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

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."

*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.

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 http://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

CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

SOURCE China Xiangtai Food Co. Ltd.

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