BEIJING, Oct. 15, 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, announced today its
financial results for the fiscal year ended June 30, 2018.
Mr. Yuying Zhang, Chairman and Chief Executive Officer of
Shineco, commented, "We are proud of our achievements for fiscal
year 2018 with total revenue increased by 30.7% to $43.90 million. Our revenue from Luobuma products
increased 200.3% to $10.88 million as
our investment in our Apocynum Industrial Park in Xinjiang began to
realize its potential. We expect to see more revenue momentum as we
continue to invest in key projects to position ourselves for long
term growth and success. We are pleased with the reception our
Luobuma product line has received over the past fiscal year and we
are excited to continue to optimize our operations and improve our
gross margins as we enter the new fiscal year."
Fiscal Year 2018 Financial Highlights
|
For the
Fiscal Years Ended June 30
|
($ millions,
except per share data)
|
2018
|
|
2017
|
|
%
Change
|
Revenue
|
43.90
|
|
33.59
|
|
30.7%
|
Luobuma
products
|
10.88
|
|
3.62
|
|
200.3%
|
Chinese medicinal
herbal products
|
14.18
|
|
13.25
|
|
7.1%
|
Other agricultural
products
|
18.83
|
|
16.72
|
|
12.6%
|
Gross
profit
|
14.79
|
|
10.74
|
|
37.7%
|
Gross
margin
|
33.7%
|
|
32.0%
|
|
1.7 pp*
|
Operating
income
|
9.27
|
|
7.45
|
|
24.5%
|
Operating
margin
|
21.1%
|
|
22.2%
|
|
-1.0 pp*
|
Net income
attributable to Shineco
|
7.59
|
|
8.47
|
|
-10.4%
|
EPS
|
0.36
|
|
0.41
|
|
-12.5%
|
*Notes: pp
represents percentage points
|
|
- Revenue: $43.90 million (at 33.7%
gross margin), up 30.7% from $33.59
million (at 32.0% gross margin) in fiscal year 2017,
reflecting the increase in sales across all products.
- Luobuma Products Revenue: $10.88
million, growing 200.3% year-over-year from $3.62 million in fiscal year 2017.
- Gross Profit: $14.79 million, up
from $10.74 million in fiscal year
2017.
- Operating Income: $9.27 million,
growing 24.5% year-over-year from $7.45
million in fiscal year 2017.
- Net income attributable to Shineco: $7.59 million, compared to $8.47 million in fiscal year 2017.
- EPS: Net income per share of 0.36, compared to a net income per
share of $0.41 in fiscal year
2017.
Fiscal Year 2018 Financial Results
Revenue
Revenue for the year ended June 30, 2018 increased
by $10.31 million, or 30.7%, to $43.90
million from $33.59 million for the same period of
last year, mainly due to the increase in sales across all
products.
|
For the Fiscal
Years Ended June 30
|
|
2018
|
|
2017
|
($
millions)
|
Revenue
|
|
COGS
|
|
Gross
Margin
|
|
Revenue
|
|
COGS
|
|
Gross
Margin
|
Luobuma
products
|
10.88
|
|
4.89
|
|
55.1%
|
|
3.62
|
|
1.71
|
|
52.8%
|
Chinese medicinal
herbal products
|
14.18
|
|
10.76
|
|
24.1%
|
|
13.25
|
|
10.18
|
|
23.1%
|
Other agricultural
products
|
18.83
|
|
13.46
|
|
28.5%
|
|
16.72
|
|
10.96
|
|
34.5%
|
Total
|
43.90
|
|
29.11
|
|
33.7%
|
|
33.59
|
|
22.85
|
|
32.0%
|
Revenue from Luobuma products increased by $7.26 million,
or 200.3%, to $10.88 million for the year ended June 30,
2018 from $3.62 million for the same period of last
year, mainly due to revenue generated by a new subsidiary, Xinjiang
Taihe, of $8.21 million for the year
ended June 30, 2018. Moreover, the
increase of revenue from this segment was due to increased sales
volume of health awareness related products. The Company also
enhanced online sales promotions during the year ended June 30, 2018, which contributed to more sales
revenue overall. The increase was partially offset by the decrease
in revenue from Tenet-Jove Xuzhou branch of $1.59 million, as the business operation of this
branch ceased in November 2017.
Revenue from Chinese medicinal herbal products increased
by $0.93 million, or 7.1%, to $14.18 million for the
year ended June 30, 2018 from $13.25
million for the same period of last year. The increase was
primarily due to the increased unit sales price in the herbal
market during the period from October to December 2017, as well as more fulfilled sales
orders from customers for the year ended June 30, 2018 than the same period in 2017.
Revenue from other agricultural products increased by $2.11
million, or 12.6%, to $18.83 million for the year
ended June 30, 2018 from $16.72 million for the
same period of last year. The increase was mainly attributable to
the increase in sales volume of yew trees since the public realized
the air purification function of the yew trees for year ended
June 30, 2018 as compared to the same
period in 2017.
Gross profit and Gross Margin
Total cost of revenue increased by $6.26 million, or 27.4%,
to $29.11 million for the year ended June 30,
2018 from $22.85 million for the same period of last
year. Gross profit increased by $4.05 million, or 37.7%,
to $14.79 million for the year ended June 30,
2018 from $10.74 million for the same period of last
year. Overall gross margin increased by 1.7 percentage points to
33.7% for the year ended June 30, 2018, compared to 32.0% for
the same period of last year.
Gross margins for Luobuma products, Chinese medicinal herbal
products, and other agricultural products were 55.1%, 24.1%, and
28.5%, respectively, for the year ended June 30, 2018. This
compared to gross margins for Luobuma products, Chinese medicinal
herbal products, and other agricultural products of 52.8%, 23.1%,
and 34.5%, respectively, for the same period of last year.
Operating income
Selling expenses increased by $0.05 million, or 3.3%,
to $1.53 million for the year ended June 30,
2018 from $1.48 million for the same period of last
year, primarily due to the acquisition of a new subsidiary, Tianjin
Tajite, in October 2017. The increase
in selling and distribution expenses was also a result of increased
promotion expenses as the Company enhanced its online sales
promotions, partially offset by decreased rent expense of warehouse
and salary expenses due to more effective cost control during the
years ended June 30, 2018 compared to
the same period of 2017.
General and administrative expenses increased by $2.17
million, or 119.8%, to $3.99 million for the year
ended June 30, 2018 from $1.81 million for the
same period of last year. The increase in general and
administrative expenses was primarily attributable to the
incorporation and acquisition of new subsidiaries, Tiankunrunze in
second quarter of fiscal year 2017, and Xinjiang Taihe, Runze and
Tianjin Tajite in fiscal year 2018. The increase in general and
administrative expenses was also a result of increased bad debt
expense, salary expenses as well as entertainment expense.
Operating income increased by $1.83 million, or 24.5%,
to $9.27 million for the year ended June 30,
2018 from $7.45 million for the same period of last
year. Operating margin was 21.1% for the year ended June 30,
2018, compared to 22.2% for the same period of last year.
Impairment loss on goodwill
Impairment loss on goodwill was $2.15 million for the year ended June
30, 2018, representing an increase of 100.00%, as compared to the
same period of last year. In conjunction with the preparation of
consolidated financial statement for year ended June 30, 2018, the management performed
evaluation on the impairment of goodwill. Due to the lower than
expected revenue and profit, and unfavorable business environment,
the management fully recorded impairment loss on goodwill of
Tianjin Tajite.
Net income
Net income decreased by $1.09 million, or 12.7%,
to $7.53 million for the year ended June 30,
2018 from $8.62 million for the same period of last
year. After the deduction of non-controlling interests, net income
attributable to common shareholders for the year ended June
30, 2018 was $7.59 million, or $0.36 per basic
and diluted share. This compared to net income attributable to
common shareholders of $8.47 million, $0.41 per
basic and diluted share, for the same period of last year.
Financial Condition
As of June 30, 2018, the Company had cash and cash
equivalents of $31.49 million, compared to $23.15
million as of June 30, 2017. Net cash provided by
operating activities was $9.85 million for the year
ended June 30, 2018, compared to net cash used in operating
activities of $2.74 million for the same period of last
year. Net cash used in investing activities was $0.75
million for the year ended June 30, 2018, compared to
$0.73 million for the same
period of last year. Net cash used in financing activities
was $0.49 million for the year ended June 30, 2018,
compared to net cash provided by financing activities of $5.38
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.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
2018
|
|
2017
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash
|
$
|
31,487,053
|
|
$
|
23,154,551
|
Accounts receivable, net
|
|
15,478,336
|
|
|
14,480,004
|
Due from related parties
|
|
388,261
|
|
|
448,833
|
Inventories
|
|
2,364,558
|
|
|
2,346,273
|
Advances to suppliers, net
|
|
4,977,407
|
|
|
2,396,123
|
Deferred issuance cost
|
|
434,000
|
|
|
-
|
Other current assets
|
|
1,034,780
|
|
|
1,900,143
|
TOTAL CURRENT
ASSETS
|
|
56,164,395
|
|
|
44,725,927
|
|
|
|
|
|
|
Property and equipment, net
|
|
11,697,304
|
|
|
10,320,396
|
Land use right, net of accumulated amortization
|
|
1,345,088
|
|
|
1,346,631
|
Investments
|
|
6,567,090
|
|
|
5,695,080
|
Deposit for business acquisition
|
|
-
|
|
|
2,065,686
|
Distribution rights
|
|
1,114,837
|
|
|
-
|
Long-term deposit and other noncurrent assets
|
|
113,764
|
|
|
112,883
|
Long-term accounts receivable, net
|
|
2,700,367
|
|
|
-
|
Prepaid leases
|
|
3,397,572
|
|
|
3,784,533
|
Deferred tax assets
|
|
-
|
|
|
233,834
|
TOTAL ASSETS
|
$
|
83,100,417
|
|
$
|
68,284,970
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Short-term loans
|
$
|
2,316,283
|
|
$
|
2,663,628
|
Accounts payable
|
|
2,270,140
|
|
|
158,068
|
Advances from customers
|
|
17,500
|
|
|
5,439
|
Due to related parties
|
|
197,617
|
|
|
257,880
|
Other payables and accrued expenses
|
|
1,736,735
|
|
|
337,107
|
Taxes payable
|
|
2,991,624
|
|
|
1,608,926
|
TOTAL CURRENT
LIABILITIES
|
|
9,529,899
|
|
|
5,031,048
|
|
|
|
|
|
|
Income tax payable - noncurrent portion
|
|
685,185
|
|
|
-
|
Deferred tax liability
|
|
11,652
|
|
|
-
|
TOTAL
LIABILITIES
|
|
10,226,736
|
|
|
5,031,048
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
|
-
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
Common stock; par value $0.001, 100,000,000 shares
authorized;
|
|
|
|
|
|
21,234,072 and
21,034,072 shares issued and outstanding at June 30, 2018 and
June 30, 2017
|
|
21,234
|
|
|
21,034
|
Additional paid-in capital
|
|
23,171,102
|
|
|
22,737,302
|
Statutory reserve
|
|
4,085,819
|
|
|
3,484,449
|
Retained earnings
|
|
46,051,289
|
|
|
39,064,743
|
Accumulated other comprehensive loss
|
|
(1,509,212)
|
|
|
(3,140,982)
|
Total Stockholders' equity of Shineco, Inc.
|
|
71,820,232
|
|
|
62,166,546
|
Non-controlling interest
|
|
1,053,449
|
|
|
1,087,376
|
TOTAL
EQUITY
|
|
72,873,681
|
|
|
63,253,922
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
83,100,417
|
|
$
|
68,284,970
|
SHINECO,
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
For the Years Ended
June 30,
|
|
2018
|
|
2017
|
|
|
|
|
REVENUE
|
$
|
43,897,618
|
|
$
|
33,592,337
|
|
|
|
|
|
|
COST OF
REVENUE
|
|
|
|
|
|
Cost of product and services
|
|
29,005,659
|
|
|
22,776,035
|
Business and sales related
tax
|
|
104,667
|
|
|
75,974
|
Total cost of revenue
|
|
29,110,326
|
|
|
22,852,009
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
14,787,292
|
|
|
10,740,328
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
General and administrative
expenses
|
|
3,985,604
|
|
|
1,813,402
|
Selling expenses
|
|
1,530,005
|
|
|
1,480,855
|
Total operating expenses
|
|
5,515,609
|
|
|
3,294,257
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
9,271,683
|
|
|
7,446,071
|
|
|
|
|
|
|
OTHER
INCOME
|
|
|
|
|
|
Impairment loss on goodwill
|
|
(2,153,298)
|
|
|
-
|
Income from equity method investments
|
|
907,794
|
|
|
927,697
|
Purchase rebate income
|
|
1,377,108
|
|
|
1,136,162
|
Other income
|
|
307,637
|
|
|
348,181
|
Interest income (expense), net
|
|
(58,775)
|
|
|
14,171
|
Total other income
|
|
380,466
|
|
|
2,426,211
|
|
|
|
|
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
9,652,149
|
|
|
9,872,282
|
|
|
|
|
|
|
PROVISION FOR
INCOME TAXES
|
|
2,123,587
|
|
|
1,252,637
|
|
|
|
|
|
|
NET
INCOME
|
|
7,528,562
|
|
|
8,619,645
|
|
|
|
|
|
|
Net (loss) income attributable to non-controlling
interest
|
|
(59,354)
|
|
|
149,991
|
|
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO SHINECO, INC.
|
$
|
7,587,916
|
|
$
|
8,469,654
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
|
|
|
|
Net income
|
$
|
7,528,562
|
|
$
|
8,619,645
|
Other comprehensive income (loss): foreign currency translation
gain (loss)
|
|
1,658,658
|
|
|
(1,271,036)
|
Total comprehensive income
|
|
9,187,220
|
|
|
7,348,609
|
Less: comprehensive (loss) income attributable to non-controlling
interest
|
|
(32,466)
|
|
|
132,008
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME ATTRIBUTABLE TO SHINECO, INC.
|
$
|
9,219,686
|
|
$
|
7,216,601
|
|
|
|
|
|
|
Weighted average number of shares basic and diluted
|
|
21,119,004
|
|
|
20,616,335
|
|
|
|
|
|
|
Earnings per common share
|
$
|
0.36
|
|
$
|
0.41
|
SHINECO,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
For the Years Ended
June 30,
|
|
2018
|
|
2017
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
$
|
7,528,562
|
|
$
|
8,619,645
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
698,232
|
|
|
575,196
|
Loss (gain) from
disposal of property and equipment
|
|
5,557
|
|
|
(8,063)
|
Provision (recovery
of) for doubtful accounts
|
|
262,013
|
|
|
(342,041)
|
Increase in inventory
reserve
|
|
124,601
|
|
|
37,292
|
Deferred tax (benefit)
provision
|
|
(28,138)
|
|
|
86,780
|
Income from equity
method investments
|
|
(907,794)
|
|
|
(927,697)
|
Interest income from
loans to related parties
|
|
-
|
|
|
(86,355)
|
Impairment loss on
goodwill
|
|
2,153,298
|
|
|
-
|
|
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(3,569,821)
|
|
|
(8,136,668)
|
Advances to
suppliers
|
|
(2,563,943)
|
|
|
(2,339,757)
|
Inventories
|
|
(25,031)
|
|
|
2,122,982
|
Other
receivables
|
|
170,125
|
|
|
(72,891)
|
Prepaid expense and
other assets
|
|
4,442
|
|
|
(401,755)
|
Due from related
parties
|
|
126,293
|
|
|
(976,937)
|
Prepaid
leases
|
|
485,382
|
|
|
466,759
|
Accounts
payable
|
|
2,145,058
|
|
|
(96,137)
|
Advances from
customers
|
|
(70,459)
|
|
|
(3,950)
|
Other
payables
|
|
1,272,263
|
|
|
(1,614,992)
|
Taxes
payable
|
|
2,036,079
|
|
|
354,453
|
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
|
|
9,846,719
|
|
|
(2,744,136)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Acquisitions of
property and equipment
|
|
(1,763,160)
|
|
|
(49,863)
|
Proceeds from disposal
of property and equipment
|
|
607
|
|
|
17,688
|
Payment for
construction in progress
|
|
58,671
|
|
|
-
|
Repayments of loans
from third parties
|
|
831,716
|
|
|
4,839
|
Loan advances to
related party
|
|
(53,793)
|
|
|
-
|
Repayments of loans
from related parties
|
|
-
|
|
|
565,739
|
Income received from
investments in unconsolidated entities
|
|
153,695
|
|
|
990,839
|
Deposit for business
acquisition
|
|
-
|
|
|
(2,055,074)
|
Deposit for potential
investment
|
|
-
|
|
|
(200,000)
|
Cash of subsidiary
acquired
|
|
23,304
|
|
|
-
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(748,960)
|
|
|
(725,832)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from
short-term loans
|
|
2,459,122
|
|
|
2,673,064
|
Repayment of
short-term loans
|
|
(2,877,044)
|
|
|
(2,701,321)
|
Proceeds from initial
public offering, net of offering costs
|
|
-
|
|
|
5,394,549
|
Repayments of advances
from related parties
|
|
(67,561)
|
|
|
17,683
|
NET CASH (USED IN)
PROVIDED BY FINANCING ACTIVITIES
|
|
(485,483)
|
|
|
5,383,975
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGE ON CASH
|
|
(279,774)
|
|
|
(768,830)
|
|
|
|
|
|
|
NET INCREASE IN
CASH
|
|
8,332,502
|
|
|
1,145,177
|
|
|
|
|
|
|
CASH - Beginning
of the Period
|
|
23,154,551
|
|
|
22,009,374
|
|
|
|
|
|
|
CASH - End of the
Period
|
$
|
31,487,053
|
|
$
|
23,154,551
|
|
|
|
|
|
|
SUPPLEMENTAL CASH
FLOW DISCLOSURES:
|
|
|
|
|
|
Cash paid for income
taxes
|
$
|
857,201
|
|
$
|
845,792
|
Cash paid for
interest
|
$
|
133,930
|
|
$
|
150,175
|
|
|
|
|
|
|
SUPPLEMENTAL
NON-CASH INVESTING ACTIVITY:
|
|
|
|
|
|
Issued 200,000 shares
of deferred issuance cost
|
$
|
434,000
|
|
$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/shineco-inc-reports-fiscal-year-2018-financial-results-300731196.html
SOURCE Shineco, Inc