Origin Agritech Grows Revenue by 77% Year-Over-Year, Records Net Income of $8.7 Million
Announces Filing of Annual Report on Form 20-F for Fiscal Year 2023
BEIJING, Feb. 21, 2024 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), a leading Chinese agricultural technology company, today announced financial results for the year ended September 30, 2023.
Management Commentary
Dr. Gengchen Han, Chairman and CEO of Origin Agritech, stated, "This past year has been a pivotal year for Origin Agritech, marked by significant advancements that position us for an unprecedented phase of growth. Today, we are not looking at just the successes of the past year but are firmly focused on the future, particularly 2024, which we anticipate will be a landmark year for the Company."
"We are particularly excited about the performance of our hybrid corn seed, which has outperformed expectations in 2023. Thanks to the outstanding performance of our new hybrid, we are projecting sales growth of over 30% in this segment alone. Also, our NEC (Nutritionally Enhanced Corn) is set to recognize its first revenue, which we expect to add more than 50% to our total revenue in 2024. These are a testament to our team's hard work and the strategic partnerships we have forged, allowing us to expand our production capabilities and market reach significantly."
"Beyond our product offerings, we are making remarkable strides in our biotech research, particularly in gene editing technology. Our team, we believe, is at the forefront of agricultural biotechnology, working to innovate and improve our crop solutions. We anticipate that our progress in gene editing technology will not only enhance our existing product lines but also open new revenue streams. The potential of this technology is vast, and we are beginning to see the fruits of our labor. As we continue to push the boundaries of what's possible in agritech, we remain committed to delivering value to our shareholders, supporting our communities, and enhancing food security through efficient agricultural practices," concluded Dr. Han.
Business Accomplishments and Highlights for the Year Ended September 30, 2023 and thereafter:
Operational Highlights
- April 11, 2023: The selection of Origin Agritech's GMO corn hybrid with the triple stack trait BFL4-2 was announced for the national demo plot.
- April 17, 2023: A new 33,000-acre growing and processing facility in Xinjiang was announced, which is expected to increase revenue substantially. This project, requiring no capital cost for Origin, is in partnership with Shihezi City.
- July 12, 2023: Held a groundbreaking ceremony for a 100,000-ton corn drying base in Shihezi, Xinjiang.
- October 31, 2023: The development of a new gene-editing method that significantly reduces cross-procedure timing from 4-5 years to just one year and the creation of nitrogen-efficient corn to enhance crop health and potential yields were announced.
Financial and Corporate Updates
- October 27, 2022: Appointed Dr. Shaojiang Chen to the Board of Directors as an independent director, effective November 1, 2022. Dr. Chen brings expertise in corn breeding and connections within the agritech community in China.
- July 19, 2023: Received a RMB 2 million grant from the Xinjiang government to support the construction of a local Germplasm Bank and the contract growing of NEC in the region. This grant highlights the government's endorsement of Origin's agricultural modernization efforts.
- September 6, 2023: Finalization of an agreement to sell former office space, converting approximately RMB 137.7 million in debt into equity in a joint venture with BC-TID. This move enhances Origin's financial health and supports its focus on agricultural biotech objectives.
Fiscal Year 2023 Financial Results:
For the fiscal year ended September 30, 2023, revenue was RMB93.3 million (US$13 million), compared to RMB52.6 million for the fiscal year ended September 30, 2022, an increase of 77.5%. The increase in revenues was mainly due to the re-opening of our Xinjiang facility and the strong market performance of our new hybrids.
Total operating expenses for the fiscal year ended September 30, 2023 were RMB32.2 million (US$4.5 million), compared to operating expenses of RMB29.1 million in fiscal year 2022.
Selling and marketing expenses for fiscal year 2023 were RMB8.3 million (US$1.2 million), compared to RMB7.3 million in fiscal year 2022. Selling and marketing expenses remained low as the Company's strategy to form seed distribution joint ventures helped improve efficiency in the distribution businesses.
General and administrative expenses for the fiscal year ended September 30, 2023, were RMB14.2 million (US$1.99 million), compared to RMB14.3 million year-over-year. General and administrative expenses from continuing operations primarily consist of salary and compensation, depreciation and amortization, legal fees, professional expenses, and other expenses, including travel and other general business expenses and office supplies.
Impairment of long-term investment for the fiscal year ended September 30, 2023 was RMB 1.49 million (US$ 0.21 million)
Research and development expenses were RMB7.4 million (US$1 million) in fiscal year 2023, the same as fiscal year 2022. Research and development expenses from continuing operations primarily consist of salary and compensation expenses of personnel engaged in the research and development of our proprietary crop seeds and genetically modified products, traveling expenses, depreciation of plant and equipment, and expenses paid to certain research institutes to carry out research projects on behalf of Origin during the period.
The Company received rental income for its headquarters building of RMB10.6 million (US$1.5 million) and incurred other non-operating income of RMB69.7 million (US$9.7 million) during the fiscal year ended September 30, 2023. For the year ended September 30, 2022, rental income was RMB10.6 million, and other non-operating expenses were RMB15.7 million.
Net Income attributable to Origin for the fiscal year ended September 30, 2023, was RMB62.7 million (US$8.7 million), compared to the net income of RMB2.35 million for the fiscal year ended September 30, 2022.
Liquidity
As of September 30, 2023, and 2022, we had approximately RMB23.7million (US$3.3 million) and RMB17.7 million, respectively, in cash and cash equivalents for continuing operations. The Company has no debt.
Net cash provided by operating activities was RMB 5.5 million (US$0.76 million) during fiscal year 2023, compared with net cash provided by operating activities RMB3.3 million for the fiscal year ended September 30, 2022.
Net cash used in investing activities was RMB11.2 million (US$1.6 million) for the fiscal year ended September 30, 2023, compared with net cash used in investing activities of RMB1.1 for the fiscal year ended September 30, 2022.
Net cash provided by financing activities was RMB22.9 million for the fiscal year ended September 30, 2023, compared with net cash used in financing activities of RMB 0.32 million for the fiscal year ended September 30, 2022. The Company raised $2.73 million from the sale of 320,000 ordinary shares during the fiscal year ended September 30, 2023. The proceeds from the sale of the ordinary shares will be used for working capital and the grant amount will be used for our corn supply chain facilities in Xinjiang and other regions.
Annual Report Now Available
The Company has filed its annual report on Form 20-F for the fiscal year ended September 30, 2023 with the Securities and Exchange Commission ("SEC"). The annual report on Form 20-F can be accessed on the SEC's website at http://www.sec.gov and the Company's investor relations website at https://originagritech.com/investor-relations/.
About Origin Agritech Limited
Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is a leading Chinese agricultural technology company. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. For further information, please visit the Company's website at www.originagritech.com. The Company also maintains a Twitter account for updating investors on Company and industry developments, which is https://x.com/origin_agritech.
Forward-Looking Statements
This communication contains "forward-looking statements" as defined in the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements address expected future business and financial performance and financial condition, and contain words like "expect," "anticipate," "intend," "plan," "believe," "seek," "will," "would," "target," and similar expressions and variations. Forward-looking statements address matters that are uncertain. Forward-looking statements are not guarantees of future performance and are based on assumptions and expectations which may not be realized. They are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates but involve a number of risks and uncertainties, many of which are beyond the Company's control. Some of the important factors that could cause the Company's actual results to differ materially from those discussed in forward-looking statements are: failure to develop and market new products and optimally manage product life cycles; ability to respond to market acceptance, rules, regulations and policies affecting our products; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; natural disasters and weather events and patterns; ability to protect and enforce the Company's intellectual property rights; and separation of underperforming or non-strategic assets or businesses. The Company undertakes no duty or obligation to publicly revise or update any forward-looking statements as a result of future developments, or new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
For more information, please contact:
Origin Agritech Limited Contact:
Kate Lang (Mandarin/English)
Director of Investor Relations
Phone: +86 186-1839-3368
Email: bing.lang@originseed.com.cn
Investor Relations Contact:
Matthew Abenante, IRC
President
Strategic Investor Relations, LLC
Tel: 347-947-2093
Email: matthew@strategic-ir.com
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SOURCE Origin Agritech Limited
