GENET archive


GMO-FREE PRODUCTS: China develops non-GE soy market

                                  PART 1

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AUTHOR: Xinhua, China


DATE:   30.11.2008

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BEIJING, Nov 27, 2008 (Xinhua via COMTEX News Network) -- China should raise the soybean import duty to narrow the price scissor between imported and home soybean so as to curb the import volume, an industry insider suggested.

The customs statistics showed that China?s soybean import volume reached 37.82 million tons in crop year of 2007-2008, an increase of 9.09 million tons or 31.6 percent from the previous year.

The price of imported soybean is far lower than that of domestic soybean, and even less than planting cost of the latter, which has seriously damaged China?s soybean industry and the benefit of China?s soybean farmers as well.

Liu Denggao, deputy president of China Soybean Industry Association (CSIA), said in an interview with Xinhua-run Shanghai Security News that China should continue strengthen policy control to solve the sluggish sales of soybean produced in Northeast China.

To stabilize soybean market and protect farmers? benefit, China launched the purchase of 1.5 million tons for state reserve in October at price of 0.925 yuan/kg, close to the production cost of soybean, with 10 million tons in Heilongjiang, 60,000 tons in Liaoning, 210,000 tons in Jilin, and 230,000 tons in Inner Mongolia Autonomous Region.

Liu said that China?s soybean industry must be revitalized especially in major soybean producing areas such as Northeast China and the Inner Mongolia Autonomous Region to guarantee the country?s soybean output and quality, and to stabilize processing industries.

One approach to vitalize the industry is to make full use of its advantage in non-genetic-modified soybean, develop brand products and explore new market.

As non-genetic-soybean is mainly used in food industry, China may channel home soybean for producing edible high protein, while importing soybean for oil and meal.

Liu said that soybean processing enterprises might make joint efforts to develop non-genetic-modified products and explore international market.

China exported a small quantity of non-genetic-modified soybean overseas at the beginning of this year at the price of 6,800 yuan/ton, much higher than the import price of genetic-modified soybean which was 4,300 yuan/ton.

The soybean market will develop by leaps and bounds if China develops its brand in non-genetic-modified soybean, Liu noted.

Because import soybean is used for crushing oil and producing feedstuff, it serves as supplement for domestic soybean, and enriches Chinese soybean market. Liu also suggested that processing enterprises set up storage facilities with state subsidies to promote soybean circulation and purchase.

With 2.5 million yuan subsidies, Liu noted, soybean-processing companies can digest 5 million tons of soybeans at price of 0.925 yuan/kg, thus greatly accelerating soybean sales in northeastern areas.

Liu predicted the dry climate in South America this year would affect soybean output in the next crop year and push up soybean price in the first two months of 2009. Therefore, China should take further step in state purchase for long-term benefits.

                                  PART 2

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AUTHOR: Yanglin Soybean, China, Press Release


DATE:   17.11.2008

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- Revenues increased 112% YoY to $48.7 million from $23.0 million

- Gross profit rose 126% YoY to $3.4 million from $1.5 million

- Net income increased 120% YoY to $2.7 million from $1.2 million

- Full year revenue and net income exceeding guidance

HEILONGJIANG, China, Nov 17, 2008 /PRNewswire-FirstCall via COMTEX/ -- Yanglin, a leading producer and processor of high-quality, non-genetically modified (non-GM) soybean products in China, today announced unaudited financial results for the third quarter and nine months ended September 30, 2008.


Financial Results Overview

Revenues for the third quarter of 2008 rose 112% year-over-year to $48.7 million, as compared to $23.0 million for the three months ended September 30, 2007. Revenues for soybean meal, soybean oil and salad oil continue to experience significant year-over-year growth at 156.4%, 46% and 86.7%, respectively.

?The impressive sales performance across our product lines speak to the strength of our underlying businesses and product portfolio,? said Mr. Shulin Liu, Yanglin?s Chief Executive Officer. ?These financial results are setting the stage for our performance for the 2008 year as well as our continued progress toward our long-term financial targets. We will introduce several new refined soybean oil products early next year to complement our existing products and generate additional sales.?

In the third quarter of 2008, sales of soybean meal, soybean oil and salad oil were $32.5 million, $11.2 million, and $5.0 million, accounting for 66.7%, 23% and 10.3% of total revenues, respectively.

Gross profit for the 2008 third quarter was $3.4 million, as compared to $1.5 million for the same quarter last year, reflecting a 126% year-over-year increase. Gross margin, as a percent of revenue, was 7.1% for the third quarter of 2008. This percentage compares favorably to the gross margin of 5.8% achieved in the second quarter of 2008 and the 6.6% in the year-ago quarter. Soybeans continue to account for over 90% of total raw material costs in our production process. Gross margin for soybean meals, our biggest revenue contributor, increased to 8.1% in the third quarter of 2008 compared to 4.4% in the year-ago quarter. Gross margin for soybean oil was 3.9% this quarter compared with 8.9% the third quarter in 2007. Gross margin of salad oil was 7.6% this quarter of 2008 compared with 10.3% the third quarter in 2007. The reason for the lower gross margins in soybean oil and salad oil was mainly due to the higher raw material cost (soybean) and delayed price hike on these pr
 oducts. However, during the third quarter, we have successfully increased our prices on soybean meal and passed on the higher costs to the customers. We continue to improve our product mix and focus on higher margin product sales.

Total operating expenses for the three months ended September 30, 2008 increased to $567,739, from $245,420 in the same period last year. Selling expenses for the 2008 third quarter were $ 61,756 as compared to $ 29,386 in the 2007 third quarter. General and administrative expenses for the 2008 third quarter were $505,983, as compared to $216,034 in the year-ago quarter. The increase of G&A expenses was mainly related to increased costs associated as a US publicly listed company and the Sarbanes-Oxley Act compliance project with Ernst & Young. The SOX 404 project is progressing well and we expect to finish by the end of the year. Total SG&A expenses accounted for 1.2% of total revenue in 2008 third quarter, as compared to 1.0% in the same period of 2007.

Income from operations for the third quarter of 2008 amounted to $2.87 million, an increase of 125% compared with operating income of $1.27 million in the same period in 2007. The operating income margin was 5.9% for the third quarter of 2008 as compared to 5.0% for the second quarter of 2008, and 5.5% for the year-ago quarter, respectively.

Interest expenses for the third quarter of 2008 amounted to $195,075, compared with $57,064 for the three months ended September 30, 2007.

Net income for the third quarter of 2008 totaled $2.70 million, or $0.07 per diluted share, compared to net income of $1.23 million, or $0.06 per diluted share in the same period one year ago. The year-over-year net income growth was 120%. As noted in our last quarter?s financial results, the disparity between the growth in net income and that of the diluted EPS is because of the large increase in the weighted average number of common stocks for the purpose of calculating EPS on fully diluted basis. The greater number of shares outstanding was caused by the issuance 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 are recognized as a key leading enterprise in the agriculture industry by the Chinese government. As the new calendar year approaches, a review process is required to determine the Company?s tax-exempt status. The current corporate income tax rate in China is 25%. As a leading soybean processor in China and given that the soybean product market is highly protected by Chinese government, Yanglin expects to continue to receive favorable tax treatment from local and central government.


Balance Sheet

The Company?s balance sheet at September 30, 2008 included cash and cash equivalents of $20.1 million, compared with $9.2 million at December 31, 2007. It is typical in the agricultural business that receivables and payables are minimal. Total short-term loan was reduced from $12.3 million on December 31, 2007 to $4.4 million on September 30, 2008. The Company has net working capital of $31.8 million versus $20.2 million at December 31, 2007. Total shareholders? equity increased to $70.8 million as compared to $54.7 million on December 31, 2007.

Our cash flow remains healthy as most sales are on a cash basis with customers usually paying in advance to secure supplies from us. This sales process results in negligible accounts receivables for us. In the third quarter, net cash flow from operations reached $19.8 million.


Business Outlook

?Earnings for our third quarter were better than forecast,? said Mr. Bode Xu, Chief Financial Officer. ?With the strong performance in our first nine months, we are on track to exceed our full year revenue guidance US$240 million and net income guidance US$14 million.?


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 processing 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.



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