March 16, 2012

Tianli Agritech's revenue saw a 49% rise on-year to US$8.7 million due to higher selling prices, more unit sales of Tianli market hogs plus retail sales of "Tianli AnPuluo" hog meat.

Tianli's Chairwoman and CEO, Hanying Li, said, "We completed another successful year, which included the acquisition of our 11th hog farm and the launch of our Tianli-branded retail pork products through our partnership with An Puluo Foods. While our fourth quarter results were negatively impacted by complications resulting from contaminated feed at a few of our farms, we responded quickly to contain the impact. Having implemented a series of additional safeguards, we expect the negative drag on our financials to subside in the first half of 2012."

Revenue for the fourth quarter of 2011 increased 49% to US$8.7 million from same period a year ago. The company sold 25,472 hogs, down 1% from the prior year reflecting the stronger demand for market hogs offset by the weaker demand for breeder hogs. Sales of market hogs increased 68% to US$5.3 million as high retail pork prices drove strong demand for market hogs. Breeder hog sales fell 38% to US$1.6 million, representing 19% of total sales in the fourth quarter of 2011.

Through its cooperation with An Puluo Food, Tianli's retail division generated US$1.7 million in sales in the fourth quarter after launching in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases under the Tianli AnPuluo brand in over 50 major retail outlets in great Wuhan, including Wal-Mart, Zon 100 and RT Mart.

Gross profit in the fourth quarter of 2011 was US$2.0 million, a 20% decrease from the same period last year. Gross margin was approximately 23% and 43% for the fourth quarter of 2011 and 2010, respectively. The year-over-year margin decline was attributable to US$1.3 million in costs related to the disposal of a shipment of contaminated hog feed and the treatment and disposal of hogs which became ill as a result of eating the contaminated feed.

Selling, general and administrative expenses were US$0.9 million in the fourth quarter of 2011, an increase of approximately US$0.5 million. Approximately US$0.1 million of the increase was related to higher public company expenses and US$0.4 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income attributable to Tianli common stockholders was approximately US$0.8 million, down 61% from US$2.2 million in the three months ended December 31, 2010. Earnings per fully diluted share were US$0.09 compared to US$0.12 the previous year.