China New Borun Announces Fourth Quarter and Full Year 2012 Unaudited Financial Results
Company Beats Fourth Quarter Guidance

SHOUGUANG, China, March 6, 2013 /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 unaudited financial results for the fourth quarter and full year 2012.  The Company also announced that it would invest RMB300 million to construct a new foam insulation and chlorinated polyethylene ("CPE") plant.

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, stated, "Despite a persistently challenging environment that continues to weigh heavily on demand of edible alcohol from our customers in the baijiu and chemical industries, I'm pleased that we were able to exceed our revenue guidance and generate positive income and cash flows from operations.  I'm excited about our expansion into promising sectors of foam insulation and CPE that currently experience solid demand and offers great potential for Borun to drive revenue growth, expand margins, and diversify market concentration risks."

Fourth Quarter 2012 Quick View

  • Total revenue decreased 33.9% to RMB503.4 million ($80.1 million[1]) from RMB762.0 million in the fourth quarter of 2011.
  • Gross profit decreased 54.7% to RMB54.4 million ($8.7 million) from RMB120.1 million in the fourth quarter of 2011.
  • Net income decreased 70.1% to RMB21.6 million ($3.4 million) from RMB72.1 million in the fourth quarter of 2011.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.84 ($0.13) for the quarter ended December 31, 2012. Each ADS represents one of the Company's ordinary shares.
  • Net operating cash flow was RMB63.2 million ($10.1 million) in the fourth quarter of 2012.

[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 year ended December 31, 2012 were made at a rate of RMB6.2855 to USD1.00, the rate published by the People's Bank of China on December 31, 2012. 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.

Mr. Wang continued, "I'm optimistic about the new growth opportunities offered by the foam insulation and CPE plant, as our research indicates a broad use for the products.  We expect to complete construction and begin trial production in the third quarter of 2013, and with an initial total capacity of 80,000 cubic meters of foam insulation products and 25,000 tons of CPE products, we estimate the new project can eventually contribute up to RMB300 million of annual revenue.  Although the production and selling of foam insulation and CPE is different from those of edible alcohol, we believe our core operational advantages are transferable.  We are confident that our efficient production processes, sourcing and distribution capabilities, and local market knowledge and relationships can all be effectively applied to the new sectors.  As such, while I anticipate demand, ASP, and margins for our edible alcohol business will require additional time to recover, I'm encouraged that we are able deploy our operating earnings and expertise to capture a new growth opportunity that should eventually be accretive to our margins and net profits." 

Fourth Quarter 2012 Financial Performance

For the fourth quarter of 2012, revenue decreased by 33.9% year-over-year to RMB503.4 million ($80.1 million) from RMB762.0 million in the same period of 2011.  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 35.5% to RMB345.7 million ($55.0 million) in the fourth quarter of 2012, compared to RMB536.1 million in the fourth quarter of 2011.  The sales volume of edible alcohol decreased by 32.8% year-over-year to 63,884 tons, primarily due to lower production as a result of weaker demand. In the fourth quarter of 2012, average selling price of edible alcohol decreased by 4.0% year-over-year to RMB5,411 per ton.
  • Revenue from DDGS Feed decreased by 28.5% to RMB105.6 million ($16.8 million) in the fourth quarter of 2012, compared to RMB147.8 million in the fourth quarter of 2011. The sales volume of DDGS Feed in the fourth quarter of 2012 decreased by 33.9% year-over-year to 53,939 tons, and average selling price increased by 8.2% year-over-year to RMB1,959 per ton.
  • Revenue from liquid carbon dioxide decreased by 34.8% to RMB10.9 million ($1.7 million) in the fourth quarter of 2012 compared to RMB16.7 million in the fourth quarter of 2011. The sales volume of liquid carbon dioxide in the fourth quarter of 2012 decreased by 31.2% to 23,454 tons, and average selling price decreased by 5.2% year-over-year to RMB464 per ton.
  • Revenue from crude corn oil decreased by 33.0% to RMB41.2 million ($6.6 million) in the fourth quarter of 2012 compared to RMB61.4 million in the fourth quarter of 2011. The sales volume of crude corn oil in the fourth quarter of 2012 decreased by 30.2% year-over-year to 5,339 tons, and average selling price decreased by 4.0% year-over-year to RMB7,712 per ton.

During the fourth quarter of 2012, gross profit decreased by 54.7% to RMB54.4 million ($8.7 million) from RMB120.1 million in the same period of 2011. Gross margin for the fourth quarter of 2012 decreased to 10.8%, from 15.8% in the same period of 2011, 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 59.1% to RMB42.9 million ($6.8 million) in the fourth quarter of 2012, from RMB104.9 million in the same period of 2011, primarily due to lower gross profit earned.

Selling expenses decreased by 26.3% to RMB 1.3 million ($0.2 million) in the fourth quarter of 2012, from RMB 1.7 million in the same period of 2011, in line with the decrease in revenue.   

General and administrative expenses decreased by 24.0% to RMB10.2 million ($1.6 million) in the fourth quarter of 2012, from RMB13.5 million in the same period of 2011, benefiting from disciplined cost control.

Income tax expenses in the fourth quarter of 2012 were RMB7.2 million ($1.1 million), representing an effective tax rate of 25.0%.

Net income decreased by 70.1% to RMB21.6 million ($3.4 million) in the fourth quarter of 2012, compared to RMB72.1 million in the same quarter of 2011.  In the fourth quarter of 2012, basic and diluted earnings per share and per ADS were RMB0.84 ($0.13), and the Company had 25.7 million weighted average basic and diluted shares outstanding.  

As of December 31, 2012, the Company had cash and bank deposits of RMB685.7 million ($109.1 million), representing an increase of RMB461.8 million, compared with RMB223.9 million as of December 31, 2011. Cash flows generated from operating activities were RMB63.2 million ($10.1 million) for the fourth quarter of 2012.

Full Year 2012 Financial Performance

For the year ended December 31, 2012, total revenue decreased 3.6% year-over-year to RMB2,587.4 million ($411.7 million), from RMB2,685.2 million for the year ended December 31, 2011. Gross profit decreased 32.0% year-over-year to RMB346.8 million ($55.2 million), from RMB510.2 million for the year ended December 31, 2011. Operating income decreased 35.2% year-over-year to RMB292.4 million ($46.5 million), from RMB451.1 million for the year ended December 31, 2011. Net income decreased 39.9% year-over-year to RMB188.2 million ($29.9 million), from RMB313.0 million for the year ended December 31, 2011. Basic and diluted earnings per share or ADS decreased to RMB7.31 ($1.16), from RMB12.17 in the prior year. Weighted average number of basic and diluted shares outstanding was approximately 25.7 million in 2012.

Financial Outlook

The Company estimates that its revenue for the first quarter of 2013 will be in the range of RMB385.0 million ($61.3 million) to RMB420.0 million ($66.8 million), a decrease of approximately 46.6% to 41.8% 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 Thursday, March 7, 2013 (9:00 p.m. Beijing time on Thursday, March 7, 2013) to discuss the results and highlights from the fourth quarter and full year of 2012 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:                                                          

96622365

A replay of the webcast will be accessible through March 14, 2013 on http://ir.chinanewborun.com or by dialing:

United States toll free:                                            

1-855-452-5696

International:                                                            

61-2-8199-0299

Passcode                                                                  

96622365

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 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:  wendy.sun@asiabridgegroup.com


CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEET  


December 31, 2011


 

December 31, 2012


RMB


RMB


US$

Assets






Cash

223,875,750


685,692,645


109,091,185

Trade accounts receivable, net of allowance for doubtful
   accounts of nil and nil, respectively

300,023,348


302,779,899


48,171,172

Inventories

86,205,820


138,280,880


21,999,981

Advance to suppliers

143,742,755


157,476,640


25,053,956

Other receivables

12,682,305


34,880,868


5,549,418

Prepaid expenses

3,957,293


6,039,816


960,913

Total current assets

770,487,271


1,325,150,748


210,826,625

Property, plant and equipment, net

1,127,381,307


1,047,934,015


166,722,459

Land use right, net

57,583,427


56,432,887


8,978,265

Intangible assets, net

17,301,257


13,475,014


2,143,825

Total assets

1,972,753,262


2,442,992,664


388,671,174







Liabilities and shareholders' equity






Trade accounts payable

13,200,118


12,605,132


2,005,430

Accrued expenses and other payables                                      

86,945,695


63,942,736


10,173,055

Income taxes payable

34,475,778


6,661,771


1,059,863

Short-term borrowings

508,700,000


842,200,000


133,990,932

Total current liabilities and total liabilities  

643,321,591


925,409,639


147,229,280







Shareholders' equity  












Ordinary share - (December 31, 2011 and 2012: 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


74,478,114

Retained earnings – appropriated

99,586,852


118,401,996


18,837,323

Retained earnings – unappropriated

762,010,754


931,347,064


148,173,902

Accumulated other comprehensive loss

(473,718)


(473,818)


(73,170)

Total shareholders' equity

1,329,431,671


1,517,583,025


241,441,894

Total liabilities and shareholders' equity

1,972,753,262


2,442,992,664


388,671,174


 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME




For the three-month period ended,


December 31,

 2011


September 30, 
2012


December 31, 2012

 


(RMB)


(RMB)


(RMB)


(US$)









Revenues

762,037,367


559,159,766


503,375,028


80,085,121

Cost of goods sold

641,947,866


492,110,107


448,934,524


71,423,836

Gross profit

120,089,501


67,049,659


54,440,504


8,661,285

Operating expenses:








Selling

1,746,508


964,123


1,286,558


204,687

General and administrative

13,474,509


11,692,129


10,238,935


1,628,977

Total operating expenses

15,221,017


12,656,252


11,525,493


1,833,664

Operating income

104,868,484


54,393,407


42,915,011


6,827,621

Other (income) expenses:








Interest income

(373,057)


(232,978)


(438,967)


(69,838)

Interest expense

9,046,705


8,302,047


14,371,023


2,286,377

Others, net

(30,810)


(17,124)


194,026


30,869

Total other expense, net

8,642,838


8,051,945


14,126,082


2,247,408

Income before income taxes                      

96,225,646


46,341,462


28,788,929


4,580,213

Income tax expense

24,076,500


11,585,365


7,197,232


1,145,053

Net income

72,149,146


34,756,097


21,591,697


3,435,160









Earnings per share:








Basic and diluted

2.80


1.35


0.84


0.13

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 year ended,


December 31, 2011


December 31, 2012


(RMB)


(RMB)


(US$)







Revenues

2,685,223,409


2,587,441,751


411,652,494

Cost of goods sold

2,175,060,342


2,240,600,096


356,471,259

Gross profit

510,163,067


346,841,655


55,181,235

Operating expenses:






Selling

5,281,112


4,566,943


726,584

General and administrative

53,779,944


49,845,321


7,930,208

Total operating expenses

59,061,056


54,412,264


8,656,792

Operating income

451,102,011


292,429,391


46,524,443

Other (income) expenses:






Interest income

(1,169,183)


(1,364,810)


(217,136)

Interest expense

34,114,359


42,767,789


6,804,198

Others, net

(32,319)


157,807


25,107

Total other expense, net

32,912,857


41,560,786


6,612,169

Income before income taxes

418,189,154


250,868,605


39,912,274

Income tax expense

105,194,680


62,717,151


9,978,069

Net income

312,994,474


188,151,454


29,934,205







Earnings per share:






Basic and diluted

12.17


7.31


1.16

Weighted average ordinary shares outstanding:






Basic and diluted

25,725,000


25,725,000


25,725,000













SOURCE China New Borun Corporation

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