BORN Noteson their first reporting QTR since the June IPO. a few items highlighted, important and should not be overlooked, and keep in mind that Ownership is largely Family owned with less than 6 million shares available to the Public, those IPO's in June
this has to do with future Earnings, Growth Rate, and a New IncomeStream that will show itself for the first time in the next QTR'sRelease.
I pasted the breakdown of the 3 Revenue Streams, and below thatI added my note RE: Liquid Carbon Dioxide that BORN just began to selllast month [July], the beginning of Q3, and will be the 4th Revenue Stream. So there is the ExpansionOverall, Plus the addition of this new Revenue that will be applied toALL Production, existing and coming. None of this added Rev isfactored-in. The Release is in News/ notes paste
Second Quarter 2010 Financial Highlights
-- Total revenue increased 154.5% to RMB432.5 million ($63.7 million(1))
from RMB169.9 million in the second quarter of 2009.
-- Gross profit increased 149.9% to RMB102.1 million ($15.0 million) from
RMB40.9 million in the second quarter of 2009.
-- Net income increased 154.8% to RMB67.1 million ($9.9 million) from
RMB26.3 million in the second quarter of 2009.
-- Diluted earnings per American Depositary Share ("ADS") were RMB3.16
(
.46) for the
quarter ended June 30, 2010. 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 quarter ended June 30, 2010, were made at a rate of
RMB6.7909 to USD1.00 as published by the People's Bank of China on
June 30, 2010.
Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented,"We are very pleased with our second quarter financial results, which marksour first quarter reporting as a publicly-traded company. Our rapid growth inrevenue for both edible alcohol and by-products, as well as our strongoperating cash flows, demonstrate the advantages of our business model and ourunique competitive position.
"We are also glad to announce significant progress in several of ourgrowth initiatives. We started construction on Phase III of our Daqingfacility this quarter, and we expect to complete Phase III on schedule by theend of this year. We have also completed the construction of our liquid carbondioxide project at the Shouguang facility, which has already generated revenuesince July. With the completion of Phase III of our Daqing facility, weestimate we will be the second largest edible alcohol producer in China."
Second Quarter 2010 Financial Performance
Second quarter 2010 revenue increased by 154.5% year-over-year to RMB432.5million ($63.7 million) from RMB169.9 million in the same period of 2009. Theincrease was primarily due to the following:
-- Revenue from edible alcohol increased by 156.0% to RMB301.0 million
($44.3 million) in the second quarter of 2010 compared to RMB117.6
million in the second quarter of 2009 primarily as a result of the
increase in sales volume during this period, in turn due to the
increase in production capacity resulting from the completion of both
Phase II at Shouguang facility and Phase II at Daqing facility during
the third quarter of 2009, and an increase in sales price per ton.
Sales volume increased by 117.6% to 65,410 tons and sales price
increased by 17.7% to RMB4,601 per ton in the second quarter of 2010.
-- Revenue from DDGS Feed increased by 108.2% to RMB80.1 million ($11.8
million) in the second quarter of 2010, compared to RMB38.5 million in
the prior year period, due to the Company's expanded production
capacity driving an increase in sales volume, partly offset by a
decrease in sales price per ton. Sales volume increased by 115.8% to
45,334 tons and sales price decreased by 3.5% to RMB1,767 per ton in
the second quarter of 2010.
-- Revenue from Corn Germ increased by 286.2% to RMB51.4 million ($7.6
million) in the second quarter of 2010 compared to RMB13.3 million in
the second quarter of 2009, mainly driven by the Company's expansion of
production capacity and improvement of production yield, both resulting
in increased
sales volume, as well as a higher sales price per ton.
Sales volume increased by 212.6% to 15,670 tons and sales price
increased by 23.6% to RMB3,279 per ton in the second quarter of 2010.
[ me:Revenue from Liquid Carbon Dioxide will be the 4th Revenue Stream
and will show here next QTR ]
During the second quarter of 2010, gross profit increased by 149.9% toRMB102.1 million ($15.0 million) from RMB40.9 million in the prior year period.Gross margin for the second quarter of 2010 was 23.6%, compared to 24.1% inthe second quarter of 2009. Gross margin in the second quarter of 2009 wasslightly higher than the second quarter of 2010, as corn prices were lower inthe second quarter of 2009, and the lower corn price was not fully reflectedin lower sales prices for edible alcohol in 2009.
Operating income increased by 141.8% to RMB90.7 million ($13.4 million) inthe second quarter of 2010, from RMB37.6 million in the same period of 2009,as a result of the Company's strong revenue growth.
Selling expenses, increased by 45.9% to RMB0.6 million (
.1 million) inthe second quarter of 2010 compared to RMB0.4 million in the same period in2009, reflecting an increase in expenses for the sales force, as the Companycontinued to expand its sales and marketing efforts.
General and administrative expenses increased by 270.7% to RMB10.8 million($1.6 million) in the second quarter of 2010 compared to RMB2.9 million in thesame period of 2009, reflecting an increase in administrative staff costs,professional fees and other expenses in connection with maintaining theCompany's status as a publicly-traded company.
Income tax expenses in the second quarter of 2010 were RMB21.7 million($3.2 million), representing an effective tax rate of 24.5%, increasing fromRMB9.1 million in the same period of 2009. As the effective tax rate remainedrelatively stable, the increase was consistent with the increase of incomebefore income tax expenses.
Net income increased 154.8% to RMB67.1 million ($9.9 million) in thesecond quarter of 2010, compared to RMB26.3 million in the same quarter of2009. Diluted earnings per share and per ADS were RMB3.16 (
.46) in thesecond quarter of 2010. The Company had approximately
17.2 million weightedaverage diluted shares outstanding during the quarter ended June 30, 2010.
As of June 30, 2010, the Company had cash and bank deposits of (RMB391.2million/ $57.6 million), compared to RMB105.8 million as of December 31, 2009.Cash flows provided by operating activities for the six months ended June 30,2010 were approximately RMB165.2 million ($24.3 million) due to strongoperation results.
Initial Public Offering
On June 11, 2010, Borun completed an initial public offering of 5.725million ADSs representing 5.725 million ordinary shares at a price of $7.00per ADS. This represented 22.3% of the 25.725 million total outstanding sharesfollowing the initial public offering. The net proceeds from the initialpublic offering, after deducting a total of $4.2 million of underwritingdiscounts, commissions and offering expenses, totaled $35.9 million.
Ms. Ann Yu, Chief Financial Officer of Borun, stated, "We are excited tomove forward into the second half of 2010 with a highly flexible financialposition. Our cash balance following the initial public offering wasapproximately (RMB 391.2 million$57.6 million), and we are confident that thecombination of our solid cash on hand, growing operating cash flows, andexisting credit facility with local banks will provide us enough capital toexecute on our immediate expansion plans. Given the strong demand for ourproducts, we anticipate strong sales with respect to our expanded capacity,which could lead to higher revenue and profits in 2011 and beyond."
Financial Outlook
The Company estimates that its revenue for the full year of 2010 will bein the range of RMB1,650 million ($243.0 million) to RMB1,670 million ($245.9million), an increase of approximately 55.7% to 57.5% over the previous year.
This forecast reflects the Company's current and preliminary view, whichis subject to change.
Conference Call
The Company will hold a conference call at 8:00 am ET on August 5, 2010 todiscuss second quarter results. Listeners may access the call by dialing:
United States toll free: 1-888-396-2369
Hong Kong toll free: 800-96-3844
South China toll free (China Telecom): 10-800-130-0399
North China toll free (China Telecom): 10-800-152-1490
South China toll free (China Netcom): 10-800-852-1490
International: 1-617-847-8710
Conference ID: 69908506
A telephone replay will become available beginning two hours after theconclusion of the call and will be available through August 12, 2010.Listeners may access the replay by dialing: