China New Borun Announces Third Quarter 2012 Financial Results

        China New Borun Announces Third Quarter 2012 Financial Results

PR Newswire

BEIJING, Nov. 15, 2012

BEIJING, Nov. 15, 2012 /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 third quarter of 2012.

Third Quarter 2012  Quick View

  oTotal revenue decreased 10.8% to RMB559.2 million ($88.2 million(1)) from
    RMB627.0 million in the third quarter of 2011.
  oGross profit decreased 40.1% to RMB67.0 million ($10.6 million) from
    RMB111.8 million in the third quarter of 2011.
  oNet income decreased 48.5% to RMB34.8 million ($5.5 million) from RMB67.5
    million in the third quarter of 2011.
  oBasic and diluted earnings per American Depositary Share ("ADS") were
    RMB1.35 ($0.21) for the quarter ended September 30, 2012. Each ADS
    represents one of the Company's ordinary shares.
  oNet operating cash inflows increased 43.1% to RMB151.3 million ($23.9
    million) from RMB105.7 million in the third quarter of 2011.

(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 quarter
ended September 30, 2012 were made at a rate of RMB6.341 to USD1.00, the rate
published by the People's Bank of China on September 30, 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.

Commenting on the results for the quarter, Mr. Jinmiao Wang, Chairman and
Chief Executive Officer of Borun, stated, "In addition to our annual scheduled
maintenance that requires a production halt for ten days, this quarter we also
ramped up production at a slower pace due to lower demand of edible alcohol
from the chemical industry. During the quarter, the average selling price
(the "ASP") for edible alcohol softened, while corn cost continued on an
upward trend, and as a result, our gross margin decreased. Despite the macro
challenges, our steadfast focus on improving operating efficiency and
controlling operating costs helped us to resiliently earn positive net income
and cash flows from operations of over RMB151 million, which further improved
our financial position."

Mr. Wang added, "Although the third quarter was challenging overall for the
entire edible alcohol industry, looking forward, we are encouraged that in
October, the spot corn price is on a downward trend which we could benefit
from to lower our production cost. We continue to focus on improving our
operating efficiency, as we are using our operating cash flows to increase our
corn inventory in order to reduce corn storage costs to local granaries. We
believe we are well positioned to not only being weathered through the tough
macro environment but also gain greater market leadership and profitability
when market conditions eventually improve."

Third Quarter 2012 Financial Performance

For the third quarter of 2012, revenue decreased by 10.8% year-over-year to
RMB559.2 million ($88.2 million) from RMB627.0 million in the same period of
2011. Key factors affecting the Company's results of operations are as
follows:

  oRevenue from edible alcohol, decreased by 14.6% to RMB381.8 million ($60.2
    million) in the third quarter of 2012, compared to RMB447.2 million in the
    third quarter of 2011. Primarily due to lower production as a result of
    weaker demand in Grade-C edible alcohol from chemical clients, the sales
    volume of edible alcohol decreased by 14.5% year-over-year to 68,758 tons.
    In the third quarter of 2012, selling price of edible alcohol decreased
    slightly by 0.1% year-over-year to RMB5,553 per ton.
  oRevenue from DDGS Feed increased by 9.6% to RMB123.2 million ($19.4
    million) in the third quarter of 2012, compared to RMB112.4 million in the
    third quarter of 2011. In the third quarter of 2012, sales volume of DDGS
    Feed decreased by 7.1% year-over-year to 60,035 tons, and selling price
    increased by 18.0% year-over-year to RMB2,051 per ton.
  oRevenue from liquid carbon dioxide decreased by 10.4% to RMB12.5 million
    ($2.0 million) in the third quarter of 2012 compared to RMB14.0 million in
    the third quarter of 2011, primarily due to a decrease in selling price
    per ton. In the third quarter of 2012, sales volume of liquid carbon
    dioxide increased by 11.6% to 26,730 tons, and selling price decreased by
    19.7% year-over-year to RMB469 per ton.
  oRevenue from crude corn oil increased by 11.3% to RMB41.7 million ($6.6
    million) in the third quarter of 2012 compared to RMB37.4 million in the
    third quarter of 2011. The increase was driven by higher sales volume
    during the quarter and partially offset by a decrease in selling price. In
    the third quarter of 2012, sales volume of crude corn oil increased by
    17.2% year-over-year to 5,367 tons and selling price decreased by 5.0%
    year-over-year to RMB7,761 per ton.

During the third quarter of 2012, gross profit decreased by 40.1% to RMB67.0
million ($10.6 million) from RMB111.8 million in the same period of 2011.
Gross margin for the third quarter of 2012 decreased to 12.0% from 17.8% in
the same period of 2011, primarily due to corn cost increasing at a faster
rate than ASP during the third quarter of 2012.

Operating income, despite stable operating expenses, decreased by 44.9% to
RMB54.4 million ($8.6 million) in the third quarter of 2012, from RMB98.8
million in the same period of 2011, primarily due to lower revenue and lower
gross profit.

Selling expenses decreased by 15.8% to RMB 0.9 million ($0.2 million) in the
third quarter of 2012, from RMB 1.1 million in the same period of 2011, in
line with the decrease in revenue during this quarter.

General and administrative expenses were RMB11.7 million ($1.8 million) in the
third quarter of 2012, which were stable compared to RMB11.9 million in the
same period of 2011.

Income tax expenses in the third quarter of 2012 were RMB11.6 million ($1.8
million), representing an effective tax rate of 25.0%.

Net income decreased by 48.5% to RMB34.8 million ($5.5 million) in the third
quarter of 2012, compared to RMB67.5 million in the same quarter of 2011. In
the third quarter of 2012, basic and diluted earnings per share and per ADS
were RMB1.35 ($0.21), and the Company had 25.7 million weighted average basic
and diluted shares outstanding.

As of September 30, 2012, the Company had cash and bank deposits of RMB276.4
million ($43.6 million), representing an increase of RMB52.5 million, compared
with RMB223.9 million as of December 31, 2011. Cash flows generated in
operating activities for the quarter ended September 30, 2012 were
approximately RMB151.3 million ($23.9 million), reflecting the Company's
efficient working capital management.

Financial Outlook

Reflecting the lower demand from chemical industry, the Company estimates that
its revenue for the fourth quarter of 2012 will be in the range of RMB430.0
million ($67.8 million) to RMB470.0 million ($74.1 million), a decrease of
approximately 43.6% to 38.3% over the same quarter of 2011.

This forecast reflects the Company's current and preliminary view, which is
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 (9:00 p.m. Beijing time) on Friday, November 16, 2012
to discuss the results and highlights from the third quarter 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:  59182438

A replay of the webcast will be accessible through November 23, 2012 on
http://ir.chinanewborun.com or by dialing:

United States toll free:        1-866-214-5335
International:  1-718-354-1232
Passcode     59182438

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 ("SEC"), 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 SHEETS


                                                    
                                 December 31, 2011
                                                    September 30, 2012
                                 RMB                RMB            US$
Assets
Cash                             223,875,750        276,385,155    43,586,998
Trade accounts receivable, net
of allowance for doubtful        300,023,348        228,452,671    36,027,862
accounts of nil and nil,
respectively
Inventories                      86,205,820         315,071,628    49,688,003
Advance to suppliers             143,742,755        13,950,634     2,200,068
Other receivables                12,682,305         46,241,505     7,292,463
Prepaid expenses                 3,957,293          4,335,283      683,691
Total current assets             770,487,271        884,436,876    139,479,085
Property, plant and equipment,   1,127,381,307      1,064,879,741  167,935,616
net
Land use right, net              57,583,427         56,720,522     8,945,044
Intangible assets, net           17,301,257         14,431,575     2,275,915
Total assets                     1,972,753,262      2,020,468,714  318,635,660
Liabilities and shareholders'
equity
Trade accounts payable           13,200,118         42,066,807     6,634,097
Accrued expenses and other       86,945,695         68,979,978     10,878,407
payables
Income taxes payable             34,475,778         26,237,830     4,137,806
Short-term borrowings            508,700,000        387,200,000    61,062,924
Total current liabilities and    643,321,591        524,484,615    82,713,234
total liabilities
Shareholders' equity

                                                                 
Ordinary share (December 31,
2011 and September 30, 2012: par                                 
value of RMB0.0068259,
25,725,000 shares issued and     175,596            175,596        25,725
outstanding)
Additional paid-in capital       468,132,187        468,132,187    73,826,240
Retained earnings – appropriated 99,586,852         99,586,852     15,705,228
Retained earnings –              762,010,754        928,570,511    146,439,128
unappropriated
Accumulated other comprehensive  (473,718)          (481,047)      (73,895)
loss
Total shareholders' equity       1,329,431,671      1,495,984,099  235,922,426
Total liabilities and            1,972,753,262      2,020,468,714  318,635,660
shareholders' equity





CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


                           For the three-month period ended,
                           September30,  June 30,
                                                       September 30, 2012
                           2011          2012
                           (RMB)          (RMB)        (RMB)        (US$)
Revenues                   627,005,034    803,731,107  559,159,766  88,181,638
Cost of goods sold         515,156,967    688,256,998  492,110,107  77,607,650
Gross profit               111,848,067    115,474,109  67,049,659   10,573,988
Operating expenses:
Selling                    1,144,684      1,153,473    964,123      152,046
                                                                 
General and administrative
                           11,907,975     13,333,724   11,692,129   1,843,893
Total operating expenses   13,052,659     14,487,197   12,656,252   1,995,939
Operating income           98,795,408     100,986,912  54,393,407   8,578,049
Other (income) expenses:
Interest income            (287,233)      (373,465)    (232,978)    (36,742)
Interest expense           9,167,384      10,538,792   8,302,047    1,309,265
Others, net                (9,690)        (3,197)      (17,124)     (2,700)
Total other expense, net   8,870,461      10,162,130   8,051,945    1,269,823
Income before income taxes 89,924,947     90,824,782   46,341,462   7,308,226
Income tax expense         22,458,628     22,706,196   11,585,365   1,827,056
                                                                    
                                                    
                                                                    5,481,170
Net income                 67,466,319     68,118,586   34,756,097
                                                                    
Earnings per share:
 Basic and diluted   2.62           2.65         1.35         0.21


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, 2011  September 30, 2012
                                (RMB)               (RMB)          (US$)
Revenues                        1,923,186,042       2,084,066,723  328,665,309
Cost of goods sold              1,533,112,476       1,791,665,572  282,552,527
Gross profit                    390,073,566         292,401,151    46,112,782
Operating expenses:
Selling                         3,534,604           3,280,385      517,329
General and administrative      40,305,435          39,606,386     6,246,079
Total operating expenses        43,840,039          42,886,771     6,763,408
Operating income                346,233,527         249,514,380    39,349,374
Other (income) expenses:
Interest income                 (796,126)           (925,843)      (146,009)
Interest expense                25,067,654          28,396,766     4,478,279
Others, net                     (1,509)             (36,219)       (5,712)
Total other expense, net        24,270,019          27,434,704     4,326,558
Income before income taxes      321,963,508         222,079,676    35,022,816
Income tax expense              81,118,180          55,519,919     8,755,704
Net income                      240,845,328         166,559,757    26,267,112
Earnings per share:
Basic and diluted               9.36                6.47           1.02
Weighted average ordinary
shares outstanding:
Basic and diluted               25,725,000          25,725,000     25,725,000



SOURCE China New Borun Corporation

Website: http://www.chinanewborun.com
 
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