EX-99.1 2 tv480138_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

China New Borun Announces Third Quarter 2017 Unaudited

Financial Results

 

 

Beijing, China, November 21, 2017 – 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 third quarter ended September 30, 2017.

 

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, “Despite a longer annual maintenance, our third quarter revenue of RMB457 million beat our previous guidance. We again generated outstanding cash flows from operations totaling RMB342 million, boosting our corn sourcing capabilities in the new corn harvest season.

 

Demand remains strong from a very healthy baijiu industry, and we are encouraged by an increase in the average selling price of edible alcohol, which expanded 7% sequentially from that of the second quarter, and continued to further increase in October. With our facilities back up to full speed and corn prices stabilizing this harvest season, we anticipate higher revenue and sequential margin expansion in the fourth quarter of 2017,” Mr. Wang concluded.

 

Third Quarter 2017 Quick View

 

·Total revenue decreased 24.1% to RMB457.0 million ($68.9 million1) from RMB602.2 million in the third quarter of 2016.

 

·Gross profit decreased 7.7% to RMB30.1 million ($4.5 million) from RMB32.6 million in the third quarter of 2016.

 

·Net income decreased 84.2% to RMB1.3 million ($0.2 million) from RMB8.0 million in the third quarter of 2016.

 

·Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.05 ($0.01) for the quarter ended September 30, 2017. Each ADS represents one of the Company's ordinary shares.

 

 

Third Quarter 2017 Financial Performance

 

For the third quarter of 2017, revenue decreased by 24.1% year-over-year to RMB457.0 million ($68.9 million) from RMB602.2 million in the same period of 2016. The decrease in revenue was mainly due to lower sales volume of edible alcohol and its by-products.

 

 

 

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 September 30, 2017 were made at a rate of RMB6.6369 to USD1.00, the rate published by the People’s Bank of China on September 30, 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.

 

 

 

Revenue breakdown by product lines is as follows:

 

·Revenue from edible alcohol decreased by 20.9% to RMB319.5 million ($48.1 million) in the third quarter of 2017, compared to RMB403.9 million in the third quarter of 2016. The sales volume of edible alcohol in the third quarter of 2017 decreased by 17.9% year-over-year to 77,476 tons, while the average selling price of edible alcohol decreased by 3.7% year-over-year to RMB4,123 per ton.

 

·Revenue from DDGS Feed decreased by 15.5% to RMB114.7 million ($17.3 million) in the third quarter of 2017, compared to RMB135.7 million in the third quarter of 2016. The sales volume of DDGS Feed in the third quarter of 2017 decreased by 13.0% year-over-year to 70,280 tons, and the average selling price decreased by 2.9% year-over-year to RMB1,632 per ton.

 

·Revenue from liquid carbon dioxide increased by 12.7% to RMB6.8 million ($1.0 million) in the third quarter of 2017, compared to RMB6.0 million in the third quarter of 2016. The sales volume of liquid carbon dioxide in the third quarter of 2017 decreased by 14.7% year-over-year to 30,042 tons, and the average selling price increased by 32.2% year-over-year to RMB226 per ton.

 

·Revenue from crude corn oil decreased by 17.6% to RMB16.0 million ($2.4 million) in the third quarter of 2017, compared to RMB19.5 million in the third quarter of 2016. The sales volume of crude corn oil in the third quarter of 2017 decreased by 18.0% year-over-year to 2,529 tons, and the average selling price increased slightly by 0.4% year-over-year to RMB6,342 per ton.

 

 

During the third quarter of 2017, gross profit decreased by 7.7% to RMB30.1 million ($4.5 million) from RMB32.6 million in the same period of 2016. Gross margin for the third quarter of 2017 increased to 6.6%, from 5.4% 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 decreased by 17.7% to RMB17.4 million ($2.6 million) in the third quarter of 2017, from RMB21.1 million in the same period of 2016, primarily due to lower gross profit earned.

 

Selling expenses decreased by RMB0.1 million, or 11.8% to RMB0.9 million ($0.1 million) in the third quarter of 2017, from RMB1.0 million in the same period of 2016.

 

General and administrative expenses increased by RMB1.3 million, or 12.9% to RMB11.8 million ($1.8 million) in the third quarter of 2017, from RMB10.5 million in the same period of 2016.

 

Income tax expenses in the third quarter of 2017 were RMB0.4 million ($0.1 million), representing an effective tax rate of 25.0%.

 

Net income decreased by 84.2% to RMB1.3 million ($0.2 million) in the third quarter of 2017, compared to RMB8.0 million in the same quarter of 2016. In the third quarter of 2017, basic and diluted earnings per share and per ADS were RMB0.05 ($0.01), and the Company had 25.7 million weighted average basic and diluted shares outstanding.

 

 

 

 

As of September 30, 2017, cash and bank deposits of RMB1.4 billion ($216.4 million) increased by RMB640.8 million, compared with RMB795.3 million as of December 31, 2016. Cash flows generated from operating activities for the third quarter of 2017 amounted to RMB341.6 million ($51.5 million) which was mainly generated form the decrease in inventory during the third quarter of 2017.

 

Financial Outlook

 

The Company estimates that its revenue for the fourth quarter of 2017 will be in the range of RMB520 million ($78.3 million) to RMB560 million ($84.4 million), an increase of approximately 1.3% to an increase of 9.1% 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 Wednesday, November 22, 2017 (9:00 p.m. Beijing time on Wednesday, November 22, 2017) to discuss the results and highlights from the third 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:  800-819-0121
China Toll (Mobile):  400-620-8038
Conference ID:  8986459

 

A replay of the webcast will be accessible through November 30, 2017 on http://ir.chinanewborun.com or by dialing:

 

United States toll free:  1-855-452-5696
International:  61-2-8199-0299
Passcode:  8986459

 

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

 

Asia Bridge Capital Limited

Michael Tieu

Phone:+86-10-8556-9033 (China)

+1-888-870-0798 (U.S.)

Email: Michael.tieu@asiabridgegroup.com

 

 

 

 

CHINA NEW BORUN CORPORATION

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

   December 31, 2016   September 30, 2017 
   RMB   RMB   US$ 
Assets            
Cash   795,329,065    1,436,113,139    216,383,121 
                
Trade accounts receivable, net of allowance for doubtful accounts   415,621,572    370,800,566    55,869,542 
Inventories   602,628,839    392,803,569    59,184,795 
Advance to suppliers   245,977,475    1,039,827    156,674 
Other receivables   81,055,814    60,823,803    9,164,490 
Prepaid expenses   3,325,225    3,158,583    475,912 
Total current assets   2,143,937,990    2,264,739,487    341,234,534 
Property, plant and equipment, net   876,240,529    792,244,381    119,369,643 
Land use right, net   130,460,205    128,335,773    19,336,704 
Total assets   3,150,638,724    3,185,319,641    479,940,881 
                
Liabilities and shareholders’ equity               
Trade accounts payable   23,643,261    18,290,213    2,755,837 
Accrued expenses and other payables   47,614,155    58,785,978    8,857,445 
Income taxes payable   12,242,364    28,879,533    4,351,359 
Short-term borrowings   905,170,000    853,067,011    128,533,956 
Total current liabilities   988,669,780    959,022,735    144,498,597 
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 RMB5,772,426 ($869,747) as of December 31, 2016 and September 30, 2017, respectively) 		   293,169,451    294,227,574    43,332,079 
Total liabilities   1,281,839,231    1,253,250,309    188,830,676 
                
Shareholders’ equity               
Ordinary share –  par value of RMB0.0068259, 25,725,000 shares authorized, issued and outstanding as of December 31, 2016 and September 30, 2017, respectively   175,596    175,596    25,725 
Additional paid-in capital   468,132,187    468,132,187    70,534,766 
Retained earnings – appropriated   153,533,656    153,533,656    23,133,339 
Retained earnings – unappropriated   1,247,519,969    1,310,742,892    197,493,241 
Accumulated other comprehensive loss   (561,915)   (514,999)   (76,866)
                
                
Total shareholders’ equity   1,868,799,493    1,932,069,332    291,110,205 
Total liabilities and shareholders’ equity   3,150,638,724    3,185,319,641    479,940,881 

 

 

 


 

CHINA NEW BORUN CORPORATION

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

   For the three-month period ended, 
  

September 30,
2016

  

June 30,
2017

  

September 30, 2017

 
   RMB   RMB   RMB   US$ 
                 
Revenues   602,246,617    555,093,952    457,012,922    68,859,396 
Cost of goods sold   569,687,921    502,561,489    426,956,487    64,330,710 
Gross profit   32,558,696    52,532,463    30,056,435    4,528,686 
Operating expenses:                    
Selling   966,076    938,979    852,375    128,430 
General and administrative   10,473,339    12,294,818    11,823,704    1,781,510 
Total operating expenses   11,439,415    13,233,797    12,676,079    1,909,940 
Operating income   21,119,281    39,298,666    17,380,356    2,618,746 
                     
Other (income) expenses:                    
Interest income   (662,929)   (942,288)   (1,239,283)   (186,726)
Interest expense   11,110,400    17,558,275    16,953,914    2,554,493 
Others, net   (32,000)   (25,263)   (24,023)   (3,620)
Total other expense, net   10,415,471    16,590,724    15,690,608    2,364,147 
Income before income taxes   10,703,810    22,707,942    1,689,748    254,599 
Income tax expense   2,675,953    5,676,985    422,437    63,650 
Net income   8,027,857    17,030,957    1,267,311    190,949 
                     
Earnings per share:                    
Basic and diluted   0.31    0.66    0.05    0.01 
Weighted average ordinary shares outstanding:                    
Basic and diluted   25,725,000    25,725,000    25,725,000    25,725,000 

 

 

 

 

CHINA NEW BORUN CORPORATION

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

   For the nine-month period ended, 
   September 30, 2016   September 30, 2017 
   RMB   RMB   US$ 
             
Revenues   1,619,208,219    1,528,016,205    230,230,410 
Cost of goods sold   1,483,111,935    1,354,722,178    204,119,721 
Gross profit   136,096,284    173,294,027    26,110,689 
Operating expenses:               
Selling   3,257,489    2,709,695    408,277 
General and administrative   33,417,617    37,750,141    5,687,918 
Total operating expenses   36,675,106    40,459,836    6,096,195 
Operating income   99,421,178    132,834,191    20,014,494 
                
Other (income) expenses:               
Interest income   (3,124,844)   (2,936,698)   (442,480)
Interest expense   37,984,640    51,556,934    7,768,225 
Others, net   351,588    (83,275)   (12,547)
Total other expense, net   35,211,384    48,536,961    7,313,198 
Income before income taxes   64,209,794    84,297,230    12,701,296 
Income tax expense   16,052,449    21,074,307    3,175,324 
Net income   48,157,345    63,222,923    9,525,972 
                
Earnings per share:               
Basic and diluted   1.87    2.46    0.37 
Weighted average ordinary shares outstanding:               
Basic and diluted   25,725,000    25,725,000    25,725,000