China New Borun Corporation
 
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China New Borun Announces Third Quarter 2017 Unaudited Financial Results
11/21/17

BEIJING, Nov. 21, 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 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 million[1]) 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.

 

[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.

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.

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

 

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SOURCE China New Borun Corporation

 
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