June 20, 2024

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China Xiangtai Food Co., Ltd. Reports Financial Results for Fiscal Year 2020

12 min read

CHONGQING, China, Dec. 21, 2020 /PRNewswire/ — China Xiangtai Food Co. Ltd. (NASDAQ: PLIN) (“PLIN” or the “Company”), an emerging growth company engaged in the food processing business, today announced its financial results for the fiscal year ended June 30, 2020.

Ms. Zeshu Dai, Chairwoman and Chief Executive Officer of the Company, commented “Our financial results for the fiscal year 2020 reflect the impact brought by the pandemic of the COVID-19, which accordingly led to the full brunt and unpredictability of our business. However, our revenue was still recorded $110.6 million, representing an increase of 11.6% compared to $99.1 million for the fiscal year 2019. Facing the challenging year of 2020, we executed well against our core business initiatives, gained market share in the food industry. completed the acquisition of Chongqing Ji Mao Cang Feed Co., Ltd. in April 2020 and integrated industrial chain. We also explored several opportunities during the year to drive our growth including opening hot pot restaurants, launching new online marketing, expanding hog breeding business in Guangxi Province, etc. We saw very strong signs of recovery in our business from our markets as containment measures of the COVID-19 were eased in China. Besides upgrading and optimizing our current core business, we will also continue to invest in the pillars of our future growth and in capabilities, and various markets that support our expansion and provide the long-term returns to our investors.”

 

For the Years Ended June 30,

($ millions, except per share data)



2020

2019

% Change

Revenues

110.6



99.1

11.6%

Supermarket and grocery stores

5.8

3.9



51.1%

Farmers’ market

80.5

95.2

-15.5%



    Feed raw material

24.3

100.0%

Gross profit



7.2

8.7

-17.0%

Gross margin

6.5%



8.7%

     -2.2pp

Income from operations

0.5

6.1



-91.5%

Net (loss) income attributable to the Company

(4.9)

4.4

NM



(Loss) Earnings per share from continuing operations

(0.14)

0.24

NM

 

*Notes: pp represents percentage points

Fiscal Year 2020 Financial Highlights (all comparable to the prior year period):

  • Total revenues were $110.6 million, an increase of 11.6% from $99.1 million in fiscal year 2019.
  • Gross profit was $7.2 million, a decrease of 17.0% from $8.7 million in fiscal year 2019.
  • Gross margin was 6.5%, a decreased of 2.2 percentage points from 8.7% in fiscal year 2019.
  • Net loss attributable to the Company was $4.9 million, compared with net income attributable to the Company of $4.4 million in fiscal year 2019.
  • Basic and diluted loss per share from continuing operations were $0.14, compared with basic and diluted earnings per share from continuing operations of $0.24 in fiscal year 2019.

Fiscal Year 2020 Financial Results

Revenues

Total revenues increased by $11.5 million, or 11.6%, to $110.6 million in fiscal year 2020, from $99.1 million in fiscal year 2019. The overall increase was primarily attributable to the increase of our feed raw materials revenues as we purchased Chongqing Ji Mao Cang Feed Co., Ltd.(“JMC”) on April 3, 2020 which offset by the decrease of farmers’ market revenues.

 

For the Years Ended June 30,

2020

2019

($ millions)



Revenue

Cost of Revenues

Gross Margin

Revenue

Cost of Revenues



Gross Margin

Supermarket and grocery stores

5.8

5.0

14.9%



3.9

3.3

15.6%

Farmers’ market

80.5



76.2

5.3%

95.2

87.2

8.5%



Feed raw material

24.3

22.2

8.4%



-%

Total

110.6

103.4



6.5%

99.1

90.4

8.7%

 

Revenues from supermarket and grocery stores increased by $2.0 million, or 51.1%, to $5.8 million in fiscal year 2020, from $3.9 million in fiscal year 2019. The outbreak of COVID-19 has shadowed China and general population in many aspects. In order to ensure that consumers’ basic living needs are met, supermarkets and grocery stores in various places still operated as usual. However, during the Chinese New Year and the COVID-19 outbreak, many food suppliers have raised product prices due to temporary shortage in the supply, so we had to raise our selling prices as well.

Revenues from farmers’ market decreased by $14.7 million, or 15.5%, to $80.5 million in fiscal year 2020, from $95.2 million in fiscal year 2019. Due to the outbreak of COVID-19, the total supply of fresh hogs largely decreased. The decrease was offset by the increase of unit selling price.

Revenues from feed raw material were $24.3 million in fiscal year 2020, compared with nil in fiscal year 2019, resulted from our purchase of the 51% equity interest in JMC on April 3, 2020 and we began to engage in raw feed material and formula solution wholesales business.

Cost of Revenues

Cost of revenues consists of cost of direct materials, labor and manufacturing overhead costs. Total cost of revenues increased by $12.9 million, or 14.3%, to $103.4 million in fiscal year 2020, from $90.4 million in fiscal year 2019.

Cost of supermarket and grocery stores increased by $1.7 million, or 52.4%, to $5.0 million in fiscal year 2020, from $3.3 million in fiscal year 2019. The cost of supermarket and grocery store revenues increased which was in line with the increase of supermarket and grocery store revenues as the purchase price of inventories increased. The increase of the cost of supermarket and grocery store revenues was offset by the depreciation of RMB against U.S. dollar of 2.9%.

Cost of farmers’ market decreased by $11.0 million, or 12.6%, to $76.2 million in fiscal year 2020, from $87.2 million in fiscal year 2019. The decrease was mainly caused by the decreased volume at farmers’ markets, which was primarily attributable to the decreased revenues brought under the influence of the African swine fever and the COVID-19. 

Cost of feed raw material was $22.2 million in fiscal year 2020, compared with nil in fiscal year 2019, resulted from our purchase of the 51% equity interest in JMC on April 3, 2020 and we began to engage in raw feed material and formula solution wholesales business.

Gross Profit

Gross profit decreased by $1.5 million, or 17.0%, to $7.2 million in fiscal year 2020, from $8.7 million in fiscal year 2019. Overall gross margin decreased by 2.2 percentage points to 6.5% in fiscal year 2020, from 8.7% in fiscal year 2019.

Gross margins for supermarket and grocery stores, farmers’ market and feed material were 14.9% 5.3% and 8.4%, respectively, in fiscal year 2020. This compared to gross margins for supermarket and grocery stores, farmers’ market and feed material of 15.6%, 8.5% and nil, respectively, in fiscal year 2019.

Selling Expenses

Selling expenses increased by $0.2 million, or 44.2%, to $0.8 million in fiscal year 2020, from $0.6 million in fiscal year 2019. The increase in selling expenses was primarily due to the increase of salary expense of approximately $0.1 million and the increase of shipping and stores decoration fees of approximately $0.1 million.

General and Administrative Expenses

General and administrative expenses increased by $2.9 million, or 226.1%, to $4.2 million in fiscal year 2020, from $1.3 million in fiscal year 2019. The increase in general and administrative expenses was primarily due to the increase of salary and insurance expenses of $0.3 million. In addition, the increase also attributable to the increase of business consulting fee of approximately $1.5 million and the promissory note repayment extension penalty of $0.5 million. The increase also attributable to the increase of approximately $0.5 million of legal expense mainly related to our financing and acquisition of JMC activities and the increase of approximately $0.1 million rent expense.

Provision for Doubtful Accounts

Provision for doubtful accounts increased by $26,000, or 3.5%, to $0.8 million in fiscal year 2020, from $0.7 million in fiscal year 2019. The change was due to the fact that we had slightly more accounts receivables aged over 6 months as of June 30, 2020 as compared to June 30, 2019.

Stock Compensation Expenses

We incurred approximately $0.9 million stock compensation expense to pay for certain professional services valued at $650,000 during the year ended June 30, 2020 in connection to the issuance of our ordinary shares in August 2019. We expect this is a one-time expense and we do not expect such expenses will incur in the future period. In addition, we incurred approximately $0.2 million stock compensation expense in relation to the vested portion of the stock options issued to our independent directors. Furthermore, we incurred approximately $67,000 on stock compensation expense in relation to our ordinary shares issued to our business consulting firm for its services performed from March 2020 to June 2020. 

Income from Operations

The income from operations decreased by $5.6 million, or 91.5%, to $0.5 million in fiscal year 2020, from $6.1 million in fiscal year 2019. The decrease was mostly attributable to the decrease of farmers’ market sales and the increase of selling expenses, general and administrative expenses and stock compensation expense and offset by the increase in supermarket and grocery store sales and feed raw material sales as the reasons that we mentioned above.

Other Income (Expense), Net

Our other expense, net, consists of interest income, interest expense, other finance expense, other income (expense), net, estimated litigation charges and provision for doubtful accounts – security deposit. Total other expense increased by $2.1 million, or 245.6% to $2.9 million in fiscal year 2020, compared to other expenses of $0.8 million in fiscal year 2019. The increase was mainly due to the increase of interest expense of approximately $0.9 million as we incurred more penalty interest charges for bank loans in default for the year ended June 30, 2020. The increase was also due to the amortization costs of convertible debts of approximately $0.4 million for the year ended June 30, 2020. Additionally, we made an allowance of approximately $0.7 million for the security deposit for a loan during the year ended June 30, 2020. The increased other expense, net of approximately $0.1 million was mainly due to the can food donation we made during the outbreak of COVID-19 during the year ended June 30, 2020.

Provision for Income Taxes

Provision for income tax increased by $10,000, or 4.5%, to $0.2 million in fiscal year 2020, from $0.2 million in fiscal year 2019. Under the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. The slight increase in provision for income taxes was mainly to JMC which had taxable income during the year ended June 30, 2020.

Net (Loss) Income

Net loss attributable to the Company was $4.9 million in fiscal year 2020, compared with net income attributable to the Company of $4.4 million in fiscal year 2019. Basic and diluted loss per share from continuing operations were $0.14 in fiscal year 2020, compared with basic and diluted earnings per share from continuing operations of $0.24 in fiscal year 2019.

Financial Condition

As of June 30, 2020, the Company had cash and cash equivalents of $1.5 million, compared to $3.2 million as of June 30, 2019. Net cash used in operating activities was $5.9 million in fiscal year 2020, compared to $5.3 million in fiscal year 2019. Net cash provided by investing activities was $0.2 million in fiscal year 2020, compared to $1.2 million in fiscal year 2019. Net cash provided by financing activities was $4.1 million in fiscal year 2020, compared to $6.7 million in fiscal year 2019.

About China Xiangtai Food Co., Ltd.

Headquartered in Chongqing, China, China Xiangtai Food Co., Ltd, is a food company primarily engaged in pork processing. The Company’s operations span key sections of the pork processing value chain, including slaughtering, packing, distribution, and wholesale of a variety of fresh pork meat and parts. Primarily focused on pork products, the Company also offers other fresh and processed products, including beef, lamb and poultries. Through the recent acquisition of Chongqing Ji Mao Cang Feed Co., Ltd, the Company has also expanded into the business of feed raw material and feed formula solutions. Through its core values, the Company is committed to maintaining the highest standards of food safety, product quality, and sustainability to provide high-quality, nutritious, and tasty food in a responsible manner through its portfolio of trusted brands. For more information, please visit https://ir.plinfood.com/.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results.

Company Contact

China Xiangtai Food Co., Ltd.
Email: [email protected] 


Investor Relations Contact

Ms. Tina Xiao, President
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: [email protected] 

 

CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

June 30,

June 30,

2020

2019



ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

1,533,237



$

3,196,990

Accounts receivable, net

40,572,757

39,522,737



Other receivables, net

148,894

238,383

Prepayments, net

7,720,452



213,596

Security deposits, net

237,409

2,352,742

Current assets of discontinued operations



63,185

174,467

Total current assets

50,275,934

45,698,915



OTHER ASSETS

Plant and equipment, net

3,455,993

3,335,229

Intangible assets, net



437,989

462,738

Goodwill

5,185,866



Operating lease right-of-use assets

2,725,747

Deferred tax assets

648,768



Other receivables

39,685

9,597

Other assets of discontinued operations



579,452

1,844,838

Total other assets

13,073,500

5,652,402



Total assets

$

63,349,434

$

51,351,317



LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Short-term loans – banks

$

4,359,210



$

4,150,309

Loans from third parties

5,013,117

2,449,048



Short-term loans – related parties

329,120

Current maturities of long-term loan – bank

777,558



Convertible debenture, net

4,768,312

Accounts payable



7,510,432

8,654,056

Customer deposits

1,266,073

704,354



Customer deposits – related party

27,395

29,643

Other payables and accrued liabilities

1,942,014



420,359

Other payables – related parties

2,234,980

1,245,864

Operating lease liabilities



49,171

Taxes payable

3,342,127

2,974,059



Current liabilities of discontinued operations

1,445,201

1,872,053

Total current liabilities

32,735,590



22,828,865

OTHER LIABILITIES

Long-term loan – bank

866,231



Loans from third parties

2,074,871

3,131,007

Long-term loans – related parties

713,325



Operating lease liabilities – noncurrent

581,083

Other liabilities of discontinued operations



417,729

Total other liabilities

3,787,008

3,997,238



Total liabilities

36,522,598

26,826,103

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY



Ordinary shares, $0.01 par value, 50,000,000 shares authorized, 23,971,084 and 21,964,027 shares issued and outstanding as of June 30, 2020 and 2019, respectively

239,711

219,640

Additional paid-in capital

15,765,411



11,031,937

Deferred share compensation

(47,708)

Statutory reserves



1,670,367

1,496,642

Retained earnings

7,034,899

12,085,566



Accumulated other comprehensive loss

(856,218)

(308,571)

Total China Xiangtai Food Co., Ltd. shareholders’ equity

23,806,462



24,525,214

NONCONTROLLING INTERESTS

3,020,374

Total equity



26,826,836

24,525,214

Total liabilities and shareholders’ equity

$

63,349,434



$

51,351,317

 

CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

For the Years Ended June 30,

2020

2019

2018



REVENUES

Supermarket and grocery store

$

5,827,319

$



3,856,358

$

3,750,904

Farmers’ market

80,473,936



95,222,909

97,353,320

Feed raw material

24,250,247



Total revenues

110,551,502

99,079,267

101,104,224



COST OF REVENUES

Supermarket and grocery store

4,961,552

3,256,439

3,193,830



Farmers’ market

76,192,444

87,172,588

88,258,923

Feed raw material



22,219,528

Total cost of revenues

103,373,524



90,429,027

91,452,753

GROSS PROFIT

7,177,978

8,650,240



9,651,471

OPERATING EXPENSES:

Selling

794,193

550,574



708,531

General and administrative

4,167,587

1,277,820

981,347



Provision for doubtful accounts

770,192

743,986

918,940

Stock compensation expense



930,223

Total operating expenses

6,662,195



2,572,380

2,608,818

INCOME FROM OPERATIONS

515,783

6,077,860



7,042,653

OTHER INCOME (EXPENSE)

Interest income

3,048

2,163



388,781

Interest expense

(1,673,563)

(730,780)

(1,282,291)



Other finance expenses

(417,549)

(118,394)

(141,284)

Other (expense) income, net



(89,405)

9,012

(18,596)

Provision for doubtful accounts – security deposit

(718,437)



Provision for doubtful accounts – loan receivable



(1,506,778)

Total other expense, net

(2,895,906)

(837,999)

(2,560,168)



(LOSS) INCOME BEFORE INCOME TAXES

(2,380,123)

5,239,861

4,482,485

PROVISION FOR INCOME TAXES



223,173

213,649

714,376

NET (LOSS) INCOME FROM CONTINUING OPERATIONS

(2,603,296)



5,026,212

3,768,109

NET LOSS FROM DISCONTINUED OPERATIONS

(1,796,237)

(662,621)



NET (LOSS) INCOME

(4,399,533)

4,363,591

3,768,109



Less: Net income attributable to non-controlling interest from continuing operations

477,409

NET (LOSS) INCOME ATTRIBUTABLE TO CHINA XIANGTAI FOOD CO., LTD.



$

(4,876,942)

$

4,363,591

$



3,768,109

NET (LOSS) INCOME

$

(4,399,533)

$



4,363,591

$

3,768,109

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustment



(559,320)

(267,546)

133,553

TOTAL COMPREHENSIVE (LOSS) INCOME

(4,958,853)



4,096,045

3,901,662

Less: Comprehensive income attributable to non-controlling interests from continuing operations

465,736



COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CHINA XIANGTAI FOOD CO., LTD.

$

(5,424,589)

$



4,096,045

$

3,901,662

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

Basic



22,417,524

20,319,723

20,000,000

Diluted

22,417,524



20,944,951

20,083,151

(LOSS) EARNINGS PER SHARE – BASIC

Continuing operations

$



(0.14)

$

0.24

$

0.19



Discontinued operations

$

(0.08)

$

(0.03)



$

(LOSS) EARNINGS PER SHARE – DILUTED

Continuing operations

$



(0.14)

$

0.24

$

0.19



Discontinued operations

$

(0.08)

$

(0.03)



$

 

CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the Years Ended June 30,

2020

2019

2018



CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$

(4,399,533)

$



4,363,591

$

3,768,109

Net loss from discontinued operations

(1,796,237)



(662,621)

Net (loss) income from continuing operations

(2,603,296)

5,026,212



3,768,109

Adjustments to reconcile net income to net cash (used in)

provided by operating activities:

Depreciation and amortization

508,354



521,925

542,189

Provision for doubtful accounts

1,488,629

743,986



2,425,718

Stock compensation expense

930,223



Late payment penalty expense

500,000

Amortization of operating lease right-of-use assets



73,346

Amortization of convertible debenture issuance cost and discount

357,853



Deferred tax (benefit) expense

(166,673)

213,649



(126,936)

Change in operating assets and liabilities

Accounts receivable

2,615,184

(16,864,582)



(12,021,191)

Accounts receivable – related party

(40,780)



Other receivables

52,333

(157,440)

(88,954)

Inventories



318,478

2,647

291,594

Prepayments

(5,556,930)



93,508

209,777

Security deposits

1,388,179

(1,476,090)



Loan receivables – interest

727,338

(384,788)



Accounts payable

(4,206,084)

5,852,139

68,175

Customer deposits



(3,329,873)

73,946

554,889

Customer deposits – related party

(1,421)



(723)

32,049

Other payables and accrued liabilities

1,564,210

165,216



245,373

Operating lease liabilities

(45,716)



Taxes payable

452,831

35,087

929,745

Net cash used in operating activities from continuing operations



(5,660,373)

(5,043,182)

(3,595,031)

Net cash used in operating activities from discontinued operations

(251,646)



(224,079)

Net cash used in operating activities

(5,912,019)

(5,267,261)



(3,595,031)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of plant and equipment

(700,399)

(20,635)



(89,351)

Repayments from loan to third party

1,171,945



Cash received from acquisition of JMC

859,461

Net cash provided by (used in) investing activities from continuing operations



159,062

1,151,310

(89,351)

Net cash provided by investing activities from discontinued operations



42,234

Net cash provided by (used in) investing activities

159,062

1,193,544



(89,351)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments from other receivables – related parties, net

741



2,736,001

(Repayments of) proceeds from other payables – related parties, net

(2,028,451)

701,245

609,048



Proceeds from issuance of ordinary shares through private placements

200,000

Proceeds from issuance of ordinary shares through initial public offering, net



4,395,634

Proceeds from issuance of ordinary shares with redemption rights



1,800,000

Proceeds from short-term loans – banks

469,288

4,535,428



6,148,734

Repayments of short-term loans – banks

(1,137,574)

(4,755,264)

(11,375,158)



Proceeds from short-term loans – third parties

770,906

1,174,453

11,134,708

Repayments of short-term loans – third parties



(1,638,334)

(322,285)

(6,138,861)

Proceeds from short-term loans – related parties



331,075

Proceeds from long-term loan – banks

923,830



Repayments of long-term loan – banks

(64,619)

(1,004,659)



Proceeds from long-term loans – third parties

2,040,691

Repayments of long-term loans – third parties



(2,844)

Proceeds from long-term loans – related parties

472,132



Repayments of long-term loans – related parties

(76,793)



Repayments of notes payable

(1,537,184)



Proceeds from convertible debentures, net of issuance costs

5,480,000

Changes in security deposits



(15,069)

648,828

615,426

Net cash provided by financing activities from continuing operations

4,269,333



6,829,026

3,992,714

Net cash used in financing activities from discontinued operations

(192,325)

(178,500)



Net cash provided by financing activities

4,077,008

6,650,526

3,992,714



EFFECT OF EXCHANGE RATE ON CASH

(4,296)

320,103

(10,769)

CHANGES IN CASH



(1,680,245)

2,896,912

297,563

CASH AND CASH EQUIVALENTS, beginning of year

3,216,005



319,093

21,530

CASH AND CASH EQUIVALENTS, end of year

1,535,760

3,216,005



319,093

LESS: CASH AND CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS

2,523

19,015



CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS

$

1,533,237

$

3,196,990



$

319,093

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income tax

$



$

$



Cash paid for interest

$

488,360

$

823,551



$

1,389,533

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

Other receivable – related party offset with other payable – related party upon execution of the tri-party offset agreement

$



1,195,585

$

439,479

$

50,627



Issuance of ordinary shares with redemption rights of mezzanine equity

$

$

1,800,000



$

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

$

3,240,920



$

$

Issuance of ordinary shares for acquisition



$

2,658,909

$

$



Conversion of convertible debenture into ordinary shares

$

857,165

$



$

 

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SOURCE China Xiangtai Food Co. Ltd.

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