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China Biologic Products Announces Strong First Quarter 2009 Results

PRNewswire
May 18, 2009

TAI'AN, Shandong, May 18 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (OTC: CBPO) (BULLETIN BOARD: CBPO) ("China Biologic," or the "Company"), one of the leading plasma-based pharmaceutical companies in the People's Republic of China ("PRC"), reported strong financial results for the first quarter of 2009.

  First Quarter 2009 Highlights
  -- Revenues increased 169.4% year-over-year to a record $21.1 million
  -- Gross profit increased 153.1% to $14.9 million compared to the first
     quarter of 2008, representing a gross margin of 70.6%
  -- Operating income increased 176.6%, from the first quarter 2008 to $10.1
     million, representing an operating margin of 47.6%
  -- Net income was up 87.8% year-over-year to $4.3 million, or $0.20 per
     diluted share

"We are pleased to report exceptional revenue and net income results for our first quarter of 2009 as 'The New China Biologic Products'," said Mr. Chao Ming Zhao, CEO of China Biologic Products. "During the first quarter, we completed the government approval process for the transfer of 35% equity interest in Xi'an Huitian Blood Products Co., Ltd. We recently also completed the acquisition of a 90% controlling interest in Chongqing Dalin Biologic Technologies Co., Ltd., which owns 54% of the equity interest in Qianfeng Biologic Products Co., Ltd. Both of these acquisitions combined have transformed China Biologic into the largest non-state-owned plasma-based biopharmaceutical company in China. Our first quarter results reflect the consolidation of these interests and demonstrate the potential for significant earnings power ahead."

During the first quarter of 2009, the Company achieved the following milestones:

  -- The Company's indirect majority-owned subsidiary, Shandong Taibang
     Biological Products Co. Ltd. ("Shandong Taibang") was awarded the High-
     Technology Enterprise Certification by the provincial government in
     Shandong Province, which allows the Company to be taxed at the
     preferential income tax rate of 15% instead of at the regular 25% rate,
     for a period of 3 years commencing January 1, 2008.

  -- One of China Biologic Products' R&D projects, "High-Purity Human
     Albumin," was listed in the National Torch Plan of China.

  -- China Biologic Products completed the government approval process for
     the transfer of a 35% equity interest in Xi'an Huitian Blood Products
     Co., Ltd. in March 2009.

  First Quarter of 2009 Results

Revenue for the first quarter of 2009 increased 169.4% to a record $21.1 million compared with $7.8 million in the first quarter of 2008. The increase in revenues for the first quarter of 2009 is primarily attributable to the revenue consolidation of Dalin which accounted for approximately 44.6% of the total revenue, a general increase in the price of plasma-based products, and a 12.4% increase due to the foreign exchange translation. During the first quarter of 2009, Dalin contributed to approximately $9.5 million in revenue, and the rest of revenue was generated from Shandong Taibang, which experienced a 49.3% increase from the first quarter of 2008 to approximately $11.6 million. All of the Company's approved products, except human hepatitis B immunoglobulin, recorded price increases ranging from 3.5% to 49.2%.

Sales breakdown of the Company's major plasma-based products, the human albumin products, accounted for 58.2% of sales in the first quarter of 2009, as compared to 58.1% in same period a year ago. Sales of human albumin products increased by 171.1% while the average selling price increased by 3.5%. The Company's human immunoglobulin for intravenous injection product represented 25.4% of revenues in the first quarter of 2009, as compared to 21.1% in the first quarter of 2008; its sales and average selling price increased by 224.6% and 14.7%, respectively. The Company's human tetanus immunoglobulin products represented 4.9% of revenues in the first quarter of 2009, as compared to 1.4% of revenues in the first quarter of 2008, and it sales and average selling price increased 823.1% and 34.3%, respectively.

Gross profit for the first quarter of 2009 was $14.9 million, up 153.1% from $5.9 million in the first quarter of 2008. Gross margin was 70.6% for the period ended March 31, 2009, compared to 75.2% for the first quarter of 2008. The decrease in the gross profit margin was primarily due to the increase in the cost of raw materials associated with the increased compensation fee for donors.

Operating expenses in the first quarter of 2009 rose 115.3% to $4.9 million. Selling expenses increased 17.2% to $0.6 million. As a percentage of sales, selling expenses in the first quarter of 2009 was 2.7%, down from 6.3% a year ago. General and administrative ("G&A") expenses increased 141.3% to $3.8 million. As a percentage of sales, the G&A expenses decreased to 18.1% for the first quarter of 2009, from 20.2% for the same period in 2008. The dollar increase in the G&A expenses was mainly due to the consolidation of Dalin, the increase in personnel-related costs, extra depreciation and amortization expenses in connection with the acquisition of Dalin as result of fair value adjustments as well as additional professional service charges related to the acquisition of Dalin. Research and development expenses increased 154.5% to $0.5 million, or 2.2% of total revenue compare to $0.2 million in the first quarter of 2008 or 2.3% of total revenue. The dollar increase was due primarily to the consolidation of Dalin and increased costs from continuing clinical trial on new products.

Total other expenses in the first quarter of 2009 was $0.8 million, as the Company recognized of a loss in the change in fair value of derivative liability in the amount of $0.4 million, and net interest expense in the amount of $0.4 million.

Provision for income taxes increased 174.2% to $2.0 million for the first quarter of 2009, from $0.7 million for the same period last year. The effective tax rate for the quarter was 21.9% as compared to 20.5% in the same period of 2008.

Net income attributable to controlling interest for the first quarter of 2009 was $4.3 million, up 87.8% from $2.3 million in first quarter of 2008. Fully diluted earnings per share were $0.20 for the first quarter of 2009, compared to $0.10 in first quarter of 2008.

Financial Condition

As of March 31, 2009, the Company had $34.0 million in cash, approximately $2.2 million in working capital and a current ratio of 1.0. Shareholder's equity at the end of the first quarter of 2009 was $39.9 million, compared to $37.2 million at the end of 2008. The Company generated $7.1 million in net cash from operating activities for the first quarter of 2009.

Recent Developments

On April 17, China Biologic announced that it has completed the third installment payment towards the acquisition of a 90% equity interest in Chongqing Dalin Biologic Technologies Co., Ltd. ('Dalin') for a total consideration of RMB 194,400,000 (approximately $28.5 million), in accordance with the terms of an equity transfer agreement with the Dalin shareholders, and is now entitled to all the rights and privileges of a 90% shareholder in Dalin and in Dalin's 54% majority-owned operating subsidiary, Qianfeng Biological Products Co., Ltd. ('Qianfeng'), one of the largest plasma-based biopharmaceutical companies in China, located in Guiyang, Guizhou Province.

On April 27, China Biologic received an order from one of the largest authorized biopharmaceutical distributors in India, to ship Company products valued at $5.3 million to be sold under Shandong Taibang's own brand.

Business Outlook

On July 1, 2008, the SFDA implemented a new 90-day quarantine period on plasma raw material. This new measure further tightens the raw material that is available for production, and has adversely impacted the already short supply of plasma-based products. As a result, during the first quarter of 2009, the supply of plasma-based products remained very tight industry-wide. The continuing price increase of the Company's products since 2008 was primarily attributable to the government's stringent control on the quality standard of the plasma-based production industry, which resulted in a shortage in the supply of finished products. The Company has been able to adjust its production plan to take advantage of the limited market supply of plasma resources to realize higher profit margins. In addition, there is a shortage in the market supply for human albumin products which has increased the value of the Company's products in the market place.

The plasma-based industry has been immune from the impact of the ongoing global financial crisis as the demand for the Company's products has outpaced supply. As a result, the Company's selling price, cost of revenue and operating expenses during the first quarter of 2009 were not impacted by the global financial turmoil. With the acquisitions of Huitian and Dalin, and its operating subsidiary Qianfeng, the Company is better situated to serve its existing and new customers with expanded production capacity and market coverage. Management expects that revenue growth will remain strong for the remainder of 2009.

Assuming the full year consolidation of Dalin, management estimates revenues for 2009 will be in the range of $90 million to $100 million with net income between $18 million to $22 million, including the equity investment income from the 35% acquisition of Hutian but excluding stock based compensation.

"Despite continued tough economic conditions worldwide, China Biologic continues to prosper due to favorable industry fundamentals, growing brand recognition, a solid business strategy and a highly defensible, scalable business model," remarked Mr. Zhao. "We see 2009 as a year in which we attain critical mass, and realize significant economies of scale as we integrate our acquisitions and increase our capacity utilization."

Conference Call

China Biologic will host a conference call at 8:00 a.m. EDT on Tuesday, May 19, 2009, to discuss the 2009 first quarter financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-888-419-5570. International callers should dial +1-617-896-9871. The pass code for the call is 634 701 69. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Tuesday, May 19, 2009 at 10:00 a.m. EDT. To access the replay, dial 1- 888-286-8010. International callers should dial +1-617-801-6888. The conference pass code is 373 105 74.

About China Biologic Products, Inc.

China Biologic Products, Inc. (the "Company"), through its indirect majority-owned subsidiary, Shandong Taibang Biological Products Co. Ltd., and equity investments in Xi'an Huitian Blood Products Co., Ltd. and Chongqing Dalin Biologic Technologies Co., Ltd. is currently the largest non-state-owned plasma-based biopharmaceutical company approved by the Chinese government. The Company is a fully integrated biologic products company with plasma collection, production and manufacturing, research and development, and commercial operations. The Company's blood products are irreplaceable in the application of medical emergencies, and prevention and treatment for various diseases. It sells its plasma-based biopharmaceutical products to hospitals and other healthcare facilities in China.

Safe Harbor Statement

This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the Company's acquisitions and acquisition strategy and the benefits of the acquisitions, including the expected impact on the Company's 2009 revenues and net income; the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov/ ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

                       - FINANCIAL TABLES FOLLOW -


                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
              FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                 (Unaudited)

                                                   2009            2008

  REVENUES                                     $21,148,598      $7,849,007
  COST OF SALES                                  6,214,930       1,948,898
  GROSS PROFIT                                  14,933,668       5,900,109

  OPERATING EXPENSES:
    Selling expenses                               579,496         494,529
    General and administrative expenses          3,822,907       1,584,128
    Research and development expenses              467,727         183,782
  Total operating expenses                       4,870,130       2,262,439

  INCOME FROM OPERATIONS                        10,063,538       3,637,670
    Equity in income of unconsolidated
     affiliate                                     -40,247              --
    Change in fair value of warrant
     liabilities                                   393,023              --
    Interest expense (income), net                 370,853          22,973
    Other expense (income), net                     51,315             412
  Total other expenses (income), net               774,944          23,385

  INCOME BEFORE PROVISION FOR INCOME TAXES
   AND NONCONTROLLING INTEREST                   9,288,594       3,614,285

  PROVISION FOR INCOME TAXES                     2,030,194         740,482

  NET INCOME BEFORE NONCONTROLLING INTEREST      7,258,400       2,873,803

  Less: Net income attributable to
   noncontrolling interest                       3,000,082         606,003

  NET INCOME ATTRIBUTABLE TO CONTROLLING
   INTEREST                                      4,258,318       2,267,800

  OTHER COMPREHENSIVE INCOME:
  Foreign currency translation adjustments          18,637         942,699
  Comprehensive income attributable to
   noncontrolling interest                         427,302         184,467
  COMPREHENSIVE INCOME                          $4,704,257      $3,394,966

  BASIC EARNINGS PER SHARE:
  Weighted average number of shares             21,434,942      21,434,942
  Earnings per share                                 $0.20           $0.11

  DILUTED EARNINGS PER SHARE:
  Weighted average number of shares             21,434,942      21,964,168
  Earnings per share                                 $0.20           $0.10


                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                  AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

                                                  March 31,    December 31,
                                                    2009           2008
                                                 (Unaudited)
  ASSETS
  CURRENT ASSETS:
    Cash                                        $34,005,948     $8,814,616
    Notes receivable                                468,800             --
    Accounts receivable, net of allowance
     for doubtful accounts of $1,275,437
     and $1,268,052 as of March 31, 2009
     and December 31, 2008, respectively            383,781        313,087
    Accounts receivable - related party             631,803             --
    Dividend receivable                             147,055        147,256
    Other receivables                               845,780        356,957
    Other receivables - related party               797,138             --
    Inventories                                  26,700,002     14,949,196
    Prepayments and deferred expense              1,133,535        614,704
       Total current assets                      65,113,842     25,195,816

  PLANT AND EQUIPMENT, net                       27,583,288     19,299,364
  OTHER ASSETS:
    Investment in unconsolidated affiliate        6,565,312      6,533,977
    Refundable deposit for potential
     acquisition                                         --     14,181,800
    Prepayments - non-current                     4,519,925        955,874
    Intangible assets, net                       21,636,063      1,002,561
    Goodwill                                     13,692,473             --
       Total other assets                        46,413,773     22,674,212

  Total assets                                 $139,110,903    $67,169,392

  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES:
    Accounts payable                             $3,502,387     $2,481,889
    Notes payable                                    29,300         29,340
    Short term loans - bank                       7,720,550             --
    Short term loan - holder of
     noncontrolling interest                        772,223        773,277
    Other payables and accrued liabilities       12,978,381      3,962,931
    Other payable - land use right                   29,281          1,683
    Other payable - holder of
     noncontrolling interest                      1,333,795             --
    Other payable - related party                 2,563,643             --
    Accrued interest - related party                305,966             --
    Distribution payable to holder of
     noncontrolling interest                      4,166,692      3,252,354
    Customer deposits                             6,390,937      1,091,792
    Taxes payable                                 5,211,498      4,060,010
    Long term bank loan-current maturities          439,500             --
    Investment payable                           17,510,836      3,275,501
       Total current liabilities                 62,954,989     18,928,777

  OTHER LIABILITIES:
  Non-current other payable - land use
   right                                            324,546        323,707
  Long term loan-bank, net of current
   maturities                                     8,790,000      5,868,000
  Total other liabilities                         9,114,546      6,191,707
  Total liabilities                              72,069,535     25,120,484

  WARRANT LIABILITIES                             2,061,049             --

  COMMITMENTS AND CONTINGENCIES                          --             --

  SHAREHOLDERS' EQUITY:
    Common stock, $0.0001 par value,
     100,000,000 shares authorized,
     21,434,942 shares issued and
     outstanding at March 31, 2009
     and December 31, 2008                            2,143          2,143
    Paid-in-capital                               9,988,956     10,700,032
    Statutory reserves                            9,750,637      6,989,801
    Retained earnings                            15,960,158     15,392,253
    Accumulated other comprehensive income        4,177,935      4,159,298
       Total shareholders' equity                39,879,829     37,243,527

  NONCONTROLLING INTEREST                        25,100,490      4,805,381

  Total equity                                   64,980,319     42,048,908

  Total liabilities and shareholders'
   equity                                      $139,110,903    $67,169,392




              CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                               (Unaudited)

                                                    2009            2008
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income attributable to
     controlling interest                       $4,258,318      $2,267,800
    Net income attributable to
     non-controlling interest                    3,000,082         606,003
    Consolidated net income                      7,258,400       2,873,803
    Adjustments to reconcile net income
     to cash provided by operating activities:
    Depreciation                                   759,072         274,361
    Amortization                                   838,459          26,157
    (Gain) Loss on disposal of equipment              -276             166
    Allowance for bad debt                          26,581              --
    Stock based compensation                        27,373              --
    Change in fair value of warrant
     liabilities                                   393,023              --
    Equity in income of unconsolidated
     affiliate                                     -40,246              --
  Change in operating assets and
   liabilities:
    Notes receivable                              -468,832              --
    Accounts receivable                            -97,007        -960,482
    Accounts receivable - related party           -212,367              --
    Other receivables                              -18,487           1,285
    Other receivables - related party                   --           1,398
    Inventories                                 -3,513,011      -1,585,462
    Prepayments and deferred expenses             -124,944         -96,457
    Accounts payable                              -252,850        -310,692
    Other payables and accrued
     liabilities                                   307,916         101,089
    Accrued interest - related party               305,966              --
    Customer deposits                            2,872,712         927,456
    Taxes payable                                 -979,190         871,964
    Contingent liability                                --        -105,707

       Net cash provided by operating
        activities                               7,082,292       2,018,879

  CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash acquired through acquisition           11,938,784              --
    Purchase of plant and equipment               -986,640      -1,249,620
    Additions to intangible assets                 -88,845          -3,285
    Advances on non-current assets                -474,736              --
    Advances on building acquired from                  --        -106,777
     related party
    Net cash provided by (used in)
     investing activities                       10,388,563      -1,359,682

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from short term bank loan           7,647,822              --
    Payments on short term loan                         --        -698,850
    Net cash provided by (used in)
     financing activities                        7,647,822        -698,850

  EFFECTS OF EXCHANGE RATE CHANGE IN CASH           72,655         182,249

  INCREASE IN CASH                              25,191,332         142,596
  CASH, beginning of period                      8,814,616       5,010,033
  CASH, end of period                          $34,005,948      $5,152,629

  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
    Income taxes paid                           $1,783,619            $ --
    Interest paid (net of capitalized
     interest)                                    $236,649         $18,416
    Non-cash investing and financing
     activities:
    Dividend paid by offsetting loan due
     from holder of noncontrolling interest     $3,735,243            $ --
    Net assets acquired with prepayments
     made in prior periods                     $14,240,772            $ --
    Net assets acquired with unpaid
     investment                                $14,240,772            $ --
    Plant and equipment acquired with
     prepayments made in prior periods             $87,305            $ --



  For more information, please contact:

  Company Contact:
   Mr. Y. Tristan Kuo
   Chief Financial Officer
   China Biologic Products, Inc.
   Tel:   +86-538-620-2206
   Email: IR@chinabiologic.com
   Web:   http://www.chinabiologic.com/

  Investor Relations Contact:
   Mr. Crocker Coulson, President
   CCG Investor Relations
   Tel:   +1-646-213-1915 (NY office) or
   Mr. Gary Chin, Tel: +1-646-213-1909
   Email: crocker.coulson@ccgir.com
   Web:   http://www.ccgirasia.com/

SOURCE: China Biologic Products, Inc.

CONTACT: Company Contact: Mr. Y. Tristan Kuo, Chief Financial Officer of
China Biologic Products, Inc., +86-538-620-2206, or IR@chinabiologic.com; Or
Investor Relations Contact: Mr. Crocker Coulson, President of CCG Investor
Relations, +1-646-213-1915 (NY office) or Mr. Gary Chin, Tel: +1-646-213-1909,
or crocker.coulson@ccgir.com

Web site: http://www.chinabiologic.com/
http://www.ccgirasia.com/


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