December 2, 2011

China Modern Agricultural Information Inc on Thursday (Dec 1) completed the acquisition of Harbin, Heilongjiang-based Shangzhi Yulong Co Ltd, a move expected to raise China Modern's annual milk production capacity by 38% to 110,000 tonnes.

Shangzhi Yulong, a livestock company engaging in the breeding of cows and sale of milk, currently has more than 4,000 cows in inventory with annual production capacity of 30,000 tonnes of raw milk.

Due to Shangzhi Yulong's proprietary breeding system, its breeding rates, conception rates and calving rates have reached leading levels within the industry in China. China Modern also intends to acquire several facilities including cow houses, feed processing plants, sterilising chambers, straw sheds, septic tanks, silage tanks and a milking space.

Shangzhi Yulong generates revenue predominately from the sale of fresh milk. Revenue and net income for the 2012 fiscal first quarter ended September 30, 2011 totalled US$3.3 million and US$1.5 million, respectively, with the gross profit margin of 44%.

Based on these results and the current demand within the livestock industry and dairy industry, revenue for the fiscal year ending June 30, 2012 is expected to reach US$13 million, with net profit exceeding US$5.6 million with net profit margin of 40%.

Shangzhi Yulong is also an important high quality milk resource provider for Mengniu Dairy (Shangzhi) Co Ltd, and was assigned as the raw material manufacturing base of Milk Deluxe, a high end dairy product of Mengniu Dairy.

Youliang Wang, CEO of China Modern Agricultural Information, commented, "The acquisition of Shangzhi Yulong will expand our existing operations with the addition of 4,000 cows, raw milk production capacity expected to increase from 80,000 to 110,000 tonnes, the addition of leading industry management team members, extensive research and development capability, advanced facilities and proprietary breeding technology. We have evaluated Shangzhi Yulong's business model which is similar to our own and expect the integration to be seamless."

China Modern Agricultural Information Inc is a high-tech livestock company specialising in the breeding of cows and calves, the production and sale of milk, the sale of organic fertiliser, as well as the promotion of agricultural information.