SOURCE: Sen Yu International Holdings, Inc.

Sen Yu International Holdings, Inc.

September 29, 2011 07:00 ET

Sen Yu International Holdings, Inc. Reports Fiscal 2011 Year End Results

Record Revenue and Profit Driven by Increased Orders for Commercial Hogs From Major Customers and Rising Pork Prices

JIAMUSI CITY, CHINA--(Marketwire - Sep 29, 2011) - Sen Yu International Holdings, Inc. ("Sen Yu International" or the "Company") (OTCBB: CSWG), a leading commercial hog breeder and supplier in Heilongjiang Province, the People's Republic of China, today announced its financial results for its fiscal year ended June 30, 2011.

Fiscal 2011 Highlights

  • Total revenue increased 41.8% to a record $99.8 million from $70.4 million
  • Gross profit increased 84.6% year-over-year to $25.9 million from $14.0 million
  • Gross margin increased to 26.0% from 20.0% on increased sales and strong increases in the average market price for hogs
  • Operating expenses were $6.9 million, down 12.2% from $7.9 million in fiscal 2010
  • Operating income rose 207.4% to $19.0 million from $6.2 million in fiscal 2010
  • Adjusted net income, which excludes a gain in the fair value of warrants, increased 202.2% to $18.9 million, or $0.73 per diluted share, versus $6.3 million, or $0.41 per diluted share, for the same period last year, which excludes a non-cash expense related to the fair value of warrants for the fiscal year 2010
  • Net income increased to $36.1 million, or $1.40 per diluted share, from $4.3 million, or $0.29 per diluted share, for the fiscal year ended June 30, 2010
  • Working capital increased 189.6% to $59.2 million at June 30, 2011, from $20.5 million at June 30, 2010
  • Shareholders' equity inclusive of noncontrolling interest increased 166.5% to $59.8 million at June 30, 2011, from $22.5 million at June 30, 2010

"We experienced record revenues and profits in fiscal 2011 based on strong demand for our high quality breeding and commercial hogs," stated Mr. Zhenyu (Jack) Shang, Founder, Chairman and CEO of Sen Yu International Holdings, Inc. "Increased orders from our two major customers, Beijing Dahongmen and Beijing Fifth Meat Factory, resulted in revenues increasing to $99.8 million for the year compared to $70.4 million in revenue for fiscal 2010. Overall, our hog sales increased by 106,773 head to 504,028 head in fiscal 2011, compared to 397,255 at the end of fiscal 2010. We achieved higher margins in fiscal 2011 due to strong increases in average market prices for commercial hogs that led to higher unit sales prices. We believe our efficient business model and advanced breeding techniques, coupled with the demand we see for our products, will help us to continue to capture market share and drive our future growth."

Fiscal 2011 Results

Revenue for the fiscal year ended June 30, 2011 increased 41.8% to a record $99.8 million compared to $70.4 million for the fiscal year ended June 30, 2010. The increase in revenues resulted from increased orders from the Company's major customers, Beijing Dahongmen and Beijing Fifth Meat Factory. Hog sales increased to 504,028 head for the fiscal year ended June 30, 2011 from 397,255 for the fiscal year ended June 30, 2010. The increase in average unit sales price per capita was due to the increase in the market price during the fiscal year ended June 30, 2011.

Cost of goods sold for the fiscal year ended June 30, 2011 increased by $17.5 million, or 31.1%, to $73.8 million from $56.3 million for the fiscal year ended June 30, 2010. The increase was primarily attributable to increased sales volume.

Gross profit for the fiscal year ended June 30, 2011, increased by $11.9 million, or 84.6% to $25.9 million from $14.0 million for the fiscal year ended June 30, 2010. The increase was primarily due to the increase in sales volume. Gross margin for the fiscal year ended June 30, 2011 increased to 26.0% from 20.0% for the fiscal year ended June 30, 2010. The increase in gross margin was due to more commercial hogs and breeding swine sold and the higher unit sale prices for the fiscal year ended June 30, 2011, which generated higher unit margins for the period ended June 30, 2011.

Operating expenses for the fiscal year ended June 30, 2011 decreased $959,419, or 12.2%, to $6.9 million from $7.9 million for the fiscal year ended June 30, 2010. The decrease was primarily attributable to a decrease in compensation expenses. Compensation expenses decreased by approximately $3.1 million, or 76.1%, from the fiscal year ended June 30, 2010, principally due to reduction of payment in fiscal 2011.

Operating income for the fiscal year ended June 30, 2011 increased by $12.8 million, or 207.4%, to $19.0 million from $6.2 million for the fiscal year ended June 30, 2010. The increase was primarily due to an increase in sales.

Net income for the year ended June 30, 2011 was $36.1 million, or $1.40 per diluted share, which includes a gain of $17.2 million related to the change in the fair value of warrants, compared to $4.3 million, or $0.29 per diluted share for the year ended June 30, 2011, which includes a non-cash expense of $2.0 million related to the fair value of warrants. Excluding these items, adjusted net income for the year ended June 30, 2011 was $18.9 million, or $0.73 per diluted share, which translates into a 202.2% increase in net income for the fiscal year ended June 30, 2011.

Financial Condition

As of June 30, 2011, the Company had $11.4 million in cash and cash equivalents, an increase of 96.4% from $5.8 million as of June 30, 2010, and $59.2 million in working capital, an increase of 189.6% from working capital of $20.5 million at June 30, 2010. Shareholders' equity inclusive of noncontrolling interest at June 30, 2011 was approximately $59.8 million, an increase of 166.5% from $22.5 million at June 30, 2010. The Company generated $892,435 in net cash flow from operating activities for the fiscal year ended June 30, 2011, versus $1.3 million in net cash flow for the fiscal year ended June 30, 2010.

Business Outlook

"We see significant growth for our industry going forward and believe that strong demand from Chinese consumers for high quality pork coupled with rising domestic incomes and economic expansion will stimulate even greater demand for our high quality breeding hogs," commented Mr. Shang. "The market for breeding and commercial hogs is becoming very attractive to foreign investors as China is the world's largest consumer of pork and produces some 50 million tons of pork every year to feed a population of over 1.3 billion. We continue to expand our production and refine our breeding techniques to meet the rising demand from China's middle class. Going forward, we believe pork consumption and production will continue to rise and that Sen Yu is well positioned to capture greater revenue and profit."

About Sen Yu International Holdings, Inc.

Sen Yu International Holdings, Inc. (OTCBB: CSWG), through its subsidiaries, is the largest commercial hog breeder and supplier in Heilongjiang Province, the People's Republic of China (PRC). Founded in 2004 and based in Jiamusi City, the Company owns and operates two farms in Heilongjiang Province with an aggregate annual capacity of over 11,000 breeding hogs. For the fiscal year ended June 30 2011, the Company sold approximately 500,000 commercial hogs in the Beijing market. The Company also conducts genetic and breeding research to improve pork production capabilities.

To be added to the Company's email distribution for future news releases, please send your request to robert.haag@hamptongrowth.com.

Safe Harbor Statement

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. Such statements may include, without limitation, statements with respect to the Company's plans, objectives, projections, beliefs, expectations and intentions and other statements identified by words such as "guidance," "projects," "may," "could," "would," "should," "believe," "expect," "anticipate," "estimate," "intend," "plan," or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties (many of which are beyond the Company's control), including, but 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, 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 stockholders. We do not undertake to update any forward-looking statements that may be made from time to time by us or on our behalf.

-- FINANCIAL TABLES FOLLOW --

Sen Yu International Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
For The Fiscal Years Ended June 30,
2011 2010
Revenues $ 99,769,757 $ 70,351,959
Cost of Goods Sold 73,836,033 56,307,072
Gross Profit 25,933,724 14,044,887
Operating Expenses
Selling expenses 3,319,367 2,264,653
General and administrative expenses 1,455,777 934,379
Losses on disposal of fixed assets 72,157 109,098
Bad debt for advanced to suppliers 1,084,608 524,179
Stock-based compensation 959,469 4,018,488
Total Operating Expenses 6,891,378 7,850,797
Income From Operations 19,042,346 6,194,090
Other Income (Expense)
Interest expense, net (112,376 ) (70,953 )
Other expense, net (2,770 ) (6,453 )
Change in fair value of warrants 17,150,616 (1,998,740 )
Total Other Income (Expense) 17,035,470 (2,076,146 )
Income from Continuing Operations Before Income Taxes 36,077,816 4,117,944
Income Tax Provision - -
Net Income Before Noncontrolling Interest 36,077,816 4,117,944
Less: Net loss attributable to the noncontrolling interest (50 ) (145,630 )
Net Income Attributable to Sen Yu International Holdings, Inc. $ 36,077,866 $ 4,263,574
Earnings Per Share:
- Basic $ 1.64 $ 0.33
- Diluted $ 1.40 $ 0.29
Weighted Common Shares Outstanding
- Basic 22,002,885 12,976,230
- Diluted 25,863,391 15,255,131

Sen Yu International Holdings, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
For The Fiscal Years Ended June 30,
2011 2010
Net Income Before Noncontrolling Interest $ 36,077,816 $ 4,117,944
Other Comprehensive Income:
Foreign Currency Translation Income 2,426,862 246,594
Comprehensive Income $ 38,504,678 $ 4,364,538

Sen Yu International Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
As of June 30,
2011 2010
Assets
Current Assets:
Cash and equivalents $ 11,440,584 $ 5,825,842
Accounts receivable - -
Inventories, net 1,544,675 943,642
Advance to suppliers, net 53,473,785 30,830,691
Prepayments and other current assets 72,169 176,777
Total Current Assets 66,531,213 37,776,952
Property, Plant, Equipment and Breeding Stock, net 1,816,987 1,983,760
Construction in Progress 213 14,801
Total Long-Term Assets 1,817,200 1,998,561
Total Assets 68,348,413 39,775,513
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued expenses 455,044 390,644
Loans payable, net 1,128,517 1,066,924
Convertible note, net - 2,165,000
Loans from shareholders/officers, net 794,354 5,460
Deferred interest income 31,858 39,036
Performance bond 1,083,016 -
Other current liabilities 9,169 1,721
Derivative liabilities-warrants 3,793,314 13,654,111
Total Current Liabilities 7,295,272 17,322,896
Temporary equity
Redeemable shares of common stock (804,000 and 0 shares issued and outstanding, respectively) 1,217,055 -
Total Liabilities 8,512,327 17,322,896
Shareholders' Equity:
Series A Convertible Preferred Stock, $0.001 par value, 4,800 shares authorized, zero and 4,646.05933 shares issued and outstanding, respectively

-


-
Series B Convertible Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 1,988,429 and 1,152,380 shares issued and outstanding, respectively

1,988


1,152
Common stock, $0.001 par value, 300,000,000 shares authorized, 25,263,113 and 20,892,982 issued and outstanding, respectively

25,263


20,893
Additional paid-in capital 11,573,432 10,860,373
Reserve funds 6,745,351 3,570,029
Retained earnings 40,766,555 7,864,011
Accumulated other comprehensive income 3,393,871 967,009
Unearned compensation (2,956,141 ) (1,116,667 )
Total Sen Yu International Holdings, Inc. Shareholders' Equity 59,550,319 22,166,800
Noncontrolling Interest 285,767 285,817
Total Equity 59,836,086 22,452,617
Total Liabilities and Equity $ 68,348,413 $ 39,775,513
The accompanying notes are an integral part of these consolidated financial statements.

Sen Yu International Holdings, Inc and Subsidiaries
Consolidated Statements of Cash Flows
For The Fiscal Year Ended June 30,
2011 2010
Cash Flows From Operating Activities:
Net Income $ 36,077,816 $ 4,117,944
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Depreciation and amortization 476,630 501,628
Bad debt adjustment 1,084,608 524,179
Consulting fees adjusted from deferred 831,969 106,333
Issue common stock to pay consulting fee - 3,912,155
Stock-based compensation 127,500 -
Amortization of financing costs - 80,500
Loss on disposal of fixed assets 72,157 109,098
Loss on disposal of inventories 26,345 245,514
Provision for losses on inventories (1,245 ) 1,236
Change in fair value of warrants (17,150,616 ) 1,998,740
Change in fair value of redeemable stock 11,055 -
Changes in operating assets and liabilities:
Accounts receivable - 634,550
Inventories (707,687 ) (255,393 )
Advanced to suppliers (21,195,303 ) (10,477,518 )
Prepayments and other current assets 107,992 (109,214 )
Accounts payable and accrued expenses 49,852 (59,738 )
Customer deposit - 4,270
Deferred interest income (8,672 ) 48,005
Performance bond 1,083,016 -
Other current liabilities 7,018 (62,884 )
Net Cash Provided by Operating Activities 892,435 1,319,405
Cash Flows From Investing Activities:
Payment for purchase of equipment (112,098 ) (51,538 )
Payment for construction in progress (70,805 ) (14,801 )
Proceeds from sale of property and equipment 45,168 27,802
Net Cash Used in Investing Activities (137,735 ) (38,537 )
Cash Flows From Financing Activities:
Proceeds from discount on loans payable 8,672 (48,005 )
Proceeds from Convertible Notes - 2,165,000
Proceeds from issuranceof redeemable stock 1,206,000
Proceeds from issuance of stock 3,044,140 2,190,145
Repayments for loans from shareholders/officers (26,034 ) (8,961 )
Proceeds the repayment of loans by shareholders/officers 813,712 152,230
Net Cash Provided by Financing Activities 5,046,490 4,450,409
Net Increase in Cash and Equivalents 5,801,190 5,731,277
Effect of Exchange Rate Changes on Cash (186,448 ) 11,711
Cash and Equivalents at Beginning of Period 5,825,842 82,854
Cash and Equivalents at End of Period $ 11,440,584 $ 5,825,842
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 222,015 $ -
Income taxes paid $ - $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Inventory transferred out to be breeding stock in fixed assets $ 153,989 $ 70,405
Construction in progress transferred out to be fixed assets $ 85,403 $ -
Majority shareholder waive his right to the Company's debt $ - $ 11,169,236
Issued shares for consulting service $ 2,671,443 $ 5,135,155
Offset debt by fixed assets $ 6,791 $ 11,654,932

Contact Information

  • Investor Relations Contact:
    Robert Haag
    Managing Director
    Hampton Growth, LLC (HGR)
    Tel: +86-152-2174-3282
    Tel: +1-877-368-3566
    E-mail: Email Contact
    Website: www.hamptongrowth.com