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China New Borun Announces First Quarter 2013 Unaudited Financial

China New Borun Announces First Quarter 2013 Unaudited Financial Results

Company Beats First Quarter Guidance

Raises Second Quarter 2013 Production Volume

Expects Second Quarter 2013 Net Revenue Growth of 22% to 33% Quarter-over-Quarter

BEIJING, May 20, 2013 - China New Borun Corporation (NYSE: BORN; “Borun” or the “Company”), a leading producer and distributor of corn-based edible alcohol in China, today announced unaudited financial results for the first quarter of 2013.

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, “I am pleased that Borun once again exceeded revenue guidance, remained profitable, and continued to forge ahead with our strategy and operations, despite facing market headwinds and lower demand due to the PRC’s challenging macro-economic environment in the first quarter. This April, we were encouraged to witness an improvement in demand for our products, and correspondingly, we have raised our second quarter production volume. With higher production volume, our capacity utilization rate will improve, and given that we have secured adequate corn during the harvest season at favorable price, we believe that Borun will remain profitable during a very challenging environment for the edible alcohol industry.”

Mr. Wang added, “During the first quarter, we further optimized our sourcing capacity by using a combination of short-term borrowings and the bond proceeds issued in January to pre-purchase 300,000 tons of corn in the harvest season. We are also diversifying into the promising and complementary foam insulation market. Our construction of the new foam insulation and chlorinated polyethylene plant is, thus far, on schedule and on budget, and we expect to begin trial production by the third quarter of this year. We believe these initiatives will ultimately drive our long-term revenue growth and margin expansion, while at the same time lower our market concentration risks.”

First Quarter 2013 Quick View


  — Total revenue decreased 37.5% to RMB450.7 million ($71.9 million[1])
      from RMB721.2 million in the first quarter of 2012.
  — Gross profit decreased 57.1% to RMB47.1 million ($7.5 million) from
      RMB109.9 million in the first quarter of 2012.
  — Net income decreased 80.0% to RMB12.8 million ($2.0 million) from
      RMB63.7 million in the first quarter of 2012.
  — Basic and diluted earnings per American Depositary Share (“ADS”) were
      RMB0.50 ($0.08) for the quarter ended March 31, 2013. Each ADS
      represents one of the Company’s ordinary shares.


  [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, 2013
    were made at a rate of RMB6.2689
    to USD1.00, the rate published by
    the People’s Bank of China on
    March 31, 2013. 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.


First Quarter 2013 Financial Performance

For the first quarter of 2013, revenue decreased by 37.5% year-over-year to RMB450.7 million ($71.9 million) from RMB721.2 million in the same period of 2012. The decrease in revenue was mainly attributable to lower average selling price and a decrease in sales volume of edible alcohol due to weaker demand from the baijiu and chemical industries.

Revenue breakdown by product lines is as follows:


  — Revenue from edible alcohol decreased by 39.5% to RMB313.5 million
      ($50.0 million) in the first quarter of 2013, compared to RMB517.8
      million in the first quarter of 2012. The sales volume of edible alcohol
      in the first quarter of 2013 decreased by 36.1% year-over-year to 59,499
      tons, primarily due to lower production as a result of weaker demand,
      and the average selling price of edible alcohol decreased by 5.3%
      year-over-year to RMB5,268 per ton.
  — Revenue from DDGS Feed decreased by 27.6% to RMB96.8 million ($15.4
      million) in the first quarter of 2013, compared to RMB133.8 million in
      the first quarter of 2012. The sales volume of DDGS Feed in the first
      quarter of 2013 decreased by 39.5% year-over-year to 48,534 tons, and
      the average selling price increased by 19.6% year-over-year to RMB1,995
      per ton.
  — Revenue from liquid carbon dioxide decreased by 44.9% to RMB8.1 million
      ($1.3 million) in the first quarter of 2013 compared to RMB14.8 million
      in the first quarter of 2012. The sales volume of liquid carbon dioxide
      in the first quarter of 2013 decreased by 44.4% year-over-year to 18,492
      tons, and the average selling price decreased by 0.9% year-over-year to
      RMB441 per ton.
  — Revenue from crude corn oil decreased by 41.1% to RMB32.3 million ($5.2
      million) in the first quarter of 2013 compared to RMB54.8 million in the
      first quarter of 2012. The sales volume of crude corn oil in the first
      quarter of 2013 decreased by 41.9% year-over-year to 4,214 tons, and the
      average selling price increased by 1.3% year-over-year to RMB7,656 per
      ton.
During the first quarter of 2013, gross profit decreased by 57.1% to RMB47.1 million ($7.5 million) from RMB109.9 million in the same period of 2012. Gross margin for the first quarter of 2013 decreased to 10.4%, from 15.2% in the same period of 2012, which was primarily attributable to a combination of increased corn purchase price and decreased average selling price.

Operating income, despite a lower year-over-year level of operating expenses, decreased by 61.5% to RMB36.2 million ($5.8 million) in the first quarter of 2013, from RMB94.1 million in the same period of 2012, primarily due to lower gross profit earned.

Selling expenses decreased by 9.8% to RMB1.1 million ($0.2 million) in the first quarter of 2013, from RMB1.2 million in the same period of 2012, in line with the decrease in revenue.

General and administrative expenses decreased by 32.7% to RMB9.8 million ($1.5 million) in the first quarter of 2013, from RMB14.6 million in the same period of 2012, benefiting from disciplined cost control.

Income tax expenses in the first quarter of 2013 were RMB4.3 million ($0.7 million), representing an effective tax rate of 25.0%.

Net income decreased by 80.0% to RMB12.8 million ($2.0 million) in the first quarter of 2013, compared to RMB63.7 million in the same quarter of 2012. In the first quarter of 2013, basic and diluted earnings per share and per ADS were RMB0.50 ($0.08), and the Company had 25.7 million weighted average basic and diluted shares outstanding.

As of March 31, 2013, reflecting the large corn pre-purchase, cash and bank deposits of RMB394.3 million ($62.9 million) decreased by RMB216.4 million, compared with RMB610.7 million as of December 31, 2012. Correspondingly, cash flows used in operating activities for the first quarter of 2013 were RMB554.7 million ($88.5 million) mainly due to cash pre-payments for corn. As of March 31, 2013, advance to supplier balance was RMB546.9 million ($87.2 million), representing an increase of RMB479.1 million, compared with RMB67.8 million as of December 31, 2012.

Financial Outlook

The Company estimates that its revenue for the second quarter of 2013 will be in the range of RMB550.0 million ($87.7 million) to RMB600.0 million ($95.7 million), an increase of 22.0% to 33.1% over the prior quarter and a decrease of approximately 25.3% to 31.6% over the same quarter in 2012.

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 21, 2013 (8:00 p.m. Beijing time on Tuesday, May 21, 2013) to discuss the results and highlights from the first quarter 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: 1-718-354-1231

Hong Kong Toll Free: 800-930-346

Hong Kong Toll: 852-2475-0994

China Toll Free: 800-819-0121

China Toll Free (Mobile): 400-620-8038

Conference ID: 64851810

A replay of the webcast will be accessible through May 29, 2013 on http://ir.chinanewborun.com or by dialing:

United States toll free: 1-855-452-5696

International: 61-2-8199-0299

Passcode: 64851810

About China New Borun Corporation

China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol in China. Borun’s edible alcohol products are primarily sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage that is sold throughout China in retail stores, restaurants, and bars. The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production. 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

Wendy Sun

Phone:

+86-10-8556-9033 (China)

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

Email: .(JavaScript must be enabled to view this email address)

 

 


                                                                              CHINA NEW BORUN CORPORATION

                                                                          UNAUDITED CONSOLIDATED BALANCE SHEETS


                                                                                          December 31, 2012           March 31, 2013
                                                                                          —-         

                                                                                                RMB                   RMB             US$

  Assets

  Cash                                                                                                   610,692,645           394,335,855     62,903,517

  Restricted cash                                                                                             75,000,000           272,500,000     43,468,551

  Trade accounts receivable, net of allowance for doubtful                                                                 302,779,899           283,661,545     45,249,014
    accounts of nil and nil, respectively

  Available-for-sale financial assets                                                                                     -            17,778,718     2,836,019

  Inventories                                                                                               138,280,880           245,287,637     39,127,700

  Advance to suppliers                                                                                         67,828,505           546,905,650     87,241,087

  Other receivables                                                                                           34,880,868           44,633,556     7,119,839

  Prepaid expenses                                                                                             6,039,816           16,623,239     2,651,700
                                                                                                        —          —-    —

  Total current assets                                                                                       1,235,502,613         1,821,726,200     290,597,427

  Property, plant and equipment, net                                                                             1,047,934,015         1,123,937,601     179,287,850

  Land use right, net                                                                                         56,432,887           56,145,253     8,956,157

  Intangible assets, net                                                                                       13,475,014           12,518,453     1,996,914

  Other non-current assets                                                                                       89,648,135           89,648,135     14,300,457
                                                                                                        —-          —-    —-

  Total assets                                                                                             2,442,992,664         3,103,975,642     495,138,805
                                                                                                      =============          =============    ===========


  Liabilities and shareholders’ equity

  Trade accounts payable                                                                                       12,605,132           11,031,031     1,759,644

  Accrued expenses and other payables                                                                               63,942,736           117,714,304     18,777,505

  Income taxes payable                                                                                         6,661,771             7,484,511     1,193,911

  Short-term borrowings                                                                                       842,200,000           991,800,000     158,209,574
                                                                                                        ——          ——  ——

  Total current liabilities                                                                                     925,409,639         1,128,029,846     179,940,634

  Long-term borrowings                                                                                               -            90,000,000     14,356,586

                                                                                                              -          355,605,833     56,725,396

  Bonds payable
                                                                                                                                          —-

  Total liabilities                                                                                           925,409,639         1,573,635,679     251,022,616
                                                                                                        ——        ———  ——


  Shareholders’ equity

  Ordinary share - (December 31, 2012 and March 31, 2013: par value of RMB0.0068259, 25,725,000 shares issued
    and outstanding)                                                                                            175,596             175,596       25,725

  Additional paid-in capital                                                                                     468,132,187           468,132,187     74,675,332

  Retained earnings - appropriated                                                                                 118,401,996           118,401,996     18,887,204

  Retained earnings - unappropriated                                                                               931,347,064           944,100,697     150,600,695

  Accumulated other comprehensive loss                                                                               (473,818)            (470,513)      (72,767)
                                                                                                          -            -     

  Total shareholders’ equity                                                                                   1,517,583,025         1,530,339,963     244,116,189
                                                                                                      ———        ———  ——

  Total liabilities and shareholders’ equity                                                                         2,442,992,664         3,103,975,642     495,138,805
                                                                                                      =============          =============    ===========

 


                                        CHINA NEW BORUN CORPORATION

                                  UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


                        For the three-month period ended,
                        ——-

                            March 31,                        December 31,        March 31, 2013

                                        2012                             2012
                                      ——                            ——

                              (RMB)                            (RMB)              (RMB)          (US$)


  Revenues                           721,175,850                         503,375,028         450,692,059     71,893,324

  Cost of goods sold                     611,298,467                         448,934,524         403,601,450     64,381,542

  Gross profit                         109,877,383                         54,440,504           47,090,609       7,511,782
                                  ——                        —-          —-      —

  Operating expenses:

  Selling                             1,162,789                         1,286,558           1,049,336       167,388

  General and administrative               14,580,533                         10,238,935           9,808,797       1,564,676
                                  —-                        —-          —    —

  Total operating expenses                 15,743,322                         11,525,493           10,858,133       1,732,064
                                  —-                        —-          —-      —

  Operating income                       94,134,061                         42,915,011           36,232,476       5,779,718
                                  —-                        —-          —-      —

  Other (income) expenses:

  Interest income                         (319,400)                          (438,967)          (626,090)      (99,872)

  Interest expense                       9,555,927                         14,371,023           19,879,666       3,171,157

  Others, net                           (15,898)                          194,026             (25,944)        (4,139)
                                                                                    ———

  Total other expense, net                 9,220,629                         14,126,082           19,227,632       3,067,146
                                    —                        —-          —-      —

  Income before income taxes               84,913,432                         28,788,929           17,004,844       2,712,572

  Income tax expense                     21,228,358                         7,197,232           4,251,211       678,143
                                  —-                        —          —     

  Net income                           63,685,074                         21,591,697           12,753,633       2,034,429
                                    ==========                        ==========          ==========      =========


  Earnings per share:

  Basic and diluted                         2.48                             0.84               0.50         0.08

  Weighted average ordinary shares
      outstanding:

  Basic and diluted                     25,725,000                         25,725,000           25,725,000     25,725,000
SOURCE China New Borun Corporation

China New Borun Corporation

Web Site: http://ir.chinanewborun.com


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Posted on May 20, 2013 - 09:37 PM • Print

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