November 15, 2011

China Modern Agricultural Information Inc announced a 70.7% leap in net income to US$2.6 million for the 2012 fiscal first quarter ended September 30, 2011.

During the quarter, revenue increased 16.1% to US$5 million, driven by strong demand for fresh raw milk.

Youliang Wang, CEO of China Modern Agricultural Information, said, "Under our new business model of leasing our cows for five years directly to farmers, we are now developing the bandwidth to focus more aggressively on the sales and marketing of our products.

"Other advantages include moving the livestock assets off our balance sheet while enabling us to make a higher return on the sale of the cows. Additionally, farmers are further incentivised to produce more milk because they now have ownership of the cow. We have significantly lowered the cost of goods sold and improved our gross profit to US$3.4 million, an increase of 57.7% on-year. Our gross profit margin has also improved from 49.9% to 67.8%."

Wang continued, "We have also set in motion several key growth drivers including a letter of intent to acquire Shangzhi Yunlong which would increase our production capacity by 30,000 tonnes and add approximately US$4.5 million in net income in 2012.

"This is in conjunction with our recently signed 10-year lease for 4,120 acres of high quality pasture with a municipality of Heilongjiang province. This agreement will help lower the feed cost for the cows. We will continue to aggressively seek other opportunities to fuel the growth of our business, while enhancing our relationship with the local government and farming community going forward."

China Modern Agriculture is a livestock company specialising in the breeding of cows and calves, the production and sale of milk and the sale of organic fertiliser.