-- Revenues increased 125% to $76.27 million from $33.90 million
HEILONGJIANG, China, Sept. 8 /Xinhua-PRNewswire-FirstCall/ -- Yanglin Soybean, Inc. (OTC Bulletin Board: YSYB) ("Yanglin" or the "Company"), a leading producer and processor of high-quality non-genetically modified (non-GM) soybean products in China, today announced unaudited financial results for the second quarter ended June 30, 2008.
Financial Results Overview
Revenues for the second quarter of 2008 rose 125% to $76.27 million, as compared to $33.90 million for the three months ended June 30, 2007. Revenues for soybean meal, soybean oil and salad oil all experienced triple-digit year-over-year growth; 115.2%, 134.7% and 152.3%, respectively, aided in part by the significant increases in the average selling prices of soybean products and as well as by the growth in sales volume.
"We are very pleased to have achieved our record revenue growth as strong demand for our soybean products helped us deliver another quarter of solid results," said Mr. Shulin Liu, Yanglin's Chief Executive Officer. "In addition to achieving record revenues, gross profit continued to increase even though the cost of our raw materials has increased. We continue to build significant momentum for the future, as we will introduce several new high-value-adding soybean products in the latter part of this year and next year to complement our existing products."
In the second quarter of 2008, sales of soybean meal, soybean oil and salad oil were $42.99 million, $24.57 million, and $8.71 million, accounting for 56.4%, 32.2% and 11.4% of total revenues, respectively.
Gross profit for the second quarter of 2008 was $4.42 million, as compared to $2.30 million for the same quarter last year, reflecting a 92.3% year-over-year increase. Gross profit, as a percent of revenue, was 5.8% for the second quarter of 2008. This compares to gross profit of 10.5% for the first quarter of 2008 and 6.8% for the year-ago quarter. Gross profit for the second quarter of 2008 was impacted by higher costs of raw materials, as the run-up in soybean prices drove overall gross margins lower. Soybean is the most important raw material in our production, as it accounts for over 90% of our total cost. Gross margin for soybean meals, our biggest revenue contributor, increased from 5.0% same quarter in 2007 to 6.5% in the second quarter of 2008. Gross margin for soybean oil went from 9.2% second quarter in 2007 to 4.5% same quarter this year. Gross margin of salad oil also lowered from 9.9% second quarter in 2007.to 5.9% same quarter in 2008. The reason of lower gross margins of soybean oil and salad oil was mainly the significantly rising soybean prices in the first half of 2008, and the prices of these two products didn't grow in line with that of soybean price. The Company is proactively looking to commence commodity-hedging strategies in an effort to stabilize the price of the raw material.
Total operating expenses for the three months ended June 30, 2008 were $616,674, an increase of 83% from $337,452 in the same period of the prior year. G&A expenses for the second quarter were $ 552,129, an increase of 93% from $285,998 in the same period of the prior year. The ongoing implementation of our Sarbanes-Oxley Act compliance project with Ernst & Young as our consultant caused a material increase in the general and administrative expense. We expect to finish this project by the end of this year. Besides, G&A expenses also increased as the result of our efforts to optimize our organizational structure and improve management institutions. Selling and marketing expenses increased 25% on a year over year basis. This was mainly due to the increase in sales-related shipping and handling expenses, which usually is related to sales volume directly.
Income from operations for the second quarter of 2008 amounted to $3.80 million, an increase of 94% compared with an operating income of $1.96 million in the same period in 2007. Operating margin was 5.0% for the second quarter of 2008 as compared to 9.3% for the first quarter of 2008 and 5.8% for the year-ago quarter.
Interest expenses for the second quarter of 2008 amounted to $264,980, compared with $108,905 for the three months ended June 30, 2007. The increase was primarily attributable to additional short-term bank borrowings on higher interest rate.
Net income for the second quarter of 2008 totaled $3.56 million, or $0.10 per diluted share. This compared to net income of $1.86 million, or $0.09 per diluted share in the same period one year ago. The disparity between the growth of the amount of net income and that of diluted EPS is because of the large increase in the weighted average number of common stock for the purpose of calculating EPS on fully diluted basis, which was caused by the issue of a large number of preferred stocks and warrants in the financing closed in October 2007.
The Company continues to enjoy a tax holiday for the remainder of 2008, as we have been recognized as a key leading enterprise in the agriculture industry by the Chinese government. After 2008, a review process is required to determine the extension of our tax exempt status. The current corporate income tax rate in China is 25%.
Balance Sheet
The Company's balance sheet at June 30, 2008 included cash and cash equivalents of $10.53 million, compared with $9.21 million at December 31, 2007. The Company has net working capital of $28.75 million versus $20.24 million at December 31, 2007. Total shareholders' equity increased to $85.42 million as compared to $70.73 million on December 31, 2007.
Business Outlook
The Company expects total revenues for the year ending December 31, 2008 to be in the range of US$230 million to US$240 million and net income in the range of US$13 million to US$14 million. These targets are based on the Company's current views on the operating and market conditions, which are subject to change.
Conference Call
Management will conduct a conference call on Monday, September 8, 2008 at 8:30 a.m. Eastern Daylight Time to discuss these results. A question and answer session will follow management's presentation. To participate, please call the following numbers 10 minutes before the call start time and ask to be connected to the Yanglin Soybean conference call: +1-877-407-9210 (North America) or +1-201-689-8049 (International).
A replay of the call will be available through Monday, September 15, 2008 until 11:59 p.m. Eastern Daylight Time. For the replay, please call +1-877- 660-6853 (North America) or +1-201-612-7415 (International) and use account Number: 286 and conference ID Number: 295841.
About Yanglin
Yanglin Soybean, Inc. is a leading non-genetically modified (non-GM) soybean processor in China. The Company manufactures soybean oil, salad oil and soybean meal with an annual production capacity of 520,000 metric tons in 2008. The Company's products are sold directly to its customers or through distributors. Majority of Yanglin Soybean's customers are located in Northern China.
Forward Looking Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by the Company constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our ability to prepare the company for growth, the Company's planned capacity expansion in 2008 and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large scale implementation of the company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except number of share and per share data)
Six months ended June 30, Three months ended June 30,
2008 2007 2008 2007
Net sales $141,549,672 $ 69,193,036 $ 76,273,814 $ 33,899,190
Cost of sales (130,296,704) (63,580,961) (71,857,724) (31,602,970)
Gross profit $ 11,252,968 $ 5,612,075 $ 4,416,090 $ 2,296,220
Selling expenses (118,970) (69,067) (64,545) (51,454)
General and
administrative
expenses (1,244,941) (710,518) (552,129) (285,998)
Income from
operation $ 9,889,057 $ 4,832,490 $ 3,799,416 $ 1,958,768
Interest income 53,798 25,558 35,514 13,122
Interest
expenses (513,903) (219,969) (264,980) (108,905)
Other expenses (14,348) -- (14,348) --
Income from
operations
before
income taxes $ 9,414,604 $ 4,638,079 $ 3,555,602 $ 1,862,985
Income taxes -- -- -- --
Net income $ 9,414,604 $ 4,638,079 $ 3,555,602 $ 1,862,985
Foreign currency
translation
adjustment 3,872,808 955,446 1,470,797 709,619
Comprehensive
income $ 13,287,412 $ 5,593,525 $ 5,026,399 $ 2,572,604
Basic earnings
per share $ 0.47 $ 0.23 $ 0.18 $ 0.09
Diluted earnings
per share $ 0.26 $ 0.23 $ 0.10 $ 0.09
Basic weighted
average share
outstanding 20,000,003 19,998,473 20,000,003 19,998,473
Diluted weighted
average share
outstanding 36,546,084 19,998,473 37,221,146 19,998,473
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, 2008 December 31, 2007
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 10,525,613 $ 9,210,121
Pledged deposits 500,000 500,000
Accounts receivable -- 13,854
Inventories 21,043,340 17,883,652
Advances to suppliers 10,269,097 5,736,267
Prepaid VAT and other taxes 3,400,284 2,457,137
Other receivables 36,587 27,896
Total current assets $ 45,774,921 $ 35,828,927
Property, plant and equipment, net 23,140,896 22,563,196
Intangible assets, net 4,716,324 3,444,081
Prepaid deposits for equipment
And construction 11,783,012 8,896,327
TOTAL ASSETS $ 85,415,153 $ 70,732,531
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short term bank loans $ 13,097,005 $ 12,305,000
Current portion of long term bank
Loans 50,486 47,433
Accounts payable 23,381 12,921
Other payables 75,408 44,380
Customers deposits 3,313,283 2,656,777
Accrued liabilities 468,014 521,114
Total current liabilities $ 17,027,577 $ 15,587,625
Long term liabilities
Long term bank loans 412,365 457,107
TOTAL LIABILITIES $ 17,439,942 $ 16,044,732
STOCKHOLDERS' EQUITY
Preferred Stock - $0.001 par value
50,000,000 share authorized;
9,999,999 and 9,999,999 issued
and outstanding as of June 30,
2008 and December 31, 2007
respectively $ 2,923,815 $ 2,923,815
Common stock - $0.001 par value
100,000,000 shares authorized;
20,000,003 shares issued and
outstanding as of June 30,
2008 and December 31, 2007 20,000 20,000
Additional paid-in capital 27,277,053 27,277,053
Statutory reserves 3,490,834 3,490,834
Retained earnings 26,824,823 17,410,219
Accumulated other comprehensive
Income 7,438,686 3,565,878
$ 67,975,211 $ 54,687,799
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 85,415,153 $ 70,732,531
For more information, please contact:
Yanglin Soybean, Inc.
Mr. Bode Xu
Chief Financial Officer
Email: yanglin_bodexu@hotmail.com
Grayling Global
Eddie Cheung
Investor Relations
Tel: +1-646-284-9414
Email: echeung@hfgcg.com
SOURCE Yanglin Soybean, Inc.
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