ABAC Renmin Tianli Group, Inc. (MM)

WUHAN, China, May 12, 2017 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ: ABAC) ("Aoxin Tianli" or the "Company"), a producer of breeder hogs, market hogs and black hogs, as well as specialty processed black hog pork products sold through retail outlets and the internet, with headquarters in Wuhan City, Hubei Province, China, today announced its financial results for the first quarter ended March 31, 2017.

Mr. Wocheng Liu, Chairman and Co-Chief Executive Officer of Aoxin Tianli, commented, "While our retail business continued to grow benefitting from strong orders from a new online e-commerce customer, our hog farming business declined in the first quarter as a result of decreases in both the number of hogs sold and the average selling price per hog. The decrease in the number of hogs sold was mainly related to our black hog program in Enshi Prefecture where severe floods in July 2016 caused significant damages to our independently operated black hog farms and limited the number of black market hogs available for sale in the first quarter. Additionally, we saw downward trend for hog prices that started in the fourth quarter of 2016 and continued into this year. We believe this was related to the fact that a number of large state owned enterprises and publicly traded companies entered into the hog farming industry. This, combined with the uptick in feed cost in recent months, would continue to put pressure on existing hog farmers, particularly smaller players, in our view."

Revenues

Revenues for the first quarter of 2017 decreased by $2.38 million, or 26.3%, to $6.68 million from $9.06 million for the same period of last year. The decrease in revenues reflected the impact from the ongoing weak demand for regular breeder hogs, lower prices for regular hogs and black hogs, and fewer black hogs available for sale after the July 2016 flood damage.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $2.67 million, or 30.9%, to $5.97 million for the first quarter of 2017 from $8.64 million for the same period of last year. The Company sold a total of 30,217 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $198 per hog during the first quarter of 2017, compared to 35,112 hogs sold and a blended average selling price of $246 per hog for the same period of last year.

Revenues for the first quarter of 2017 from regular breeder hog sales decreased by 36.4% to $0.70 million with the number of regular breeder hogs sold decreasing by 34.6% to 2,837 hogs and the average selling price of regular breeder hogs decreasing by 2.7% to $245 per hog. Revenues for the first quarter of 2017 from regular market hog sales decreased by 18.3% to $2.85 million as the number of regular market hogs sold increased by 5.4% to 16,792 hogs while the average selling price of regular market hogs decreased by 22.5% to $169 per hog. Revenues for the first quarter of 2017 from black market hogs decreased by 40.1% to $2.43 million with the number of black hogs sold decreasing by 28.7% to 10,588 hogs and the average selling price of black hogs decreasing by 16.1% to $230 per hog.

We sold 136,682 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.71 million for the first quarter of 2017. This compares to 87,384 kilograms sold at approximately $5 per kilogram and revenues of $0.42 million for the same period of last year. The increase in our specialty black hog pork products was mainly related to a new online e-commerce customer. These revenues, combined with the sales of black market hogs, led to $3.14 million in revenues from our black hog program for the first quarter of 2017, compared to $4.48 million for the same period of last year.

The results of operations of Hang-ao and its wholly owned subsidiaries, were reclassified as discontinued operations in the Company's financial statements for the three months ended March 31, 2016 based on the Company's decision to focus on the hog industry. Hang-ao was sold on December 23, 2016.

Gross profit

Cost of goods sold decreased by $1.22 million, or 17.5%, to $5.74 million for the first quarter of 2017 from $6.96 million for the same period of last year. Cost of goods sold for hog farming decreased by $1.38 million, or 20.8%, to $5.26 million for the first quarter of 2017 from $6.65 million for the same period of last year. The decrease in cost of goods sold for hog farming was primarily due to lower sale volume, which was partly offset by increased feed costs. Cost of goods sold for retail increased by $0.17 million, or 52.5%, to $0.48 million for the first quarter of 2017 from $0.31 million for the same period of last year. The increase in cost of goods sold for retail was primarily due to increased sales volume.

Overall gross profit decreased by $1.16 million, or 55.3%, to $0.94 million for the first quarter of 2017 from $2.10 million for the same period of last year. Gross profits for hog farming and retail were $0.71 million and $0.23 million, respectively, for the first quarter of 2017, compared to $1.99 million and $0.11 million, respectively, for the same period of last year.

Overall gross margin was 14.0%, with gross margins for hog farming and retail of 11.9% and 32.2%, respectively, for the first quarter of 2017. This compared to overall gross margin of 23.2%, and gross margins for hog farming and retail of 23.1% and 25.2%, respectively, for the same period of last year.

Operating income(loss)

Total operating expenses, including general and administrative expenses and selling and marketing expenses, decreased by $0.14 million, or 13.0%, to $0.91 million for the first quarter of 2017 from $1.05 million for the same period of last year. Operating income for the first quarter of 2017 was $0.03 million, compared to $1.05 million for the same period of last year. Operating margin for the first quarter of 2017 was 0.4%, compared to 11.6% for the same period of last year.

Net income(loss)

Net income was $0.03 million for the first quarter of 2017, compared to net loss of $0.27 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $0.03 million for the first quarter of 2017, compared to $1.14 million for the same period of last year. Net loss from our discontinued operation, Hang-ao, was $1.41 million for the first quarter of 2016. Hang-ao was sold on December 23, 2016.

After the deduction for non-controlling interests, net income attributable to common shareholders for the first quarter of 2017 was $0.03 million. This compared to net loss attributable to common shareholders of $0.10 million for the same period of last year.

Financial Condition

As of March 31, 2017, the Company had cash and cash equivalents of $56.52 million, compared to $54.46 million at the end of 2016. Working capital as of March 31, 2017 was $58.57 million as compared to $57.50 million at December 31, 2016. Net cash provided by operating activities was $1.64 million for the first quarter of 2017, compared to $3.24 million for the same period of last year. Net cash used in investing activities was $nil for the first quarter of 2017, compared to $1.61 million for the same period of last year. No cash was used in or generated by financing activities in the first quarter of 2017. Financing activities in the first quarter of 2016 consisted of an increase of $6.12 million in restricted cash offset by the repayment of short term loans in the same amount.

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, Inc., is in the business of breeding, raising and selling breeder and market hogs in China. The Company also sells specialty processed black hog pork products through supermarkets and other retail outlets, as well as the internet.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information, please contact:

Tony Tian, CFA
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com

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SOURCE Aoxin Tianli Group, Inc.