BEIJING, May 30, 2017 /PRNewswire/ -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"), a leading producer and distributor of corn-based edible alcohol in China, today announced its unaudited financial results for the first quarter ended March 31, 2017.
Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We are pleased with our first quarter's significant accomplishments, as revenue of RMB515.9 million ($74.8 million) comfortably exceeded the high end of our previous revenue guidance while gross margin and net income expanded to a five-year high of 17.6% and RMB44.9 million ($6.5 million), respectively.
Benefiting from factory maintenance and upgrade that were proactively conducted in the fourth quarter of 2016, we achieved excellent utilization during the first quarter. Importantly, driven by solid demand from a healthy baijiu industry, the average selling price of edible alcohol decreased modestly by 1.1% sequentially, while our cost of corn improved at a better rate during the quarter, fueling our strong gross margin expansion.
By the end of first quarter of 2017, we completed our annual corn pre-purchase plan of 600,000 tons, as we anticipate corn prices will gradually increase during the non-harvest season. This May, corn price has risen by over 10% compared to the corn price level during the first quarter. We believe as corn prices increase in this non-harvest season, we are well-positioned to benefit from our corn sourcing advantage," Mr. Wang concluded.
First Quarter 2017 Quick View
First Quarter 2017 Financial Performance
For the first quarter of 2017, revenue increased by 6.0% year-over-year to RMB515.9 million ($74.8 million) from RMB486.6 million in the same period of 2016. The increase in revenue was mainly attributable to higher sales volume of edible alcohol and its by-products.
Revenue breakdown by product lines is as follows:
During the first quarter of 2017, gross profit increased by 52.4% to RMB90.7 million ($13.1 million) from RMB59.5 million in the same period of 2016. Gross margin for the first quarter of 2017 increased to 17.6%, from 12.2% in the same period of 2016, which was primarily attributable to the steeper decrease in average corn cost, compare with selling price of edible alcohol.
Operating income increased by 64.2% to RMB76.2 million ($11.0 million) in the first quarter of 2017, from RMB46.4 million in the same period of 2016, primarily attributable to higher gross profit earned.
Selling expenses decreased by RMB0.2 million, or 15.4% to RMB0.9 million ($0.1 million) in the first quarter of 2017, from RMB1.1 million in the same period of 2016.
General and administrative expenses increased by RMB1.6 million, or 13.3% to RMB13.6 million ($2.0 million) in the first quarter of 2017, from RMB12.0 million in the same period of 2016.
Income tax expenses in the first quarter of 2017 were RMB15.0 million ($2.2 million), representing an effective tax rate of 25.0%.
Net income increased by 77.9% to RMB44.9 million ($6.5 million) in the first quarter of 2017, compared to RMB25.3 million in the same quarter of 2016. In the first quarter of 2017, basic and diluted earnings per share and per ADS were RMB1.75 ($0.25), and the Company had 25.7 million weighted average basic and diluted shares outstanding.
As of March 31, 2017, cash and bank deposits of RMB956.7 million ($138.7 million) increased by RMB161.4 million, compared with RMB795.3 million as of December 31, 2016. Cash flows generated from operating activities for the first quarter of 2017 amounted to RMB23.9 million ($3.5 million), compared with RMB138.2 million in the first quarter of 2016. The decrease in cash from generated from operations was mainly because the Company pre-purchased more corn during the quarter, which should be sufficient to meet the Company's production needs during the non-harvest season in 2017.
Financial Outlook
Reflecting the solid demand for edible alcohol and its by-products, the Company anticipates strong sales volume and high capacity utilization. However, as the price of edible alcohol and its by-products will likely decrease on a year-over-year basis due to lower corn cost. The Company estimates that its revenue for the second quarter of 2017 will be in the range of RMB535 million ($77.5 million) to RMB560 million ($81.2 million), an increase of approximately 0.9% to an increase of approximately 5.6% over the same quarter of 2016.
This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
Conference Call
Borun's management will hold a corresponding earnings conference call and live webcast at 8:00 a.m. E.T. on Tuesday, May 30, 2017 (8:00 p.m. Beijing time on Tuesday, May 30, 2017) to discuss the results and highlights from the first quarter 2017 and answer questions from investors. A webcast of the call will be available at http://ir.chinanewborun.com. Listeners may access the call by dialing:
| United States Toll Free: |
1-866-519-4004 |
| US Toll/International: |
1-845-675-0437 |
| Hong Kong Toll Free: |
800-906-601 |
| Hong Kong Toll: |
852-3018-6771 |
| China Toll Free: |
800-819-0121 |
| China Toll Free (Mobile): |
400-620-8038 |
| Conference ID: |
21993671 |
A replay of the webcast will be accessible through June 7, 2017 on http://ir.chinanewborun.com or by dialing:
| United States toll free: |
1-855-452-5696 |
| International: |
61-2-8199-0299 |
| Passcode |
21993671 |
About China New Borun Corporation
China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage in China. The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production, and CPE that is widely used in chemical industries. China New Borun is based in Shouguang, Shandong Province. Additional information about the company can be found at http://www.chinanewborun.com and in documents filed with the U.S. Securities and Exchange Commission, which are available on the SEC's website at http://www.sec.gov.
Forward-looking Statements
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
| Contact Information |
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| Asia Bridge Capital Limited |
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| Wendy Sun |
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| Phone: |
+86-10-8556-9033 (China) |
| +1-888-870-0798 (U.S.) |
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| Email: |
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| CHINA NEW BORUN CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS
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| December 31, 2016 |
March 31, |
||||
| RMB |
RMB |
US$ |
|||
| Assets |
|||||
| Cash |
795,329,065 |
956,698,426 |
138,666,013 |
||
| Trade accounts receivable, net of allowance for doubtful accounts of RMB nil and RMB nil (US$ nil), as of December 31, 2016 and March 31, 2017, respectively |
415,621,572 |
370,477,024 |
53,697,770 |
||
| Inventories |
602,628,839 |
925,943,059 |
134,208,262 |
||
| Advance to suppliers |
245,977,475 |
274,264 |
39,752 |
||
| Other receivables |
81,055,814 |
129,867,143 |
18,823,235 |
||
| Prepaid expenses |
3,325,225 |
2,121,422 |
307,484 |
||
| Total current assets |
2,143,937,990 |
2,385,381,338 |
345,742,516 |
||
| Property, plant and equipment, net |
876,240,529 |
848,241,813 |
122,946,069 |
||
| Land use right, net |
130,460,205 |
129,752,061 |
18,806,554 |
||
| Total assets |
3,150,638,724 |
3,363,375,212 |
487,495,139 |
||
| Liabilities and shareholders' equity |
|||||
| Trade accounts payable |
23,643,261 |
29,203,612 |
4,232,837 |
||
| Accrued expenses and other payables |
47,614,155 |
52,625,658 |
7,627,681 |
||
| Income taxes payable |
12,242,364 |
25,115,562 |
3,640,306 |
||
| Short-term borrowings |
905,170,000 |
1,049,170,000 |
152,069,050 |
||
| Total current liabilities |
988,669,780 |
1,156,114,832 |
167,569,874 |
||
| Bonds payable Outstanding principal amount of RMB300,000,000, bearing fixed annual interest rate of 6.5%, with maturity on November 2, 2021 (less unamortized debt issuance costs based on imputed interest rate of 6.75% of RMB6,830,549 and RMB6,470,779 ($937,889) as of December 31, 2016 and March 31, 2017, respectively) |
293,169,451 |
293,529,221 |
42,544,783 |
||
| Total liabilities |
1,281,839,231 |
1,449,644,053 |
210,114,657 |
||
| Shareholders' equity |
|||||
| Ordinary share – par value of RMB0.0068259, 25,725,000 shares authorized, issued and outstanding as of December 31, 2016 and March 31, 2017, respectively |
175,596 |
175,596 |
25,725 |
||
| Additional paid-in capital |
468,132,187 |
468,132,187 |
67,852,128 |
||
| Retained earnings – appropriated |
153,533,656 |
153,533,656 |
22,253,512 |
||
| Retained earnings – unappropriated |
1,247,519,969 |
1,292,444,624 |
187,329,820 |
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| Accumulated other comprehensive loss |
(561,915) |
(554,904) |
(80,703) |
||
| Total shareholders' equity |
1,868,799,493 |
1,913,731,159 |
277,380,482 |
||
| Total liabilities and shareholders' equity |
3,150,638,724 |
3,363,375,212 |
487,495,139 |
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| CHINA NEW BORUN CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
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| For the three-month period ended, |
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| March 31, 2016 |
December 31, 2016 |
March 31, |
||||||
| RMB |
RMB |
RMB |
US$ |
|||||
| Revenues |
486,582,235 |
513,471,966 |
515,909,331 |
74,777,054 |
||||
| Cost of goods sold |
427,070,211 |
467,502,403 |
425,204,202 |
61,630,050 |
||||
| Gross profit |
59,512,024 |
45,969,563 |
90,705,129 |
13,147,004 |
||||
| Operating expenses: |
||||||||
| Selling |
1,084,968 |
907,214 |
918,341 |
133,106 |
||||
| General and administrative |
12,033,658 |
14,996,132 |
13,631,619 |
1,975,797 |
||||
| Total operating expenses |
13,118,626 |
15,903,346 |
14,549,960 |
2,108,903 |
||||
| Operating income |
46,393,398 |
30,066,217 |
76,155,169 |
11,038,101 |
||||
| Other (income) expenses: |
||||||||
| Interest income |
(1,994,062) |
(919,059) |
(755,127) |
(109,450) |
||||
| Interest expense |
14,738,258 |
14,256,960 |
17,044,745 |
2,470,504 |
||||
| Others, net |
(19,273) |
(4,009,834) |
(33,989) |
(4,926) |
||||
| Total other expense, net |
12,724,923 |
9,328,067 |
16,255,629 |
2,356,128 |
||||
| Income before income taxes |
33,668,475 |
20,738,150 |
59,899,540 |
8,681,973 |
||||
| Income tax expense |
8,417,118 |
5,184,537 |
14,974,885 |
2,170,493 |
||||
| Net income |
25,251,357 |
15,553,613 |
44,924,655 |
6,511,480 |
||||
| Earnings per share: |
||||||||
| Basic and diluted |
0.98 |
0.60 |
1.75 |
0.25 |
||||
| Weighted average ordinary shares outstanding: |
||||||||
| Basic and diluted |
25,725,000 |
25,725,000 |
25,725,000 |
25,725,000 |
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1 This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars for the period ended March 31, 2017 were made at a rate of RMB6.8993 to USD1.00, the rate published by the People's Bank of China on March 31, 2017. China New Borun Corporation makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi, at any particular rate or at all.
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