China Botanic Pharmaceutical Reports Second-Quarter Fiscal Year 2011 Results

Press release

Second-Quarter 2011 Highlights and Recent Events



Net sales increased 56.1% year-over-year to $18.9 million

Gross profit increased 79.3% to $11.1 million from $6.2 million in the second quarter of fiscal year 2010

Gross margin increased to 59.0% from 51.4% a year ago

Net income rose 107.1% to $7.1 million or $0.19 per diluted share

The Company's wholly owned subsidiary, Harbin Renhuang Pharmaceutical Co., Ltd received official approval to produce water-based mixtures.

The Company successfully completed research of the chromatographic fingerprints for its Siberian Ginseng series products, utilizing a state-of-the-art analysis method which identifies the chemical characteristics of the designated medicine.

The Company successfully completed a feasibility study to analyze the benefits of using straw pellets, a renewable bio-fuel, for its production operations and plans to put the new fuel into use by October, 2011.

"During the second fiscal quarter of 2011, we continued to benefit from our strong market position, customer loyalty and well-accepted increases in selling prices, resulting in nearly 56% year-over-year growth in revenue and more than 100% year-over-year growth in net income. We are pleased to report strong financial performance during the quarter and remain optimistic about the future," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic. "In addition, our four new products, namely Qing Re Jie Du Oral Liquid, Compound Schizandra Tablets, Ginseng and Venison Extract, and Badger Oil have been well accepted in the market and contributed 19% of the quarter's total sales revenue up from 15% in the first fiscal quarter of 2011."

Business Outlook


"We anticipate continued growth in revenue and net income in the coming years driven by our established market presence, strong customer loyalty, ability to introduce new market-oriented products and aggressive sales and marketing efforts. We are confident that we will achieve our goals for fiscal 2011 and meet our financial guidance for revenue in the range of $70.6 million to $71.7 million and our raised after-tax net income guidance of approximately $25.5 million," said Mr. Li. "The recent government levied price controls in the TCM industry do not result in a margin squeeze for China Botanic as our product prices are significantly lower than the government price ceilings and the prices of our competitors. We enjoy a strong pricing advantage even after our recent price increases and our customers are satisfied with the high-quality of our products. In addition, our research team continues to work on several other promising products and we hope to announce new product introductions in the coming quarters, which will strengthen our market position and enhance our longer term growth."