China New Borun Announces First Half Year of 2018 Unaudited Financial Results

BEIJING,Oct. 30,2018 -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"),a leading producer and distributor of corn-based edible alcohol in China,today announced its unaudited financial results for the first half year ended June 30,2018.

First Half Year of 2018Quick View

Total revenue decreased 12.2% to RMB940.4 million ($142.1 million[1]) from RMB1,071.0 million in the first half year of 2017.

Gross profit decreased 54.1% to RMB65.7 million ($9.9 million) from RMB143.2 million in the first half year of 2017.

Net income decreased 83.1% to RMB10.5 million ($1.6 million) from RMB62.0 million in the first half year of 2017.

Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.41 ($0.06) for the first half year of 2018. Each ADS represents one of the Company's ordinary shares.

[1]

This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted,all translations from Renminbi to US dollars for the period ended June 30,2018 were made at a rate of RMB6.6166 to USD1.00,the rate published by the People's Bank of China on June 30,2018. China New Borun Corporation makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi,at any particular rate or at all.

First Half Year of 2018 Financial Performance

For the first half year of 2018,revenue decreased by 12.2% year-over-year to RMB940.4 million ($142.1 million) from RMB1,071.0 million in the same period of 2017. The decrease in revenue was mainly due to lower sales volume of edible alcohol and its by-products.

Revenue breakdown by product lines is as follows:

Revenue from edible alcohol decreased by 7.3% to RMB661.1 million ($99.9 million) in the first half year of 2018,compared to RMB713.0 million in the first half year of 2017. The sales volume of edible alcohol in the first half year of 2018 decreased by 18.4% year-over-year to 150,386 tons,while the average selling price of edible alcohol increased by 13.7% year-over-year to RMB4,396 per ton.

Revenue from DDGS Feed decreased by 12.2% to RMB227.4 million ($34.4 million) in the first half year of 2018,compared to RMB258.9 million in the first half year of 2017. The sales volume of DDGS Feed in the first half year of 2018 decreased by 14.7% year-over-year to 137,161 tons,while the average selling price increased by 2.9% year-over-year to RMB1,658 per ton.

Revenue from liquid carbon dioxide increased by 34.1% to RMB14.0 million ($2.1 million) in the first half year of 2018,compared to RMB10.5 million in the first half year of 2017. The sales volume of liquid carbon dioxide in the first half year of 2018 decreased by 14.8% year-over-year to 52,197 tons,while the average selling price increased by 57.4% year-over-year to RMB269 per ton.

In 2017,we invested in and completed the construction of our AMPS manufacturing plant with an annual production capacity of 4,000 tons. AMPS is a chemical product that is widely used in many fields,including oilfield chemistry,water treatment and synthetic fibers. Revenue from AMPS products increased by 284.4% to RMB37.8 million ($5.7 million) in the first half year of 2018,compared to RMB9.8 million in the first half year of 2017. The sales volume of AMPS in the first half year of 2018 increased by 262.7% year-over-year to 2,067 tons,and the average selling price increased by 6.0% year-over-year to RMB18,283 per ton.

During the first half year of 2018,gross profit decreased by 54.1% to RMB65.7 million ($9.9 million) from RMB143.2 million in the same period of 2017. Gross margin for the first half year of 2018 decreased to 7.0%,from 13.4% in the same period of 2017,which was primarily attributable to the steeper increase in average corn cost,compare with selling price of edible alcohol.

Operating income decreased by 63.3% to RMB42.3 million ($6.4 million) in the first half year of 2018,from RMB115.5 million in the same period of 2017,primarily due to lower gross profit earned.

Selling expenses decreased by RMB0.1 million,or 6.5% to RMB1.7 million ($0.3 million) in the first half year of 2018,from RMB1.8 million in the same period of 2017.

General and administrative expenses decreased by RMB4.2 million,or 16.5% to RMB21.7 million ($3.3 million) in the first half year of 2018,from RMB25.9 million in the same period of 2017.

Income tax expenses in the third quarter of 2017 were RMB3.5 million ($0.5 million),representing an effective tax rate of 25.0%.

Net income decreased by 83.1% to RMB10.5 million ($1.6 million) in the first half year of 2018,compared to RMB62.0 million in the same period of 2017. In the first half year of 2018,basic and diluted earnings per share and per ADS were RMB0.41 ($0.06),and the Company had 25.7 million weighted average basic and diluted shares outstanding.

As of June 30,2018,cash and bank deposits of RMB1.1 billion ($164.3 million) increased by RMB358.6 million,compared with RMB728.3 million as of December 31,2017.

About China New Borun Corporation

China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol sold as an ingredient to producers of baijiu,a popular grain-based alcoholic beverage in China. The Company also produces DDGS Feed,liquid carbon dioxide and crude corn oil as by-products of edible alcohol production,and CPE that is widely used in chemical industries. China New Borun is based in Shouguang,Shandong Province. Additional information about the company can be found at http://www.chinanewborun.com and in documents filed with the U.S. Securities and Exchange Commission,which are available on the SEC's website at http://www.sec.gov.

Forward-looking Statements

All statements included in this press release,other than statements or characterizations of historical fact,are forward-looking statements. These forward-looking statements are based on our current expectations,estimates and projections about our industry,management's beliefs,and certain assumptions made by us,all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions,and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks,uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

December 31,

2017

June 30,

2018

RMB

RMB

US$

Assets

Cash

728,249,297

1,086,873,642

164,264,674

Trade accounts receivable,net of allowance for doubtful accounts

509,737,390

374,097,731

56,539,270

Inventories

434,185,431

864,790,353

130,700,111

Advance to suppliers

562,196,185

116,421

17,595

Other receivables

66,391,456

124,068,994

18,751,170

Prepaid expenses

2,781,503

1,057,588

159,839

Total current assets

2,303,541,262

2,451,004,729

370,432,659

Property,plant and equipment,net

766,055,948

708,673,988

107,105,460

Land use right,net

127,627,629

126,211,340

19,074,954

Total assets

3,197,224,839

3,285,890,057

496,613,073

Liabilities and shareholders' equity

Trade accounts payable

36,637

96,856,426

14,638,398

Accrued expenses and other payables

54,770,180

56,059,165

8,472,503

Income taxes payable

66,717,710

18,227,885

2,754,872

Short-term borrowings

698,667,011

763,361,371

115,370,639

Total current liabilities

857,045,538

934,504,847

141,236,412

Bonds payable:

outstanding principal amount of RMB300,000,bearing fixed annual interest rate of 6.5%,with maturity on November 2,2021 (less unamortized debt issuance costs based on imputed interest rate of 6.75% of RMB5,419,012 and RMB4,712,184 ($712,176) as of December 31,2017 and June 30,respectively)

294,580,988

295,287,816

44,628,331

Total liabilities

1,151,626,526

1,229,792,663

185,864,743

Shareholders' equity

Ordinary share – par value of RMB0.0068259,25,725,000 shares authorized,issued and outstanding as of December 31,respectively

175,596

175,596

25,725

Additional paid-in capital

468,132,187

468,187

70,169

Retained earnings – appropriated

171,207,400

171,400

25,875,435

Retained earnings – unappropriated

1,406,583,669

1,417,082,750

214,170,835

Accumulated other comprehensive loss

(500,539)

(500,539)

(74,834)

Total shareholders' equity

2,598,313

2,056,394

310,748,330

Total liabilities and shareholders' equity

3,073

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

For the six-month period ended,

June 30,2017

June 30,2018

RMB

RMB

US$

Revenues

1,071,003,283

940,373,341

142,123,347

Cost of goods sold

927,765,691

874,660,760

132,191,875

Gross profit

143,237,592

65,581

9,931,472

Operating expenses:

Selling

1,857,320

1,736,694

262,475

General and administrative

25,926,437

21,659,207

3,273,465

Total operating expenses

27,783,757

23,395,901

3,535,940

Operating income

115,453,835

42,316,680

6,532

Other (income) expenses:

Interest income

(1,697,415)

(1,576,502)

(238,265)

Interest expense

34,603,020

26,679

4,502,717

Others,net

(59,252)

101,728

15,375

Total other expense,net

32,846,353

28,317,905

4,279,827

Income before income taxes

82,607,482

13,998,775

2,115,705

Income tax expense

20,651,870

3,499,694

528,926

Net income

61,955,612

10,081

1,586,779

Earnings per share:

Basic and diluted

2.41

0.41

0.06

Weighted average ordinary shares outstanding:

Basic and diluted

25,000

25,000

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