BEIJING, Feb. 12, 2018 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural produce, specialized textiles, and other health and well-being focused plant-based products in China, today announced its financial results for the second quarter ended December 31, 2017.

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, commented, "We are proud of all that we have accomplished in the first two quarters of our fiscal year and are pleased to report the second quarter of 2018 financial results with a 26.3% increase in net income as compared to the second quarter of 2017. We believe that our investment in our Apocynum Industrial Park and Institute of Chinese Apocynum Industrial Technology Research continues to strengthen the long-term outlook of Shineco as a positive long-term investment. In the short term we have seen tremendous growth in our Luobuma product line and are pleased that we have grown to become a high margin business, with revenues grown 327% compared to the second quarter ended December 31, 2016, and have achieved impressive results following our expansion over this past year. The past six months have been immensely positive for Shineco and we are excited to tackle the challenges and opportunities that the next six months will bring, as we anticipate continued future growth in our revenues and net income."

Second Quarter of 2018 Financial Highlights



For the Three Months Ended December 31

($ millions, except per share data)


2017


2016


% Change

Revenue


14.13


11.22


25.9%

Luobuma products


3.89


0.91


327.0%

Chinese medicinal herbal products


3.66


3.50


4.8%

Other agricultural products


6.58


6.82


-3.4%

Gross profit


4.82


3.95


21.9%

Gross margin


34.1%


35.2%


-1.1%

Operating income


3.24


2.53


28.2%

Operating margin


22.9%


22.5%


0.4%

Net income attributable to Shineco


3.60


2.85


26.3%

EPS


0.17


0.14


26.3%

  • Revenues increased by 25.9% to $14.13 million for the three months ended December 31, 2017 from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.
  • Gross profit increased by 21.9% to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Gross margin decreased by 1.1 percentage points to 34.1% from 35.2% for the same period of last year.
  • Net income attributable to Shineco increased by 26.3% to $3.60 million, or $0.17 per basic and diluted share, for the three months ended December 31, 2017 from $2.85 million, or $0.14 per basic and diluted share, for the same period of last year. The increases in net income earnings per share were primarily a result of the increase in gross profit, partially offset by the increase in general and administrative expenses.

Second Quarter of 2018 Financial Results

Revenues

Revenues for the three months ended December 31, 2017 increased by $2.91 million, or 25.9%, to $14.13 million from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.



For the Three Months Ended December 31



2017


2016

($ millions)


Revenues


COGS


Gross
Margin


Revenues


COGS


Gross
Margin

Luobuma products


3.89


1.87


51.7%


0.91


0.44


51.0%

Chinese medicinal herbal products


3.66


2.75


24.6%


3.50


2.48


29.1%

Other agricultural products


6.58


4.67


29.0%


6.82


4.33


36.4%

Business and sales related taxes


-


0.03


-


-


0.02


-

Total


14.13


9.31


34.1%


11.22


7.27


35.2%

Revenues from Luobuma products increased by $2.98 million, or 327.0%, to $3.89 million for the three months ended December 31, 2017 from $0.91 million for the same period of last year, mainly due to establishment of new subsidiary, Xinjiang Taihe, which generated revenue of $2.93 million.

Revenues from Chinese medicinal herbal products increased by $0.17 million, or 4.8%, to $3.66 million for the three months ended December 31, 2017 from $3.50 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers for the three months ended December 31, 2017 than the same period in 2016.

Revenues from other agricultural products decreased by $0.23 million, or 3.4%, to $6.58 million for the three months ended December 31, 2017 from $6.82 million for the same period of last year. The decrease was mainly due to the decrease in revenue of storage services, partially offset by the increased sales of yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $2.04 million, or 28.1%, to $9.31 million for the three months ended December 31, 2017 from $7.27 million for the same period of last year. Gross profit increased by $0.86 million, or 21.9%, to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Overall gross margin decreased by 1.1 percentage points to 34.1% for the three months ended December 31, 2017, compared to 35.2% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 51.7%, 24.6%, and 29.0%, respectively, for the three months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 51.0%, 29.1%, and 36.4%, respectively, for the same period of last year.

Operating income

Selling expenses increased by $0.05 million, or 9.6%, to $0.55 million for the three months ended December 31, 2017 from $0.50 million for the same period of last year, primarily due to the acquisition of new subsidiary, Tajite, in October, and increased promotion expenses, partly offset by decreased rent expense of warehouses and service fees of e-commerce websites. General and administrative expenses increased by $0.10 million, or 11.2%, to $1.03 million for the three months ended December 31, 2017 from $0.92 million for the same period of last year. The increase in general and administrative expenses was due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017. As a result, total operating expenses increased by $0.15 million, or 10.7%, to $1.58 million for the three months ended December 31, 2017 from $1.43 million for the same period of last year.

Operating income increased by $0.71 million, or 28.2%, to $3.24 million for the three months ended December 31, 2017 from $2.53 million for the same period of last year. Operating margin was 22.9% for the three months ended December 31, 2017, compared to 22.5% for the same period of last year.

Net income

Net income increased by $0.68 million, or 23.6%, to $3.58 million for the three months ended December 31, 2017 from $2.90 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended December 31, 2017 was $3.60 million, or $0.17 per basic and diluted share. This compared to net income attributable to common shareholders of $2.85 million, $0.14 per basic and diluted share, for the same period of last year.

Six Months Ended December 31, 2017 Financial Results



For the Six Months Ended December 31

($ millions, except per share data)


2017


2016


% Change

Revenue


21.94


17.59


24.7%

Luobuma products


4.93


1.65


199.4%

Chinese medicinal herbal products


6.93


6.68


3.8%

Other agricultural products


10.08


9.27


8.8%

Gross profit


6.91


5.87


17.7%

Gross margin


31.5%


33.4%


-1.9%

Operating income


4.20


3.59


17.0%

Operating margin


19.1%


20.4%


-1.3%

Net income attributable to Shineco


4.85


4.20


15.7%

EPS


0.23


0.21


11.1%

Revenues

Revenues for the six months ended December 31, 2017 increased by $4.35 million, or 24.7%, to $21.94 million from $17.59 million for the same period of last year, mainly due to increases in sales across all the products.



For the Six Months Ended December 31



2017


2016

($ millions)


Revenues


COGS


Gross
Margin


Revenues


COGS


Gross
Margin

Luobuma products


4.93


2.45


50.1%


1.65


0.81


50.4%

Chinese medicinal herbal products


6.93


5.33


23.1%


6.68


4.92


26.0%

Other agricultural products


10.08


7.21


28.4%


9.27


5.96


35.6%

Business and sales related taxes


-


0.04


-


-


0.03


-

Total


21.94


15.04


31.5%


17.59


11.72


33.4%

Revenues from Luobuma products increased by $3.29 million, or 199.4%, to $4.93 million for the six months ended December 31, 2017 from $1.65 million for the same period of last year, mainly due to revenue generated by a new subsidiary, Xinjiang Taihe, of $2.93 million and increased sales volume of our health awareness related products. The Company also enhanced online sales promotions during the six months ended December 31, 2017, which contributed to more sales.

Revenues from Chinese medicinal herbal products increased by $0.25 million, or 3.8%, to $6.93 million for the six months ended December 31, 2017 from $6.68 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers.

Revenues from other agricultural products increased by $0.81 million, or 8.8%, to $10.08 million for the six months ended December 31, 2017 from $9.27 million for the same period of last year. The increase was mainly due to the increase in sales volume of yew trees since the public realized the air purification function of the yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $3.31 million, or 28.3%, to $15.04 million for the six months ended December 31, 2017 from $11.72 million for the same period of last year. Gross profit increased by $1.04 million, or 17.7%, to $6.91 million for the six months ended December 31, 2017 from $5.87 million for the same period of last year. Overall gross margin decreased by 1.9 percentage points to 31.5% for the six months ended December 31, 2017, compared to 33.4% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 50.1%, 23.1%, and 28.4%, respectively, for the six months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 50.4%, 26.0%, and 35.6%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.04 million, or 4.2%, to $0.85 million for the six months ended December 31, 2017 from $0.88 million for the same period of last year, primarily due to decreased rent expense of warehouses, salary expenses, and service fees of e-commerce websites, partially offset by increased promotion expenses. General and administrative expenses increased by $0.47 million, or 33.3%, to $1.86 million for the six months ended December 31, 2017 from $1.40 million for the same period of last year. The increase in general and administrative expenses was primarily due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017, as well as increased professional service fees, such as attorney's fees, consulting fees and auditing fees.

Operating income increased by $0.61 million, or 17.0%, to $4.20 million for the six months ended December 31, 2017 from $3.59 million for the same period of last year. Operating margin was 19.1% for the six months ended December 31, 2017, compared to 20.4% for the same period of last year.

Net income

Net income increased by $0.56 million, or 13.2%, to $4.84 million for the six months ended December 31, 2017 from $4.28 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the six months ended December 31, 2017 was $4.85 million, or $0.23 per basic and diluted share. This compared to net income attributable to common shareholders of $4.20 million, $0.21 per basic and diluted share, for the same period of last year.

Financial Condition

As of December 31, 2017, the Company had cash of $29.35 million, compared to $23.15 million as of June 30, 2017. Working capital as of December 31, 2017 was $44.27 million as compared to $39.69 million at June 30, 2017. Net cash provided by operating activities was $7.78 million for the six months ended December 31, 2017, compared to net cash used in operating activities of $0.15 million for the same period of last year. Net cash used in investing activities was $0.49 million for the six months ended December 31, 2017, compared to $2.78 million for the same period of last year. Net cash used in financing activities was $1.47 million for the six months ended December 31, 2017, compared to net cash provided by financing activities of $5.79 million for the same period of last year.

About Shineco, Inc.

Incorporated in August 1997 and headquartered in Beijing, China, Shineco, Inc. ("Shineco" or the "Company") is a Delaware holding company that uses its subsidiaries' and variable interest entities' vertically- and horizontally-integrated production, distribution and sales channels to provide health and well-being focused plant-based products in China. Utilizing modern engineering technologies and biotechnologies, Shineco produces, among other products, Chinese herbal medicines, organic agricultural produce and specialized textiles. For more information about the Company, please visit www.tianyiluobuma.com.

Forward-Looking Statements

This press release contains information about Shineco's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in Shineco's registration statement and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com

 

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS








ASSETS







December 31,


June 30,


2017


2017



(Unaudited)




CURRENT ASSETS:






Cash

$

29,351,613


$

23,154,551

Accounts receivable, net


15,068,392



14,480,004

Due from related parties


529,816



448,833

Inventories


2,502,196



2,346,273

Advances to suppliers, net


3,230,843



2,396,123

Loans to third parties, net


-



830,090

Other receivables, net


981,808



535,700

Short-term deposit


230,201



158,894

Prepaid expenses


138,967



375,459

TOTAL CURRENT ASSETS


52,033,836



44,725,927







Property and equipment at cost, net of accumulated depreciation and amortization


11,670,890



10,320,396

Land use right, net of accumulated amortization


1,385,421



1,346,631

Investments


6,280,999



5,695,080

Deposit for business acquisition


124,474



2,065,686

Distribution right


1,134,099



-

Long-term deposit and other noncurrent assets


116,633



112,883

Prepaid leases


3,698,929



3,784,533

Deferred tax assets


285,917



233,834

Goodwill


2,152,975



-

TOTAL ASSETS

$

78,884,173


$

68,284,970













LIABILITIES AND EQUITY












CURRENT LIABILITIES:






Short-term loans

$

1,203,764


$

2,663,628

Accounts payable


1,740,791



158,068

Advances from customers


105,785



5,439

Due to related parties


343,655



257,880

Other payables and accrued expenses


2,057,436



337,107

Taxes payable


2,024,768



1,608,926

Deferred tax liability


283,525



-

TOTAL LIABILITIES


7,759,724



5,031,048







Commitments and contingencies


-



-







EQUITY:












Common stock; par value $0.001, 100,000,000 shares authorized; 21,034,072 and 21,034,072 shares issued and outstanding at December 31, 2017 and June 30, 2017


21,034



21,034

Additional paid-in capital


22,737,302



22,737,302

Statutory reserve


3,727,672



3,484,449

Retained earnings


43,675,155



39,064,743

Accumulated other comprehensive loss


(155,024)



(3,140,982)

Total Stockholders' equity of Shineco, Inc.


70,006,139



62,166,546

Non-controlling interest


1,118,310



1,087,376

TOTAL EQUITY


71,124,449



63,253,922







TOTAL LIABILITIES AND EQUITY

$

78,884,173


$

68,284,970













The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)














For the Six Months Ended
December 31,


For the Three Months Ended
December 31,


2017


2016


2017


2016









REVENUE

$

21,941,696


$

17,589,730


$

14,132,202


$

11,223,066













COST OF REVENUE












    Cost of product and services


14,994,212



11,687,306



9,288,701



7,251,134

    Business and sales related tax


41,337



33,964



25,724



18,419

          Total cost of revenue


15,035,549



11,721,270



9,314,425



7,269,553













GROSS PROFIT


6,906,147



5,868,460



4,817,777



3,953,513













OPERATING EXPENSES












    General and administrative expenses


1,863,924



1,398,341



1,028,373



924,577

    Selling expenses


845,219



882,354



550,283



502,036

          Total operating expenses


2,709,143



2,280,695



1,578,656



1,426,613













INCOME FROM OPERATIONS


4,197,004



3,587,765



3,239,121



2,526,900













OTHER INCOME












    Income from equity method investments


350,652



401,768



202,194



240,586

    Purchase rebate income


779,935



592,628



411,132



352,638

    Other income


139,975



159,308



54,356



73,407

    Interest income (expense), net


(31,324)



40,538



(12,139)



7,785

          Total other income


1,239,238



1,194,242



655,543



674,416













INCOME BEFORE PROVISION FOR INCOME TAXES


5,436,242



4,782,007



3,894,664



3,201,316













PROVISION FOR INCOME TAXES


595,035



505,387



312,178



303,751













NET INCOME


4,841,207



4,276,620



3,582,486



2,897,565













    Less: net income (loss) attributable to non-controlling interest


(12,428)



80,177



(15,259)



49,829













NET INCOME ATTRIBUTABLE TO SHINECO, INC.

$

4,853,635


$

4,196,443


$

3,597,745


$

2,847,736













COMPREHENSIVE INCOME












    Net income

$

4,841,207


$

4,276,620


$

3,582,486


$

2,897,565

    Other comprehensive income (loss): foreign currency translation gain (loss)


3,030,781



(2,514,175)



1,561,371



(2,317,494)

    Total comprehensive income


7,871,988



1,762,445



5,143,857



580,071

    Less: comprehensive income attributable to non-controlling interest


32,395



36,441



9,542



9,815













COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.

$

7,839,593


$

1,726,004


$

5,134,315


$

570,256













    Weighted average number of shares basic and diluted


21,034,072



20,205,409



21,034,072



21,034,072













    Basic and diluted earnings per common share

$

0.23


$

0.21


$

0.17


$

0.14

























The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








For the Six Months Ended December 31,


2017


2016







CASH FLOWS FROM OPERATING ACTIVITIES:






Net income

$

4,841,207


$

4,276,620

Adjustments to reconcile net income to net cash provided by (used in) operating activities:






Depreciation and amortization


295,832



299,553

(Recovery of) provision for doubtful accounts


(18,931)



298,297

Increase in inventory reserve


148,043



35,930

Deferred tax benefit


(41,523)



(43,424)

Income from equity method investments


(350,652)



(401,768)

Interest income from loans to related parties


-



(87,220)







Changes in operating assets and liabilities:






Accounts receivable


35,996



(6,148,928)

Advances to suppliers


(733,215)



(282,288)

Inventories


(145,327)



2,530,386

Other receivables


(195,516)



(399,914)

Prepaid expense and other assets


189,270



(152,508)

Due from related parties


(8,399)



240,601

Prepaid leases


237,751



235,872

Accounts payable


1,544,313



5,444

Advances from customers


17,181



79,921

Other payables


1,640,458



(785,057)

Taxes payable


323,744



151,820

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


7,780,232



(146,663)







CASH FLOWS FROM INVESTING ACTIVITIES:






Acquisitions of property and equipment


(564,937)



(31,952)

Payment for construction in progress


(602,267)



-

Loan advances to third parties


-



(979,465)

Repayments of loans from third parties


830,889



-

Loan advances to related party


(52,698)



-

Repayments of loans from related parties


-



501,119

Deposit for business acquisition


(121,959)



(2,074,198)

Deposit for potential investment


-



(200,000)

Cash of subsidiary acquired


22,830



-

NET CASH (USED IN) INVESTING ACTIVITIES


(488,142)



(2,784,496)







CASH FLOWS FROM FINANCING ACTIVITIES:






Proceeds from short-term loans


1,204,533



2,697,939

Repayment of short-term loans


(2,743,199)



(2,414,589)

Stock issuance cost payable


-



843,844

Proceeds from initial public offering, net of offering costs


-



4,550,705

Proceeds from advances from related parties


73,556



109,882

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES


(1,465,110)



5,787,781







EFFECT OF EXCHANGE RATE CHANGE ON CASH


370,082



(1,122,302)







NET INCREASE IN CASH


6,197,062



1,734,320







CASH - Beginning of the Period


23,154,551



22,009,374







CASH - End of the Period

$

29,351,613


$

23,743,694







SUPPLEMENTAL CASH FLOW DISCLOSURES:






Cash paid for income tax

$

492,206


$

219,682

Cash paid for interest

$

69,498


$

71,586







The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

Cision View original content:http://www.prnewswire.com/news-releases/shineco-inc-reports-second-quarter-of-2018-financial-results-300597346.html

SOURCE Shineco, Inc

Copyright 2018 PR Newswire

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