UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

Date of report: For the month of August, 2011

 

Commission File Number: 001-34754

 

China New Borun Corporation

(Translation of Registrant’s name into English)

 

Bohai Industrial Park

Yangkou Town

Shouguang, Shandong

People’s Republic of China 262715

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

 

x Form 20-F

 

o Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 



 

China New Borun Announces Second Quarter 2011 Financial Results

 

2Q11 Revenue Increased 67.5% Year-Over-Year

2Q11 Net Income Increased 42.7 % Year-Over-Year

Phase III Daqing facilities run at full capacity throughout the quarter

 

Beijing, China, August 10, 2011 — 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 second quarter of 2011.

 

Second Quarter 2011 Financial Highlights

 

·                Total revenue increased 67.5% to RMB724.4 million ($111.9 million(1)) from RMB432.5 million in the second quarter of 2010.

 

·                Gross profit increased 47.9% to RMB151.1 million ($23.3 million) from RMB102.1 million in the second quarter of 2010.

 

·                Net income increased 42.7% to RMB95.8 million ($14.8 million) from RMB67.1 million in the second quarter of 2010.

 

·                Diluted earnings per American Depositary Share (“ADS”) were RMB3.72 ($0.58) for the quarter ended June 30, 2011. Each ADS represents one of the Company’s ordinary shares.

 

Commenting on the results for the quarter, Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, stated, “We are pleased with our performance in the second quarter, as we solidly executed on all aspects of our business plans. We continue to experience strong demand for edible alcohol with sales volumes showing strong increases in spite of rising prices. Although corn cost rose at a higher year-over-year rate than that of edible alcohol prices and caused a decrease in our gross margin, our operating and net income rose solidly in line with our sales volume increases.”

 

Mr. Wang added, “Our ability to complete pre-purchases of corn at locked-in prices provided us with assured supplies and enabled us to operate at full capacity throughout the quarter. Our new Phase III Daqing facility reached full capacity utilization during the quarter, allowing us to meet increasing market demand for our edible alcohol. I am confident that our operating efficiencies and sourcing expertise have placed us in a much better position in the edible alcohol market than most of the rest of the industry, and we are well positioned to take advantage of strategic expansion opportunities. The outlook for continued growth is bright, and we continue to make good progress towards becoming the preeminent producer of edible alcohol in China.”

 


(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, 2011, were made at a rate of RMB6.4716 to USD1.00 as published by the People’s Bank of China on June 30, 2011. 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.

 

2



 

Second Quarter 2011 Financial Performance

 

Second quarter 2011 revenue increased by 67.5% year-over-year to RMB724.4 million ($111.9 million) from RMB432.5 million in the same period of 2010Key factors affecting our results of operations are as follows:

 

·                Revenue from edible alcohol increased by 74.1% to RMB523.9 million ($81.0 million) in the second quarter of 2011 compared to RMB301.0 million in the second quarter of 2010 as a result of increases in the sales volume and price of edible alcohol during this period.  Both strong demand in the edible alcohol market and increased production capacity due to deployment of our Daqing Phase III facilities throughout the quarter contributed to the revenue increase. Sales volume increased by 44.3% to 94,375 tons in the second quarter of 2011 and sales price increased by 20.7% to RMB5,552 per ton.

 

·                   Revenue from DDGS Feed increased by 48.8% to RMB119.2 million ($18.4 million) in the second quarter of 2011, compared to RMB80.1 million in the prior year period, due to increase in sales volume being offset in part by a decrease in sales price per ton. Sales volume increased by 65.7% to 75,129 tons over the prior year period due to the utilization of the Daqing Phase III facilities and improved production yield. Following the deep- processing corn germ into crude corn oil, we can collect the residuals from Corn Germ to produce more DDGS. Sales price decreased in the second quarter of 2011 by 10.2% over the prior year period to RMB1,587 per ton.

 

·                Revenue from Corn Germ decreased by 38.8% to RMB31.5 million ($4.9 million) in the second quarter of 2011 compared to RMB51.4 million in the second quarter of 2010, mainly due to the decreases in sales volume during this period. Sales volume decreased by 43.1% to 8,916 tons. Due to the installation of our crude corn oil equipment in our Daqing facilities in the first quarter of 2011, we began to deep-process Corn Germ into crude corn oil in our Daqing facilities beginning in March 2011. This eliminated Corn Germ production at our Daqing facilities.

 

·                We began recognizing revenue from the by-product liquid carbon dioxide in July 2010. Revenue from liquid carbon dioxide was RMB15.8 million ($2.4 million) in the second quarter of 2011, and the sales volume was 29,945 tons at a price per ton of RMB528.

 

·                We began recognizing revenue from the by-product crude corn oil, produced at our Daqing facilities, in March 2011. Revenue from crude corn oil was RMB34.0 million ($5.2 million) in the second quarter of 2011, and the sales volume was 4,400 tons at a price per ton of RMB7,717.

 

During the second quarter of 2011, gross profit increased by 47.9% to RMB151.1 million ($23.3 million) from RMB102.1 million in the prior year period.  Gross margin for the second quarter of 2011 decreased to 20.9% from 23.6% in the prior year period due to higher corn cost.

 

Operating income increased by 49.6% to RMB135.8 million ($21.0 million) in the second quarter of 2011, from RMB90.7 million in the same period of 2010, reflecting of the Company’s strong revenue growth.

 

Selling expenses increased by 93.5% to RMB1.2 million ($0.2 million) in the second quarter of 2011 compared to RMB0.6 million in the same period of 2010. The higher expenses in the second quarter of 2011 were primarily due to additional sales activities to support the increased sales volume.

 

3



 

General and administrative expenses increased by 30.9% to RMB14.1 million ($2.2 million) in the second quarter of 2011 compared to RMB10.8 million in the same period of 2010, reflecting an increase in administrative staff costs, professional fees and other expenses in connection with maintaining the Company’s status as a publicly-traded company and expanded operations.

 

Income tax expenses in the second quarter of 2011 were RMB32.3 million ($5.0 million), representing an effective tax rate of 25.2%, increasing from RMB21.7 million in the same period of 2010. The effective tax rate represented an increase of 78 basis points over the effective tax rate in the second quarter of 2010.

 

Net income increased by 42.7% to RMB95.8 million ($14.8 million) in the second quarter of 2011, compared to RMB67.1 million in the same quarter of 2010.  Diluted earnings per share and per ADS were RMB3.72 ($0.58) in the second quarter of 2011. The Company had 25.725 million weighted average diluted shares outstanding during the quarter ended June 30, 2011.

 

As of June 30, 2011, the Company had cash and bank deposits of RMB112.9 million ($17.4 million), a decrease from RMB341.0 million as of December 31, 2010, which was principally driven by the pre-purchase of corn and the costs of expanding production facilities. Cash flows provided by operating activities for the quarter ended June 30, 2011 were approximately RMB36.0 million ($5.6 million) due to the strong operating results partially offset by the cash payment for corn storage for 2011 non-harvest season.

 

Financial Outlook

 

Reflecting a planned annual maintenance and upgrade of its production facilities, the Company estimates that its revenue for the third quarter of 2011 will be in the range of RMB570 million ($88.1 million) to RMB620 million ($95.8 million), an increase of approximately 36.5% to 48.4% over the same quarter of 2010.

 

This forecast reflects the Company’s current and preliminary view, which is subject to change.

 

Conference Call

 

Boruns management will hold an earnings conference call at 8:00 am ET on August 10, 2011 to discuss the results and highlights from the second quarter of 2011 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:

 

1-866-700-0133

US Toll/International:

 

1-617-213-8831

Hong Kong Toll Free:

 

###-##-####

Hong Kong Toll:

 

852-3002-1672

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

China Toll:

 

86-400-881-1629

Passcode:

 

45349761

 

4



 

A replay of the webcast will be accessible through August 17, 2011 on http://ir.chinanewborun.com or by dialing:

 

United States toll free:

 

1-888-286-8010

International:

 

1-617-801-6888

Passcode

 

95014389

 

5



 

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, Corn Germ, 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

Three Part Advisors, LLC

John Palizza

Phone: +1-888-870-0798

Email: jpalizza@threepa.com

 

6



 

CHINA NEW BORUN CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

 

 

 

December 31, 2010

 

June 30, 2011

 

 

 

RMB

 

RMB

 

US$

 

Assets

 

 

 

 

 

 

 

Cash

 

340,984,614

 

112,926,491

 

17,449,547

 

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

 

128,480,503

 

204,555,946

 

31,608,249

 

Inventories

 

96,942,787

 

140,878,281

 

21,768,694

 

Advance to suppliers

 

46,113,552

 

201,009,718

 

31,060,282

 

Other receivables

 

33,904,486

 

26,567,390

 

4,105,227

 

Prepaid expenses

 

1,313,568

 

3,000,469

 

463,636

 

Total current assets

 

647,739,510

 

688,938,295

 

106,455,635

 

Property, plant and equipment, net

 

1,035,304,235

 

1,071,592,214

 

165,583,815

 

Land use right, net

 

58,733,967

 

58,158,697

 

8,986,757

 

Intangible assets, net

 

21,127,500

 

19,214,378

 

2,969,031

 

Total assets

 

1,762,905,212

 

1,837,903,584

 

283,995,238

 

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Trade accounts payable

 

29,222,634

 

19,265,652

 

2,976,953

 

Accrued expenses and other payables

 

199,446,777

 

82,697,270

 

12,778,489

 

Income taxes payable

 

19,707,874

 

35,575,891

 

5,497,233

 

Short-term borrowings

 

498,000,000

 

510,500,000

 

78,883,120

 

Total current liabilities

 

746,377,285

 

648,038,813

 

100,135,795

 

Total liabilities

 

746,377,285

 

648,038,813

 

100,135,795

 

Commitment and contingencies

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Ordinary share — (December 31, 2010 and March 31, 2011: par value of RMB0.0068259, 100,000,000 shares authorized, 25,725,000 shares issued and outstanding)

 

175,596

 

175,596

 

25,725

 

Additional paid-in capital

 

468,132,187

 

468,132,187

 

72,336,391

 

Retained earnings — appropriated

 

67,794,324

 

67,794,324

 

10,475,667

 

Retained earnings — unappropriated

 

480,808,808

 

654,187,817

 

101,085,947

 

Accumulated other comprehensive income (loss)

 

(382,988

)

(425,153

)

(64,287

)

Total shareholders’ equity

 

1,016,527,927

 

1,189,864,771

 

183,859,443

 

Total liabilities and shareholders’ equity

 

1,762,905,212

 

1,837,903,584

 

283,995,238

 

 

7



 

CHINA NEW BORUN CORPORATION

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

For the three months period ended,

 

 

 

June 30,
 2010

 

March 31,
2011

 

June 30, 2011

 

 

 

(RMB)

 

(RMB)

 

(RMB)

 

(US$)

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

432,469,590

 

571,811,302

 

724,369,706

 

111,930,544

 

Cost of goods sold

 

330,324,880

 

444,664,817

 

573,290,692

 

88,585,619

 

Gross profit

 

102,144,710

 

127,146,485

 

151,079,014

 

23,344,925

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling

 

635,830

 

1,159,400

 

1,230,520

 

190,142

 

General and administrative

 

10,759,284

 

14,309,065

 

14,088,395

 

2,176,957

 

Total operating expenses

 

11,395,114

 

15,468,465

 

15,318,915

 

2,367,099

 

Operating income

 

90,749,596

 

111,678,020

 

135,760,099

 

20,977,826

 

Other (income) expenses:

 

 

 

 

 

 

 

 

 

Interest income

 

(156,239

)

(309,197

)

(199,696

)

(30,857

)

Interest expense

 

1,849,998

 

8,047,668

 

7,852,602

 

1,213,394

 

Others, net

 

218,007

 

6,332

 

1,849

 

286

 

Total other expense, net

 

1,911,766

 

7,744,803

 

7,654,755

 

1,182,823

 

Income before income taxes

 

88,837,830

 

103,933,217

 

128,105,344

 

19,795,003

 

Income tax expense

 

21,741,170

 

26,319,074

 

32,340,478

 

4,997,292

 

Net income

 

67,096,660

 

77,614,143

 

95,764,866

 

14,797,711

 

Participation in undistributed earnings by preference shareholders

 

(12,687,683

)

 

 

 

Net income attributable to ordinary shareholders

 

54,408,977

 

77,614,143

 

95,764,866

 

14,797,711

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

3.16

 

3.02

 

3.72

 

0.58

 

Weighted average ordinary shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

17,238,402

 

25,725,000

 

25,725,000

 

25,725,000

 

 

8



 

CHINA NEW BORUN CORPORATION

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

For the six months period ended,

 

 

 

June 30, 2010

 

June 30, 2011

 

 

 

(RMB)

 

(RMB)

 

(US$)

 

 

 

 

 

 

 

 

 

Revenues

 

821,238,007

 

1,296,181,008

 

200,287,565

 

Cost of goods sold

 

631,999,323

 

1,017,955,509

 

157,295,802

 

Gross profit

 

189,238,684

 

278,225,499

 

42,991,763

 

Operating expenses:

 

 

 

 

 

 

 

Selling

 

1,249,026

 

2,389,920

 

369,294

 

General and administrative

 

16,783,577

 

28,397,460

 

4,388,012

 

Total operating expenses

 

18,032,603

 

30,787,380

 

4,757,306

 

Operating income

 

171,206,081

 

247,438,119

 

38,234,457

 

Other (income) expenses:

 

 

 

 

 

 

 

Interest income

 

(193,063

)

(508,893

)

(78,635

)

Interest expense

 

3,906,265

 

15,900,270

 

2,456,930

 

Others, net

 

(135,261

)

8,181

 

1,264

 

Total other expense, net

 

3,577,941

 

15,399,558

 

2,379,559

 

Income before income taxes

 

167,628,140

 

232,038,561

 

35,854,898

 

Income tax expense

 

42,080,631

 

58,659,552

 

9,064,150

 

Net income

 

125,547,509

 

173,379,009

 

26,790,748

 

Participation in undistributed earnings by preference shareholders

 

(27,744,622

)

 

 

Net income attributable to ordinary shareholders

 

97,802,887

 

173,379,009

 

26,790,748

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic and diluted

 

6.09

 

6.74

 

1.04

 

Weighted average ordinary shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

16,049,711

 

25,725,000

 

25,725,000

 

 

9



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

China New Borun Corporation

 

 

 

 

By:

/s/ Jinmiao Wang

 

Name:

Jinmiao Wang

 

Title:

Chairman and Chief Executive Officer

 

Date: August 10, 2011

 

10