Sen Yu International Holdings, Inc. Reports Higher Revenues and Net Income
Sep. 28, 2010 (Marketwire) --
NEW YORK, NY -- (Marketwire) -- 09/28/10 -- Sen Yu International Holdings, Inc. ("Sen Yu International" or the "Company") (OTCBB: CSWG), a leading producer and distributor of breeding and commercial hogs in the People's Republic of China, today reported higher revenues and net income for its fiscal year ended June 30, 2010.
Year ended June 30, 2010 Highlights
Net revenue increased 39.61% to $70.35 million for the fiscal year ended June 30, 2010 from $50.39 million for the same period ended June 30, 2009
Gross profit increased 62.75% to $14.29 million for the fiscal year ended June 30, 2010 from $8.78 million for the same period ended June 30, 2009
Net income increased 38.74% to $6.26 million for the fiscal year ended June 30, 2010 from $4.51 million for the same period ended June 30, 2009
Diluted earnings per common share increased 100% to $0.46 per share for the fiscal year ended June 30, 2010 from $0.23 per share for the same period ended June 30, 2009
Net revenue increased $19.96 million or 39.61% to $70.35 million for the fiscal year ended June 30, 2010 from $50.39 million for the same period ended June 30, 2009. The increase in revenues resulted from increased orders from our major customers, Beijing Dahongmen and Beijing Fifth Meat Factory. Hog sales increased to 397,255 head for the fiscal year ended June 30, 2010 from 294,226 for the fiscal year ended June 30, 2009. Net income increased $1.75 million or 38.74% to $6.26 million for the fiscal year ended June 30, 2010 from $4.51 million for the same period ended June 30, 2009, mainly due to the higher revenues and continuing control over expenses. However, general and administrative expenses increased by approximately $4.33 million, or approximately 699% for the fiscal year ended June 30, 2010 from the fiscal year ended June 30, 2009, principally due to the payment of non-recurring consulting fees of approximately $4.02 million. Diluted earnings per share increased 100% to $0.46 per share for the fiscal year ended June 30, 2010 from $0.23 per share for the same period ended June 30, 2009, mainly due to increase in net income and decrease in diluted common shares outstanding during the period ended June 30, 2010 from the same period ended June 30, 2009.
Mr. Zhenyu Shang, the founder and chief executive officer of Sen Yu International, said, "Our strong increases in revenues and net income for the fiscal year ended June 30, 2010 reflect the high pork consumption in the Chinese market due to China's economic expansion. The consistency of our operating performance results from our established business model and effective execution. Our strategy, business model and actions have proven to be very effective, thereby delivering results. We continue to bring in talents to strengthen our financial structure and corporate governance."
Looking at the company's products, revenues from commercial hogs were up $20.82 million or 44% to $68.33 million for the fiscal year ended June 30, 2010 from $47.51 million for the same period ended June 30, 2009. Revenues from other hogs decreased from $2.89 million or 30% for the period ended June 30, 2010 to $2.02 million. Commercial hogs refer to the hogs we purchase from Wang Da Farmers. Other hogs refer to hogs raised in our own breeding facilities. The increase in the commercial hogs product line was primarily attributable to our policy of committing all of our available cash resources to the commercial hogs market.
To help fulfill the large increase in customer orders for the commercial hogs, the Company negotiates large discount of fodder and prepays Wang Da to deliver the high quality fodder to farmers. Wang Da acquires the mature hogs and delivers the hogs to Beijing Fifth Meat Factory and Dahongmen, both located in Beijing.
Operating expenses remained under control, with gross profit margin increasing by 2.89% to 20.31% for period ended June 30, 2010 from 17.42% for the same period ended June 30, 2009 on higher unit margin. The Company's income from operations decreased to 9.31% for period ended June 30, 2010 from 10.83% for the same period ended June 30, 2009, principally due to the payment of non-recurring consulting fees of approximately $4.02 million occurring in 2010.
Total other expenses decreased $0.94 million or 68.55% to $0.43 million for the period ended June 30, 2010 from $1.37 million for period ended June 30, 2009, mainly due to decrease in mortality losses. Swine mortality caused an expense of $354,612 during the fiscal year ended June 30, 2010, recorded as "losses on disposal of fixed assets" or "losses on disposal of inventories" depending on the category of the deceased hog. During the fiscal year ended June 30, 2009, our mortality losses were $1,368,364. This category of expense will vary from year to year, depending on factors such as weather, disease, and other seasonal factors. We recorded the mortality losses of breeder and commercial hogs under "losses on disposal of fixed assets" and "losses on disposal of inventories," respectively.
As a result, the Company's net income increased $1.75 million or 38.74% for the fiscal year ended June 30, 2010 to $6.26 million from $4.51 million for the fiscal year ended June 30, 2009. The Company's net profit margin before non-controlling Interest improved to 8.69% for the fiscal year ended June 30, 2010 from 8.10% for the same period ended June 30, 2009.
As of June 30, 2010 there was an advance to Wang Da of $30.82 million. In order to raise quality commercial hogs, and control the quality of feeding materials and procedures, we entered into a cooperation agreement with Wang Da, our major feedstuff supplier, to provide our farmers fodder to raise their commercial hogs. The supplier offsets the advances from us once it delivers the Wang Da Farmers' commercial hogs to us. Primarily as a result of this advance, our operations provided us only $1.32 million in cash, despite $6.26 million net income during the fiscal year ended June 30, 2010.
The Company's cash outstanding for the fiscal year ended June 30, 2009 was $82,854.
The Company's current liability and total liability for the fiscal year ended June 30, 2010 was $7.82 million as compared to $12.64 million for the same period ended June 30, 2009. The Company recorded derivative warrant liability of $4.15 million in 2010.
Mr. Shang continued, "I believe our results for the fiscal year ended June 30, 2010 represent a very good performance in a very high growth year. With our advanced technology, modest debt leverage, and additional financing flexibility, we believe we should be very successful in expanding our current market and working capital to support sales growth in our commercial hogs market. We utilize Golden Lotus as our selling agent to ensure quality through a selection process. Golden Lotus is our exclusive sales agent in Heilongjiang Province. If Golden Lotus is not able to sell the minimum quarterly amount, it is required to pay a fee equal to 20% of the unaccomplished sales, and we have the right to sell our breeding swine through other agents. Among Golden Lotus' responsibilities is the recruitment of farmers that meet our standards. Golden Lotus is also responsible for processing the necessary data regarding the farmers, their requirements of breeding swine, their productivity, and an estimate of their fodder requirements. The data formulated by Golden Lotus is then used to determine the farmers' fodder requirements and our financial obligations to Wang Da. Wang Da is our fodder supply agent who maintains the Fodder Supply and Commercial Hog Buyback Agreements with the farmers."
Mr. Shang concluded, "China's economic outlook continues to be encouraging, and China's projected domestic pork consumption will approach 68 million metric tons in 2015. Government support and trade protection policies also encourage domestic pig production with tax exemptions, vaccines technology, feed costs cap, price control and providing use of lands. China consumes about 50% of the world's pork products. As a result, we believe that the high demand for hogs should continue for several years."
About Sen Yu International Holdings, Inc.
We are a holding company whose subsidiaries are in the business of research, development and sale of breeding stock of swine and the sale of their mature offspring in the PRC.
We entered the hog breeding and production business in September 2004. We currently own and operate two breeding farms with approximately 40% of the products being breeding sows and boars. These farms, in the aggregate, had an annual production capacity of approximately 6,000 and 6,600 breeding swine for the fiscal years ended June 30, 2010 and 2009, respectively. We conduct genetic, breeding and nutrition research to improve the production capabilities of breeding swine. As a result of our dedication to the use of leading-edge technology, the Livestock Bureau of Heilongjiang Province designated our Jiamusi City facility as the Breeding Swine Research Center for Heilongjiang Province.
Safe harbor
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements.
The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China.
Additional risks that could affect our future operating results are more fully described in our filings with United States Securities and Exchange Commission. These filings are available at www.sec.gov.
We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.
Source: Marketwire (September 28, 2010 - 8:48 PM EDT)
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