China New Borun Corporation
 
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China New Borun Announces Second Quarter 2017 Unaudited Financial Results
08/22/17

BEIJING, Aug. 22, 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 second quarter ended June 30, 2017. 

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We are pleased with our solid results for second quarter of 2017, as revenue expanded by 4.7% year-over-year, gross profit by 19.3% year-over-year, and net income by 14.5% year-over-year.  We also generated outstanding cash flows from operations totaling RMB333.4 million ($49.2 million), driven by the deployment of our pre-purchased corn inventory.

Driven by the strong sale volumes across major product categories, our facilities were practically running at maximum output, with effective utilization rate of 97%.  Sales volume of edible alcohol and DDGS Feed reached a new five-year high to 95,196 tons and 83,586 tons, respectively.

We continue to witness solid demand from a healthy baijiu industry, with prices rising for the top baijiu brands.  Corn prices are also rising in the current non-harvest season, which favors our corn sourcing advantage, and we are confident that despite the rising corn prices at the spot market, our corn cost during the third quarter will remain stable.  With adequate corn reserves, healthy cash flows, and a strong cash balance of more than RMB1.2 billion to support our corn sourcing arrangement in the next harvest season, we are reassured with our competitive position for the second half of 2017," Mr. Wang concluded.

Second Quarter 2017 Quick View

  • Total revenue increased 4.7% to RMB555.1 million ($81.9 million[1]) from RMB530.4 million in the second quarter of 2016.
  • Gross profit increased 19.3% to RMB52.5 million ($7.8 million) from RMB44.0 million in the second quarter of 2016.
  • Net income increased 14.5% to RMB17.0 million ($2.5 million) from RMB14.9 million in the second quarter of 2016.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.66 ($0.10) for the quarter ended June 30, 2017. Each ADS represents one of the Company's ordinary shares.  

Second Quarter 2017 Financial Performance

For the second quarter of 2017, revenue increased by 4.7% year-over-year to RMB555.1 million ($81.9 million) from RMB530.4 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:  

  • Revenue from edible alcohol increased by 1.6% to RMB366.9 million ($54.2 million) in the second quarter of 2017, compared to RMB360.9 million in the second quarter of 2016. The sales volume of edible alcohol in the second quarter of 2017 increased by 13.2% year-over-year to 95,196 tons, while the average selling price of edible alcohol decreased by 10.2% year-over-year to RMB3,854 per ton.
  • Revenue from DDGS Feed increased by 12.2% to RMB135.1 million ($19.9 million) in the second quarter of 2017, compared to RMB120.4 million in the second quarter of 2016. The sales volume of DDGS Feed in the second quarter of 2017 increased by 3.7% year-over-year to 83,586 tons, and the average selling price increased by 8.2% year-over-year to RMB1,616 per ton.
  • Revenue from liquid carbon dioxide decreased by 10.8% to RMB4.9 million ($0.7 million) in the second quarter of 2017, compared to RMB5.5 million in the second quarter of 2016. The sales volume of liquid carbon dioxide in the second quarter of 2017 decreased by 4.9% year-over-year to 30,657 tons, and the average selling price decreased by 6.2% year-over-year to RMB160 per ton.
  • Revenue from crude corn oil decreased by 6.0% to RMB17.0 million ($2.5 million) in the second quarter of 2017, compared to RMB18.1 million in the second quarter of 2016. The sales volume of crude corn oil in the second quarter of 2017 increased by 1.8% year-over-year to 2,860 tons, and the average selling price decreased by 7.7% year-over-year to RMB5,950 per ton.
  • Revenue from CPE increased by 22.8% to RMB31.2 million ($4.6 million) in the second quarter of 2017, compared to RMB25.4 million in the second quarter of 2016. The sales volume of CPE in the second quarter of 2017 increased by 26.9% year over year to 3,935 tons, and the average selling price decreased by 3.3% to RMB7,938 per ton.

During the second quarter of 2017, gross profit increased by 19.3% to RMB52.5 million ($7.8 million) from RMB44.0 million in the same period of 2016. Gross margin for the second quarter of 2017 increased to 9.5%, from 8.3% 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 23.2% to RMB39.3 million ($5.8 million) in the second quarter of 2017, from RMB31.9 million in the same period of 2016, primarily attributable to higher gross profit earned.

Selling expenses decreased by RMB0.3 million, or 22.2% to RMB0.9 million ($0.1 million) in the second quarter of 2017, from RMB1.2 million in the same period of 2016.

General and administrative expenses increased by RMB1.4 million, or 12.7% to RMB12.3 million ($1.8 million) in the second quarter of 2017, from RMB10.9 million in the same period of 2016.

Income tax expenses in the second quarter of 2017 were RMB5.7 million ($0.8 million), representing an effective tax rate of 25.0%.

Net income increased by 14.5% to RMB17.0 million ($2.5 million) in the second quarter of 2017, compared to RMB14.9 million in the same quarter of 2016. In the second quarter of 2017, basic and diluted earnings per share and per ADS were RMB0.66 ($0.10), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of June 30, 2017, cash and bank deposits of RMB1,219.8 million ($180.1 million) increased by RMB424.5 million, compared with RMB795.3 million as of December 31, 2016. Cash flows generated from operating activities for the second quarter of 2017 amounted to RMB333.4 million ($49.2 million) which was mainly generated form the decrease in inventory during the second quarter of 2017.

Financial Outlook

For the third quarter of 2017, the Company's Shandong facility will halt production for approximately two weeks, and the Daqing facility will halt production for up to four weeks for annual maintenance.  Comparatively, in the third quarter of 2016, the Company's Shandong and Daqing facilities did not halt production, as the Company had already completed annual maintenance in the second quarter of 2016.  Reflecting the comparatively shorter year-over-year production period, the Company estimates that its revenue for the third quarter of 2017 will be in the range of RMB380 million ($56.1 million) to RMB420 million ($62.0 million), a decrease of approximately 36.9% to approximately 30.3%, respectively, 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, August 23, 2017 (8:00 p.m. Beijing time on Wednesday, August 23, 2017) to discuss the results and highlights from the second 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: 

66753231

A replay of the webcast will be accessible through August 31, 2017 on http://ir.chinanewborun.com or by dialing:

United States toll free:

1-855-452-5696

International:

61-2-8199-0299

Passcode:

66753231

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.


[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 June 30, 2017 were made at a rate of RMB6.7744 to USD1.00, the rate published by the People's Bank of China on June 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.

Contact Information

Asia Bridge Capital Limited
Wendy Sun
Phone: +86-10-8556-9033 (China)
            +1-888-870-0798  (U.S.)
Email:  wendy.sun@asiabridgegroup.com

 

 

 CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS



December 31,
2016


June 30,
2017


RMB


RMB


US$

Assets






Cash

795,329,065


1,219,761,937


180,054,608

Trade accounts receivable, net of allowance for doubtful accounts of RMB nil and RMB nil (US$ nil), as of December 31, 2016 and June 30, 2017, respectively

415,621,572


390,926,580


57,706,451

Inventories

602,628,839


648,631,535


95,747,451

Advance to suppliers

245,977,475


243,582


35,956

Other receivables

81,055,814


93,578,212


13,813,506

Prepaid expenses

3,325,225


1,513,382


223,397

Total current assets

2,143,937,990


2,354,655,228


347,581,369

Property, plant and equipment, net

876,240,529


820,243,097


121,079,815

Land use right, net

130,460,205


129,043,917


19,048,760

Total assets

3,150,638,724


3,303,942,242


487,709,944







Liabilities and shareholders' equity






Trade accounts payable

23,643,261


19,434,182


2,868,768

Accrued expenses and other payables

47,614,155


52,863,857


7,803,474

Income taxes payable

12,242,364


28,457,093


4,200,681

Short-term borrowings

905,170,000


978,380,000


144,423,122

Total current liabilities

988,669,780


1,079,135,132


159,296,045

Bonds payable in connection with 2016 Bonds:

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 RMB5,975,840 ($882,121) as of December 31, 2016 and June 30, 2017, respectively)

 

293,169,451


294,024,160


43,402,244

Total liabilities

1,281,839,231


1,373,159,292


202,698,289







Shareholders' equity






Ordinary share –  par value of RMB0.0068259, 25,725,000 shares authorized, issued and outstanding as of December 31, 2016 and June 30, 2017, respectively

175,596


175,596


25,725

Additional paid-in capital

468,132,187


468,132,187


69,103,122

Retained earnings – appropriated

153,533,656


153,533,656


22,663,801

Retained earnings – unappropriated

1,247,519,969


1,309,475,581


193,297,647

Accumulated other comprehensive loss

(561,915)


(534,070)


(78,640)

Total shareholders' equity

1,868,799,493


1,930,782,950


285,011,655

Total liabilities and shareholders' equity

3,150,638,724


3,303,942,242


487,709,944


 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME



For the three-month period ended,


June 30,


December 31,


June 30,

2016

2016

2017


RMB


RMB


    RMB


US$









Revenues

530,379,367


513,471,966


555,093,952


81,939,943

Cost of goods sold

486,353,803


467,502,403


502,561,489


74,185,387

Gross profit

44,025,564


45,969,563


52,532,463


7,754,556

Operating expenses:








   Selling

1,206,445


907,214


938,979


138,607

   General and administrative

10,910,620


14,996,132


12,294,818


1,814,894

Total operating expenses

12,117,065


15,903,346


13,233,797


1,953,501

Operating income

31,908,499


30,066,217


39,298,666


5,801,055









Other (income) expenses:








   Interest income

(467,853)


(919,059)


(942,288)


(139,096)

   Interest expense

12,563,890


14,256,960


17,558,275


2,591,857

   Others, net

(25,047)


(4,009,834)


(25,263)


(3,729)

Total other expense, net

12,070,990


9,328,067


16,590,724


2,449,032

Income before income taxes

19,837,509


20,738,150


22,707,942


3,352,023

Income tax expense 

4,959,378


5,184,537


5,676,985


838,006

Net income

14,878,131


15,553,613


17,030,957


2,514,017









Earnings per share:








Basic and diluted

0.58


0.60


0.66


0.10

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 six-month period ended,


June 30,
2016


June 30,
2017


RMB


RMB


US$







Revenues

1,016,961,602


1,071,003,283


158,095,666

Cost of goods sold

913,424,014


927,765,691


136,951,714

Gross profit

103,537,588


143,237,592


21,143,952

Operating expenses:






Selling

2,291,413


1,857,320


274,167

General and administrative

22,944,278


25,926,437


3,827,119

Total operating expenses

25,235,691


27,783,757


4,101,286

Operating income

78,301,897


115,453,835


17,042,666







Other (income) expenses:






Interest income

(2,461,915)


(1,697,415)


(250,563)

Interest expense

26,874,240


34,603,020


5,107,909

Others, net

383,588


(59,252)


(8,746)

Total other expense, net

24,795,913


32,846,353


4,848,600

Income before income taxes

53,505,984


82,607,482


12,194,066

Income tax expense

13,376,496


20,651,870


3,048,516

Net income

40,129,488


61,955,612


9,145,550







Earnings per share:






Basic and diluted

1.56


2.41


0.36

Weighted average ordinary shares outstanding:






Basic and diluted

25,725,000


25,725,000


25,725,000



















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SOURCE China New Borun Corporation

 
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