May 21, 2012

China Modern reports Q3 2012 financial results

China Modern Agricultural Information, Inc., posted on May 15 a rise in its net income of 149% to U$S14.0 million or U$S0.31 per basic and diluted earnings per share.

The financial results were for the 2012 fiscal third quarter and first nine months ended March 31. China Modern is a high-tech livestock company specialising in the breeding of cows and calves, the production and sale of milk and the sale of organic fertiliser.

Youliang Wang, Chief Executive Officer of China Modern Agricultural Information, said: "China Modern has been engaged in the breeding of livestock and in the production and sale of fresh milk since January 2005. Driven by the strong demand of raw milk in China, we saw the price of raw milk has kept rising. During the quarter ended March 31, the sales price of milk was increased by approximate 15% to approximate US$0.50 per kg comparing with prior quarter. To offset the increasing cost of animal feed, the management team adopted a new business model since June 2011 which has dramatically decreased the operating costs and improved the profit margins. Our acquisition of Yulong Cattle in November 2011 further improved our capacity of milk production, which is an important driver for our revenue growth."

Wang, continued, "The demand for raw milk in China will stay strong in the next several years, which will be a key driver for our business growth. Combined with our new operating activities in place, I am confident China Modern will keep delivering strong both top-line and bottom-line growth."

Revenue for the 2012 fiscal third quarter ended March 31, totalled U$S9.4 million, an increase of 38% as compared to U$S6.8 million for the same period the prior year. The three months revenue consisted of U$S6.4 million from milk sales and U$S3.0 million from sales commission. The increase in revenue was primarily due to the acquisition of Yulong Cattle in prior quarter and sales commission from farmer, while the revenue stream in the same quarter last year only comprised sales from nature milk, although the change of our business operating activities decreased the overall number of milk cows. The average number of milk cows for the quarter ended March 31, decreased from 10,762 to 5,354 comparing the quarter ended March 31, 2011. In contrast to the decrease in number of milk cows, the revenue per milk cow per quarter increased from U$S632 for the three months ended March 31, 2011 to U$S1,200 for the three months ended March 31, an increase by U$S568 or 90% due to higher sales price of raw milk, disposing of inferior cows and younger milk cows. The decrease in sales of natural milk was partially offset by sales commission from local farmers of U$S3.0 million for the three months ended March 31, and has become one of main revenue streams of the Company.