China New Borun Announces Fourth Quarter and Full-Year 2015 Unaudited Financial Results

• Revenue from edible alcohol increased by 11.1% to RMB454.6 million ($70.0 million) in the fourth quarter of 2015, compared to RMB409.3 million in the fourth quarter of 2014. The sales volume of edible alcohol in the fourth quarter of 2015 increased by 14.4% year-over-year to 89,991 tons, while the average selling price of edible alcohol decreased by 2.9% year-over-year to RMB5,052 per ton.
• Revenue from DDGS Feed increased by 13.9% to RMB148.9 million ($22.9 million) in the fourth quarter of 2015, compared to RMB130.7 million in the fourth quarter of 2014. The sales volume of DDGS Feed in the fourth quarter of 2015 increased by 30.6% year-over-year to 81,836 tons, while the average selling price decreased by 12.7% year-over-year to RMB1,819 per ton.
• Revenue from liquid carbon dioxide decreased by 25.4% to RMB6.2 million ($1.0 million) in the fourth quarter of 2015, compared to RMB8.3 million in the fourth quarter of 2014. The sales volume of liquid carbon dioxide in the fourth quarter of 2015 increased by 12.0% year-over-year to 35,170 tons, while the average selling price decreased by 33.4% year-over-year to RMB177 per ton.
• Revenue from crude corn oil increased by 11.1% to RMB48.3 million ($7.5 million) in the fourth quarter of 2015, compared to RMB43.5 million in the fourth quarter of 2014. The sales volume of crude corn oil in the fourth quarter of 2015 increased by 16.2% year-over-year to 7,623 tons, while the average selling price decreased by 4.5% year-over-year to RMB6,331 per ton.
• Revenue from CPE increased by 144.6% to RMB40.5 million ($6.2 million) in the fourth quarter of 2015, compared to RMB16.5 million in the fourth quarter of 2014. The sales volume of CPE in the fourth quarter of 2015 increased by 149.5% year over year to 4,736 tons, while the average selling price decreased by 2.0% to RMB8,547 per ton. Revenue from foam insulation was RMB0.6 million ($0.1 million) in the fourth quarter of 2015, compared to RMB1.7 million in the fourth quarter of 2014.

During the fourth quarter of 2015, gross profit increased by 18.7% to RMB67.6 million ($10.4 million) from RMB56.9 million in the same period of 2014. Gross margin for the fourth quarter of 2015 increased to 9.7%, from 9.3% in the same period of 2014, which was primarily attributable to the decrease in average corn cost, partly offset by the decrease in average selling price of edible alcohol and its by-products.

Operating income increased by 8.3% to RMB48.0 million ($7.4 million) in the fourth quarter of 2015, from RMB44.3 million in the same period of 2014, primarily attributable to higher gross profit earned and partly offset by the impairment for foam insulation equipment.

Selling expenses increased by RMB0.2 million, or 16.0% to RMB1.2 million ($0.1 million) in the fourth quarter of 2015, from RMB1.0 million in the same period of 2014, which is in line with the sales volume.

General and administrative expenses decreased by RMB0.2 million, or 1.8% to RMB11.3 million ($1.7 million) in the fourth quarter of 2015, from RMB11.5 million in the same period of 2014.

In the fourth quarter of 2015, as the manufacturing of foam insulation products was halted in 2015, and the Company elected to make a one-time non-cash impairment of RMB7.0 million ($1.1 million) for all the equipment related to the production of foam insulation. 

Income tax expenses in the fourth quarter of 2015 were RMB17.7 million ($2.7 million), representing an effective tax rate of 25.0%.

Net income increased by 306.6% to RMB53.2 million ($8.2 million) in the fourth quarter of 2015, compared to RMB13.1 million in the same quarter of 2014. The increase in net income was primarily attributable to a government subsidy netting of income tax of approximately RMB32.0 million the Company received during the fourth quarter of 2015, as the local government grants for corn processing.  In the fourth quarter of 2015, basic and diluted earnings per share and per ADS were RMB2.07 ($0.32), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of December 31, 2015, cash and bank deposits of RMB495.6 million ($76.3 million) decreased by RMB397.2 million, compared with RMB892.8 million as of December 31, 2014. Cash flows used in operating activities for the fourth quarter of 2015 increased to RMB443.0 million ($68.2 million), which was primarily used in corn pre-purchase in the harvest season.

Full Year 2015 Financial Performance

For the year ended December 31, 2015, total revenue increased 9.0% year-over-year to RMB2.7 billion ($408.4 million), from RMB2.4 billion for the year ended December 31, 2014. Gross profit increased 7.4% year-over-year to RMB279.8 million ($43.1 million), from RMB260.4 million for the year ended December 31, 2014. Income from operations increased 2.4% year-over-year to RMB217.3 million ($33.5 million), from RMB212.1 million for the year ended December 31, 2014. Net income increased 62.7% year-over-year to RMB128.9 million ($19.8 million), from RMB79.2 million for the year ended December 31, 2014. Basic and diluted earnings per ordinary share and per ADS increased to RMB5.01 ($0.77), from RMB3.08 in the prior year. Weighted average number of basic and diluted shares outstanding was approximately 25.7 million in 2015.

Financial Outlook

Reflecting the sustained solid demand for edible alcohol and its by-products, the Company continues to operate at a high level capacity utilization.  However, this February the Shouguang government conducted a safety check for all the chemical manufacturing facilities in Shouguang, which mandated the Company's Shouguang facility to shut down for an additional two weeks (approximately 15% of quarterly production schedule) after the Chinese New Year. 

As such, despite sustained solid industry fundamentals, the Company estimates that its revenue for the first quarter of 2016 will be in the range of RMB510 million ($78.5 million) to RMB540 million ($83.2 million), a decrease of approximately 5.4% to 10.7% over the same quarter of 2015.

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 Tuesday, March 15, 2016 (8:00 p.m. Beijing time on Tuesday, March 15, 2016) to discuss the results and highlights from the fourth quarter and full year of 2015 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:

A replay of the webcast will be accessible through March 22, 2016 on http://ir.chinanewborun.com or by dialing:

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
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, 2014		December 31, 2015
	RMB		RMB		US$
Assets
Cash	830,430,168		495,630,607		76,326,014
Restricted cash	62,370,000		—		—
Trade accounts receivable, net of allowance for doubtful accounts of nil and nil, respectively	531,480,981		515,520,269		79,388,978
Held-to-maturity debt securities	—		98,720,762		15,202,778
Inventories	496,754,625		438,841,092		67,580,555
Advance to suppliers	52,577,513		344,998,183		53,128,955
Other receivables	73,593,217		68,223,787		10,506,312
Prepaid expenses	4,562,333		3,645,396		561,383
Deferred tax assets	—		1,755,197		270,296
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