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 Zhongpin (NASDAQ:HOGS)

Thursday, June 27, 2013
Going Private News

BEIJING, June 27, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," NASDAQ: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that at a special meeting of its stockholders held today (the "Special Meeting"), the Company's stockholders voted in favor of the proposal to adopt the previously announced Amended and Restated Agreement and Plan of Merger, dated February 8, 2013 (the "Merger Agreement"), by and among Golden Bridge Holdings Limited (the "Parent"), Golden Bridge Merger Sub Limited (the "Merger Sub"), Mr. Xianfu Zhu and the Company, pursuant to which Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Parent (the "Merger"). Parent and Merger Sub are beneficially owned by Mr. Xianfu Zhu.

Approximately 65.5% of shares of Company common stock were voted in person or by proxy at the Special Meeting. Of these shares voted in person or by proxy at the Special Meeting, approximately 97.7% were voted in favor of the proposal to adopt the Merger Agreement and approximately 94.3% were voted in favor of the proposal to approve, on an advisory (non-binding) basis, specified compensation that may become payable to the named executive officers of the Company in connection with the Merger. Approximately 51.3% of shares of Company common stock held by unaffiliated stockholders were voted in favor of the proposal to adopt the Merger Agreement.

The parties expect to complete the Merger as soon as practicable, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. Upon completion of the Merger, the Company will become a privately-held company and its common stock will no longer be listed on the NASDAQ Global Market.

Cowen and Company (Asia) Limited and Duff & Phelps Securities, LLC are serving as independent financial advisors to the Special Committee of the Company's Board of Directors. Akin Gump Strauss Hauer & Feld LLP is serving as United States legal advisor to the Special Committee, and O'Melveny & Myers LLP is serving as United States legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as United States legal advisor to the buyer group. Credit Suisse is serving as financial advisor to the buyer group. Paul Hastings Janofsky and Walker LLP is serving as legal advisor to Cowen and Company (Asia) Limited, and Winston Strawn LLP is serving as legal advisor to Duff & Phelps Securities, LLC.

 

BEIJING and CHANGGE, China, June 27, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced the completion of the merger (the "Merger") contemplated by the previously announced Amended and Restated Agreement and Plan of Merger, dated as of February 8, 2013 (the "Merger Agreement"), by and among Golden Bridge Holdings Limited ("Parent"), Golden Bridge Merger Sub Limited (the "Merger Sub"), Mr. Xianfu Zhu and the Company.  As a result, the Company became a wholly-owned subsidiary of Parent.

Under the terms of the Merger Agreement, which was approved by the Company's stockholders at a special meeting held on June 27, 2013, each share of Company common stock has been cancelled and converted into the right to receive $13.50 in cash, without interest and less any applicable withholding taxes (the "Merger Consideration"), except for (a) shares of common stock owned by the Company as treasury stock and shares owned by Parent or Merger Sub and their affiliates, including shares contributed to Parent by Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang (the "Rollover Investors"), all of which shares of common stock have been cancelled without the right to receive any consideration thereon, and (b) shares of common stock owned by stockholders who have exercised, perfected and not withdrawn a demand for or lost the right to, appraisal rights under the Delaware General Corporation Law ("DGCL"), which shares of common stock have been cancelled and have entitled the former holders thereof to receive the appraised value thereon in accordance with such holder's appraisal rights under the DGCL.

Stockholders of record as of the effective time of the Merger who are entitled to the Merger Consideration will receive a letter of transmittal and instructions on how to surrender their share certificates in exchange for the merger consideration. Stockholders should wait to receive the letter of transmittal before surrendering their share certificates.


Wednesday, May 29, 2013
Going Private News

BEIJING and CHANGGE, China, May 28, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that the Company has called a special meeting of its stockholders (the "Special Meeting"), to be held on June 27, 2013, at10:00 a.m. (local time), at 21 Changshe Road, Changge City, Henan Province, People's Republic of China 461500, to consider and vote on the proposal to adopt the previously announced Amended and Restated Agreement and Plan of Merger, dated February 8, 2013 (the "Merger Agreement"), by and among Golden Bridge Holdings Limited (the "Parent"), Golden Bridge Merger Sub Limited (the "Merger Sub"), Mr. Xianfu Zhu and the Company.

Under the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving company after the merger as a wholly owned subsidiary of Parent (the "Merger"). If completed, the proposed Merger will result in (i) the Company's unaffiliated stockholders receiving $13.50 per share in cash, without interest, for their shares of common stock of the Company, (ii) the Company becoming a privately-held company and (iii) the common stock of the Company no longer being listed on the Nasdaq Stock Market. The Company's board of directors, acting upon the unanimous recommendation of a special committee of the Company's board of directors composed entirely of independent directors, approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement.


Tuesday, May 28, 2013
Going Private News

BEIJING and CHANGGE, China, May 28, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that the Company has called a special meeting of its stockholders (the "Special Meeting"), to be held on June 27, 2013, at 10:00 a.m. (local time), at 21 Changshe Road, Changge City, Henan ProvincePeople's Republic of China 461500, to consider and vote on the proposal to adopt the previously announced Amended and Restated Agreement and Plan of Merger, dated February 8, 2013 (the "Merger Agreement"), by and among Golden Bridge Holdings Limited (the "Parent"), Golden Bridge Merger Sub Limited (the "Merger Sub"), Mr. Xianfu Zhu and the Company.

Under the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving company after the merger as a wholly owned subsidiary of Parent (the "Merger"). If completed, the proposed Merger will result in (i) the Company's unaffiliated stockholders receiving $13.50 per share in cash, without interest, for their shares of common stock of the Company, (ii) the Company becoming a privately-held company and (iii) the common stock of the Company no longer being listed on the Nasdaq Stock Market. The Company's board of directors, acting upon the unanimous recommendation of a special committee of the Company's board of directors composed entirely of independent directors, approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement.

Stockholders of record as of the close of business on May 23, 2013, the record date for the Special Meeting, are entitled to receive notice of the Special Meeting and to vote the shares of common stock of the Company owned by them at the Special Meeting. Additional information regarding the Special Meeting and the Merger Agreement can be found in the transaction statement on Schedule 13E-3 and the definitive proxy statement on Schedule 14A, filed with the Securities and Exchange Commission ("SEC") onMay 28, 2013, which can be obtained, along with other filings containing information about the Company, the proposed Merger and related matters, without charge, from the SEC's website (http://www.sec.gov) or at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, holders of shares of common stock of the Company as of the record date will receive the definitive proxy statement by mail. Requests for additional copies of the definitive proxy statement should be directed to MacKenzie Partners, the Company's proxy solicitor, at +1 (212) 929-5500 (collect) or (800) 322-2885 (toll free in North America) or +44 (0) 203 178 8057 (from other countries). INVESTORS AND STOCKHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE PROPOSED MERGER AND RELATED MATTERS.

The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from our stockholders with respect to the proposed Merger. Information regarding the persons who may be considered "participants" in the solicitation of proxies is set forth in the definitive proxy statement and Schedule 13E-3 transaction statement relating to the proposed Merger. Further information regarding persons who may be deemed participants, including any direct or indirect interests they may have, is also set forth in the definitive proxy statement.

This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities and it is not a substitute for any proxy statement or other filings that have been or will be made with the SEC.


Friday, May 10, 2013
Comments & Business Outlook

First quarter 2013 Financial Results

  • Sales revenues increased 2% to $382.4 million in the first quarter 2013 from $374.1 million in the first quarter 2012 primarily due to higher sales volume of pork products sold at lower average selling prices.
  • Net income decreased 13% to $10.6 million in the first quarter 2013 from $12.2 million in the first quarter 2012 primarily due to higher operating expenses in support of higher sales, more employees to support expansion, higher promotional activities, and higher interest expense, partly offset by higher gross profit. The higher expenses were mainly due to the higher volume of business and intense competitive pressure in the pork market due to the ongoing industry consolidation.
  • Basic earnings per share (based on net income attributable to Zhongpin shareholders) decreased 12% to$0.29 in the first quarter 2013 from $0.33 in the first quarter 2012. Weighted average basic shares outstanding decreased 1% to 37,209,344 shares in the first quarter 2013 from 37,498,563 shares in the first quarter 2012.
  • Diluted earnings per share (based on net income attributable to Zhongpin shareholders) decreased 15% to$0.28 in the first quarter 2013 from $0.33 in the first quarter 2012. Weighted average diluted shares outstanding decreased 1% to 37,278,630 shares in the first quarter 2013 from 37,503,019 shares in the first quarter 2012.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin, said, "Our results for the first quarter of 2013 clearly illustrate the intense competitive pressure in the meat industry in China.

"While the demand for all our pork products, measured by our tonnage sold, was up 10.6% in the first quarter 2013 from last year's first quarter, the average price per ton for those products dropped 7.5%. Sequentially, the first quarter 2013 average price for all our pork products was only 1.0% higher than in the fourth quarter 2012.

"Both comparisons are substantially different from the normal seasonal pattern, when the first quarter prices often peak for the year due to the high demand for pork during the Chinese New Year. Those prices reflect strong competition to gain market share that is pressuring prices and financial performance.

"Our gross profit margin increased 0.6 percentage points to 10.1% in the first quarter from 9.5% in the first quarter 2012 primarily due to higher gross profit margins on our prepared pork products and from an increase in the spread between pork prices and hog prices, due to lower hog prices.

"Our operating expenses continued to increase to support higher sales. We added more employees to support expansion and had higher promotional activities and higher interest expense, all mainly due to the higher volume of business and expansion, plus the intense competitive pressure in the pork industry.

"For the year 2013, we expect that the demand for pork in China should remain strong and that Zhongpin's revenues from pork and pork products are likely to increase modestly based on higher tonnage sold at lower average prices compared with 2012. We anticipate that our net profit margin in 2013 will decrease due to increased competition in the industry, the expected increase in labor cost and overheads, and the expected increase in quality assurance and control costs in response to increased importance on food safety placed by the government and customers."

Thursday, March 14, 2013
Comments & Business Outlook

BEIJING and CHANGGE, China, March 15, 2013 /PRNewswire/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today reported higher sales revenues and lower net income for the year ended December 31, 2012 compared with the year 2011.

Year 2012 highlights:

  • Sales revenues increased 13% to $1,639.6 million in 2012 from $1,456.2 million in 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.
  • Net income decreased 31% to $44.1 million in 2012 from $64.2 million in 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, higher promotional activities, rising labor and utility costs, and higher interest expenses. The higher expenses were mainly due to the higher volume of business and intense competitive pressure in the pork market due to the ongoing industry consolidation.
  • Basic earnings per share (based on net income attributable to Zhongpin shareholders) decreased 29% to $1.18 in 2012 from $1.66 in 2011. Weighted average basic shares outstanding decreased 3% to 37,273,652 shares in 2012 from 38,505,027 shares in 2011.
  • Diluted earnings per share (based on net income attributable to Zhongpin shareholders) decreased 29% to $1.18in 2012 from $1.66 in 2011. Weighted average diluted shares outstanding decreased 3% to 37,328,792 shares in 2012 from 38,539,880 shares in 2011.
  • As of December 31, 2012, Zhongpin had 40,376,182 shares of common stock issued, of which 37,209,344 were outstanding and 3,166,838 were held as treasury stock.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin, said, "In 2012, our sales revenues increased 13 percent on higher tonnage at lower average prices, compared with 2011, primarily due to the intense competitive market pressure generated mainly by the continuing pork industry consolidation in China.

"Our costs continued to increase, mainly in support of our current operations and planned expansions. As a result, our gross profit margin declined to 9.4% in 2012 from 10.7% in 2011 and our net profit margin declined to 2.7% in 2012 from 4.4% in 2011.

"We are sustaining our prudent expansions in geographic markets and operations to gain market share for our long-term success in the face of the ongoing industry consolidation. We are managing our costs to maintain as much gross and net profit margin as possible and are aggressively working to further increase our asset utilization, effectiveness, and efficiency.

"In 2013, we expect that the demand for pork in China should remain strong and that Zhongpin's revenues from pork and pork products are likely to increase modestly based on higher tonnage sold at lower average prices, while live hog prices will remain at current levels, compared with 2012. We anticipate that our net profit margin in 2013 will decrease due to increased competition in the industry, the expected increase in labor cost and overheads, and the expected increase in quality assurance and control costs in response to increased importance on food safety placed by the government and consumers."


Friday, February 8, 2013
Going Private News

BEIJING and CHANGGE, China, February 8, 2013 /PRNewswire/ -- Zhongpin Inc. (Nasdaq: HOGS) ("Zhongpin", the "Company", "we", "us" and "our"), a leading meat and food processing company in the People's Republic of China, today announced that the terms of the previously announced definitive agreement and plan of merger by and among Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr. Xianfu Zhu, the Company's Chairman and Chief Executive Officer, dated as of November 26, 2012 and amended on January 14, 2013, have been amended and restated.

The amended and restated agreement and plan of merger (the "Amended Merger Agreement") provides that each share of the Company's common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $13.50 in cash without interest, except for shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms.Juanjuan Wang (collectively, the "Rollover Holders"), who are party to an equity contribution agreement pursuant to which they have agreed to contribute their shares of Company common stock to Parent immediately prior to the effective time of the merger, (iii) the Company or any direct or indirect wholly-owned subsidiary of the Company or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law. The Amended Merger Agreement amends and restates the original agreement and plan of merger to, among other things: (i) remove the provisions allowing the Company to initiate, solicit and encourage, whether publicly or otherwise, any alternative transaction proposals from third parties (i.e., the "go-shop" provision); (ii) remove the right of the Company to terminate the merger agreement at any time for any reason (and without payment of any termination fees) on or prior to February 8, 2013; and (iii) reduce the amount of the termination fee payable by the Company in specified circumstances.

Parent and Merger Sub intend to finance the merger through a combination of an equity commitment of $85 millionby China Wealth Growth Fund I L.P. and a $320,000,000 term loan facility from China Development Bank Corporation Hong Kong Branch.

The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee formed by the Board of Directors, approved the Amended Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Amended Merger Agreement. The Special Committee, which is composed solely of independent directors unrelated to any of Parent, Merger Sub or any of the management members of the Company, negotiated the terms of the Amended Merger Agreement.

The merger, which is currently expected to close in the second quarter of 2013, is subject to the adoption of the Amended Merger Agreement by an affirmative vote of (i) stockholders holding at least a majority of the outstanding shares of Company common stock and (ii) stockholders holdings at least a majority of the outstanding shares of the Company's common stock other than shares owned by Parent, Merger Sub, the Rollover Holders or any of their respective affiliates at a special meeting of the Company's stockholders which will be convened to consider the adoption of the Amended Merger Agreement, as well as certain other customary closing conditions. The Amended Merger Agreement may be terminated under certain circumstances, including, among others, termination by mutual agreement of the parties or by either party if the merger is not consummated on or before November 26, 2013. Mr.Xianfu Zhu and the other Rollover Holders have agreed under a voting agreement to vote all of the shares of Company common stock owned by them (which, as of the date of the Amended Merger Agreement, comprises an aggregate of approximately 26% of the outstanding shares of the Company's common stock) in favor of the adoption of the Amended Merger Agreement. If completed, the merger will, under Delaware law, result in the Company becoming a privately-held company, wholly-owned by Parent. Following the merger, the Company's common stock will no longer be listed on the NASDAQ Global Select Market.


Tuesday, January 15, 2013
Going Private News

Item 1.01.         Entry into a Material Definitive Agreement. 

Amendment to Agreement and Plan of Merger

 

On January 14, 2013, Zhongpin Inc., a Delaware corporation (the “Company”), entered into an Amendment No. 1 to Agreement and Plan of Merger (the “Amendment”) with Golden Bridge Holdings Limited, a Cayman Islands exempted company with limited liability (“Parent”), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”) and Mr. Xianfu Zhu, the Company’s Chief Executive Officer and Chairman of the its Board of Directors. The Amendment amended certain terms of the Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Parent, Merger Sub and Mr. Zhu (solely for the purposes of Section 6.6(c) and 6.15 of the Merger Agreement) dated November 26, 2012, to provide the following: (i) the extension of the “go-shop” period under the Merger Agreement until February 8, 2013 and (ii) the extension of the date on or prior to which the Merger Agreement may be terminated by the Company at any time for any reason until February 8, 2013. The Amendment is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The Amendment was negotiated on behalf of the Company by the special committee formed by the board of directors (the “Special Committee”) comprising solely independent and disinterested directors, and upon the unanimous recommendation of the Special Committee, unanimously adopted by the Company’s board of directors.

 

The Special Committee has appointed Cowen and Company (Asia) Limited and Duff & Phelps Securities, LLC as financial advisors to the Special Committee and to conduct the go-shop process.


Monday, November 26, 2012
Going Private News

BEIJING and CHANGGE, China, November 26, 2012 /PRNewswire/ -- Zhongpin Inc. (Nasdaq: HOGS) ("Zhongpin", the "Company", "we", "us" and "our"), a leading meat and food processing company in the People's Republic of China, today announced that it has entered into a definitive agreement and plan of merger (the "Merger Agreement") with Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr.Xianfu Zhu, the Company's Chairman and Chief Executive Officer.

Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of the Company common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr.Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang(collectively, the "Rollover Holders"), who are party to an equity contribution agreement with Parent and Holdco pursuant to which they have agreed to contribute their shares of Company common stock to Parent immediately prior to the effective time of the merger, (iii) the Company or any direct or indirect wholly-owned subsidiary of the Company or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law) will be converted automatically into the right to receive $13.50 in cash (the "Per Share Merger Consideration"), without interest. Collectively, the Rollover Holders own approximately 26% of the Company's outstanding common stock. In connection with the merger, each option to purchase Company common stock that is outstanding, whether vested or unvested, shall be cancelled at the effective time of the merger and converted into the right to receive, net of any applicable withholding taxes, cash in an amount equal to the excess of the Per Share Merger Consideration over the exercise price payable per share of Company common stock issuable under each option. The Per Share Merger Consideration of $13.50 represents a premium of approximately 47% over the closing price on March 26, 2012, the last trading day prior to the Company's announcement on March 27, 2012 that it had received a "going private" proposal from Mr. Xianfu Zhu.

Parent and Merger Sub intend to finance the merger through a combination of an equity commitment of $85 millionby China Wealth Growth Fund I L.P. and a $320,000,000 term loan facility from China Development Bank Corporation Hong Kong Branch.

The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee formed by the Board of Directors, approved the Merger Agreement and the merger and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. The Special Committee, which is composed solely of independent and disinterested directors, negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

The merger, which is currently expected to close in the first quarter of 2013, is subject to the adoption of the Merger Agreement by an affirmative vote of (i) stockholders holding at least a majority of the outstanding shares of Company common stock and (ii) stockholders holdings at least a majority of the outstanding shares of the Company's common stock other than shares owned by Parent, Merger Sub, the Rollover Holders or any of their respective affiliates at a special meeting of the Company's stockholders which will be convened to consider the adoption of the Merger Agreement, as well as certain other customary closing conditions. The merger agreement may be terminated under certain circumstances, including, among others, termination by mutual agreement of the parties or by either party if the merger is not consummated on or before November 26, 2013. In addition, the Company (acting upon the recommendation of the Special Committee) may terminate the Merger Agreement at any time for any reason on or prior to January 25, 2013 as set forth in the Merger Agreement. Mr. Xianfu Zhu and the other Rollover Holders have agreed under a voting agreement to vote all of the shares of Company common stock owned by them (which, as of the date of the Merger Agreement, comprises an aggregate of approximately 26% of the outstanding shares of the Company's common stock) in favor of the adoption of the Merger Agreement. If completed, the merger will, underDelaware law, result in the Company becoming a privately-held company, wholly-owned by Parent. Following the merger, the Company's common stock will no longer be listed on the NASDAQ Global Select Market.


Friday, November 9, 2012
Comments & Business Outlook

Third quarter 2012 highlights:

  • Sales revenues increased 4% to $415.7 million for the three months ended September 30, 2012 from $398.1 million in the third quarter 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.
  • Net income decreased 40% to $11.0 million in the third quarter 2012 from $18.3 million in the third quarter 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, higher promotional activities, rising labor and utility costs, and higher interest expenses. The higher expenses were mainly due to the higher volume of business and intense competitive pressure in the pork market.
  • Basic earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 35% to $0.30 in the third quarter 2012 from $0.46 in the third quarter 2011. Weighted average basic shares outstanding decreased 7% to 37,198,909 shares in the third quarter 2012 from 39,918,816 shares in the third quarter 2011.
  • Diluted earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 35% to $0.30 in the third quarter 2012 from $0.46 in the third quarter 2011. Weighted average diluted shares outstanding decreased 7% to 37,240,843 shares in the third quarter 2012 from 39,918,816 shares in the third quarter 2011.
  • 40,376,182 common shares were issued as of September 30, 2012, of which 37,209,344 were outstanding and 3,166,838 were held by Zhongpin as treasury shares.
  • The Company maintains its previous guidance for 2012. Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012. Gross profit margin is expected to be within the range of 8.6% to 10.2%. Net profit margin is expected to be within the range of 3.3% to 4.2%. The resulting diluted earnings per share for the fiscal year ending December 31, 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions and judgments supporting the guidance are shown below.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "We achieved 4 percent sales revenue growth in the third quarter on higher tonnage at lower average prices, compared with last year's third quarter, in the face of intense competitive pressure. The competitive pressure in the market remains very high due, in part, to industry consolidation in the pork industry in China. Our costs continued to increase, mainly to support our current operations and planned expansions. While pork prices were generally lower, mainly due to intense competitive market pressure, hog prices also declined, but not as rapidly as pork prices. That is the primary factor for our lower gross profit margin in the third quarter compared with last year's third quarter.

Guidance for the year 2012

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are maintaining our prior guidance.

"Our guidance for 2012 is based on several assumptions that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth.
  • Average hog prices in China are expected to decrease about 15% to 20% in 2012 from 2011, based on the assumed forecasted trend for the supply of live hogs and the increasing cost to raise hogs.
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2012 compared with 2011, while we plan to continue to increase sales volumes of processed pork products to optimize our product structure.
  • Average capacity utilization for the year of about 75% for pork products.
  • Increasing distribution efficiencies and reduction in the duration of delivery times through the expansion of our cold-chain logistics system, networks, and services.
  • Total government subsidies for Zhongpin are expected to be $5 million in 2012.

"In addition, we have assumed that the more aggressive price competition that we saw in the latter part of 2011 and the first quarter of 2012 will continue in 2012, especially aggressive promotion efforts by our major competitors.

"We have assumed that we will increase our expenses in four areas in 2012:

  • First, we will continue to build our brand more aggressively;
  • second, we will increase our investments in human resources, especially in training and recruiting;
  • third, we will increase research and development for new customized products with different styles and tastes to further satisfy customer needs in different regions, with the objective of capturing more market share for prepared pork products; and
  • fourth, we will advance our information technology and information systems more rapidly to support our cold-chain logistics system, optimize the structure of the supply chain, and to reduce the management cost.

"Lastly, we have assumed that the historical trend of increasing costs for labor, energy, environmental protection, and quality assurance and control will continue into the future, including in 2012.

"Given those comments and assumptions, we are maintaining our prior guidance.

"For the year 2012, we expect that Zhongpin's sales revenues should be within a range of US$1.55 billion to $1.72 billion.

"Gross profit margin is expected to be within the range of 8.6% to 10.2%.

"Net profit margin is expected to be within the range of 3.3% to 4.2%.

"Diluted earnings per share for the year 2012 are expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012."


Wednesday, August 8, 2012
Comments & Business Outlook

Second quarter 2012 highlights:

  • Total sales revenues increased 11.4% to $408.2 million for the three months ended June 30, 2012 from$366.5 million in the second quarter 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.
  • Net income decreased 43.0% to $11.0 million in the second quarter 2012 from $19.3 million in the second quarter 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, rising labor and utility costs, and higher interest expenses and income taxes. The higher expenses were mainly due to expansion of our business and intense competitive pressure in the pork market as the industry continues to consolidate and companies are required to vie aggressively to win additional market share in a variety of ways.
  • Basic earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6% to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average basic shares outstanding decreased 7.8% to 37,189,322 shares in the second quarter 2012 from 40,355,502 shares in the second quarter 2011.
  • Diluted earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6% to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average diluted shares outstanding decreased 7.8% to 37,209,695 shares in the second quarter 2012 from 40,365,654 shares in the second quarter 2011.
  • Common shares issued were 40,356,182 shares as of June 30, 2012, of which 37,189,344 were outstanding and 3,166,838 were held in Zhongpin's treasury.
  • Guidance for 2012 is maintained: Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012. Gross profit margin is expected to be within the range of 8.6% to 10.2%. Net profit margin is expected to be within the range of 3.3% to 4.2%. The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions and judgments supporting the guidance are shown below.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "We achieved good sales growth in the second quarter on higher tonnage at lower average prices, compared with last year's second quarter.

"The continuing intense competitive pressure due to the ongoing pork industry consolidation inChina, and higher costs generally in China, have reduced our gross profit margin and increased our operating costs for this quarter and this year.

"We continued to expand our operations in the second quarter, but at a slower rate, to help secure our long-term growth and achieve a much stronger market position in the years ahead. Recently, we finished the construction for additional annual production capacity of 50,000 metric tons for prepared pork products and started trial production in July. With that addition, our total annual production capacity was 954,760 metric tons for all of our products at the end of July 2012.

"Pork prices were lower than expected, mainly due to intense competitive pressure as the industry continues to consolidate. Hog prices also declined, but not as rapidly as pork prices. Those were the main factors for our lower gross profit margin in the second quarter compared with last year's quarter.

"Our product growth strategy is to develop, produce, and sell more prepared pork products -- first, because customers like them, and second, because the products can be sold at higher profit margins. So the shift you see in our product mix -- with lower tonnage, lower prices, and lower sales revenues from frozen pork and higher numbers from our prepared pork products this quarter - reflects our strategy to use more of our resources to develop and produce our prepared pork products, because those are considerably more profitable and have a very attractive future. Chinese consumers today are embracing more easy-to-complete-and-serve meals, often based on the outstanding quality, safety, and taste of Zhongpin's prepared pork products. In some markets, we even sell complete kits for those meals.

Guidance for the year 2012

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are maintaining our prior guidance.

"Our guidance for 2012 is based on several assumptions that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth.
  • Average hog prices in China are expected to decrease about 15% to 20% in 2012 from 2011, based on the assumed forecasted trend for the supply of live hogs and the increasing cost to raise hogs.
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2012 compared with 2011, while we plan to continue to increase sales volumes of processed pork products to optimize our product structure.
  • Average capacity utilization for the year of about 75% for pork products.
  • Increasing distribution efficiencies and reduction in the duration of delivery times through the expansion of our cold-chain logistics system, networks, and services.
  • Total government subsidies for Zhongpin, which are expected to be $5 million in 2012.

"In addition, we have assumed that the more aggressive price competition that we saw in the latter part of 2011 and the first and second quarters of 2012 will continue in 2012, especially aggressive promotion efforts by our major competitors.

"We have assumed that we will increase our expenses in four areas in 2012:

  • First, we will continue to build our brand and do that more aggressively in 2012 than in 2011;
  • second, we will increase our investments in human resources, especially in training and recruiting;
  • third, we will increase research and development for new customized products with different styles and tastes to further satisfy customer needs in different regions, with the objective of capturing more market share for prepared pork products; and
  • fourth, we will advance our information technology and information systems more rapidly to support our cold-chain logistics system, optimize the structure of the supply chain, and to reduce the management cost.

"Lastly, we have assumed that the historical trend of increasing costs for labor, energy, environmental protection, and quality assurance and control will continue into the future, including in 2012.

"Given those comments and assumptions, we are maintaining our prior guidance.

"For the year 2012, we expect that Zhongpin's sales revenues should be within a range of US$1.55 billion to $1.72 billion.

"Gross profit margin is expected to be within the range of 8.6% to 10.2%.

"Net profit margin is expected to be within the range of 3.3% to 4.2%.

"Diluted earnings per share for the year 2012 are expected to be within the range of $1.36 to$1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012.

"Zhongpin believes that China's meat and food industry will continue to consolidate in 2012 at a more rapid pace than in 2011, which may result in higher market shares for the leading producers. We believe that Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2012 can be achieved."


Thursday, May 10, 2012
Going Private News

BEIJING and CHANGGE, China, May 10, 2012 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. ( the "Company," NASDAQ: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that the special committee of the Company's board of directors (the "Special Committee") has appointed Barclays Bank PLC as its independent financial advisor. Akin Gump Strauss Hauer & Feld LLP has been retained as the Special Committee's legal counsel.

As previously announced, the Company's board of directors formed the Special Committee to review and evaluate the March 27, 2012 non-binding proposal from its chairman and chief executive officer, Mr. Xianfu Zhu, to acquire all of the outstanding shares of the Company's common stock not currently owned by him.

The Special Committee is considering Mr. Zhu's proposal, as well as the Company's other strategic alternatives. No decisions have been made by the Special Committee with respect to the Company's response to Mr. Zhu's proposal. The Special Committee has not set a definitive timetable for the completion of its evaluation of Mr. Zhu's proposal or any other alternative and does not currently intend to announce developments unless and until an agreement has been reached. There can be no assurance that any definitive offer will be made, that any agreement will be executed, or that Mr. Zhu's proposal or any other transaction will be approved or consummated.


Comments & Business Outlook

First Quarter 2012 highlights:

  • Sales revenues increased 31% to $374.1 million in the first quarter 2012 from $285.8 million in the first quarter 2011.
  • Net income decreased 27.8% to $12.2 million in the first quarter 2012 from $16.9 million in the first quarter 2011.
  • Basic earnings per share decreased 29.8% to $0.33 in the first quarter 2012 from $0.47 in the first quarter 2011 on average basic shares outstanding that were 4.6% higher than in the first quarter 2011.
  • Diluted earnings per share decreased 29.8% to $0.33 in the first quarter 2012 from $0.47 in the first quarter 2011 on average diluted shares outstanding that were 3.5% higher than in the first quarter 2011.
  • Guidance for 2012 is maintained: Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012. Gross profit margin is expected to be within the range of 8.6% to 10.2%. Net profit margin is expected to be within the range of 3.3% to 4.2%. The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions and judgments supporting the guidance are shown below.
  • As of March 31, 2012, Zhongpin had a total annual capacity of 904,760 metric tons for pork, pork products, and vegetables and fruits.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "The intense competitive pressure in the pork market to gain market share continued in the first quarter as the pork industry goes through consolidation. As a result, pork prices did not increase, as a percent, as much as hog prices increased, which narrowed the gross profit spread between the cost of hogs and the price of pork. Further, substantial promotion costs were required to be competitive in both keeping and gaining market share. As expected, we incurred higher expenses in promotion, marketing, and operations to build market share and prepare the Company for increasing success in the future.

"Although, pork prices and volumes were generally higher in the first quarter than in the first quarter of 2011, we expect the prices of both hogs and pork to decline approximately 15% to 20% in 2012, so it will continue to be difficult to report higher results in 2012 than in 2011.

"As you know, in 2012 we are slowing the rate of our capacity expansions and focusing on greater use of existing facilities, which we believe should help offset some of the pressure on our financial results.

"Given the challenging competition that is very likely to continue in the marketplace in 2012, we still expect to report somewhat higher revenues in 2012 than 2011, a somewhat lower gross profit margin, and a somewhat lower net profit margin than in 2011, and diluted earnings per share within the range of $1.36 to $1.92 per share in 2012.

"Zhongpin provides outstanding, flavorful, and increasingly convenient pork products with the highest product quality and safety, from farm to fork. Those products are the foundation of our success and our future. We offer more than 410 types of pork products and more than 25 different categories of vegetables and fresh fruits and have more than 90 new products under development as of March 31, 2012, so we believe that our existing products and those in our new product pipeline will continue to be attractive to consumers and help Zhongpin gain market share in the challenging years ahead."

Guidance for the year 2012

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are maintaining our prior guidance that we issued on March 13, 2012.

"Our guidance for 2012 is based on several assumptions that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth.
  • Average hog prices in China are expected to decrease about 15% to 20% in 2012 from 2011, based on the assumed forecasted trend for the supply of live hogs and the increasing cost to raise hogs.
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2012 compared with 2011, while we plan to continue to increase sales volumes of processed pork products to optimize our product structure.
  • Average capacity utilization for the year of about 75% for pork products.
  • Increasing distribution efficiencies and reduction in the duration of delivery times through the expansion of our cold-chain logistics system, networks, and services.
  • Total government subsidies for Zhongpin are expected to be $5 million in 2012.

"In addition, we have assumed that the more aggressive price competition that we saw in the latter part of 2011 and the first quarter of 2012 will continue in 2012, especially aggressive promotion efforts by our major competitors.

"We have assumed that we will increase our expenses in four areas in 2012:

  • First, we will continue to build our brand and do that more aggressively in 2012 than in 2011;
  • second, we will increase our investments in human resources, especially in training and recruiting;
  • third, we will increase research and development for new customized products with different styles and tastes to further satisfy customer needs in different regions, with the objective of capturing more market share for prepared pork products; and
  • fourth, we will advance our information technology and information systems more rapidly to support our cold-chain logistics system, optimize the structure of the supply chain, and to reduce the management cost.

"Lastly, we have assumed that the historical trend of increasing costs for labor, energy, environmental protection, and quality assurance and control will continue into the future, including in 2012.

"Given those comments and assumptions, we are maintaining our prior guidance.

"For the year 2012, we expect that Zhongpin's sales revenues should be within a range of US$1.55 billion to $1.72 billion.

"Gross profit margin is expected to be within the range of 8.6% to 10.2%.

"Net profit margin is expected to be within the range of 3.3% to 4.2%.

"Diluted earnings per share for the year 2012 are expected to be within the range of $1.36 to$1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012.

"Zhongpin believes that China's meat and food industry will continue to consolidate in 2012 at a more rapid pace than in 2011, which may result in higher market shares for the leading producers. We believe that Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2012 can be achieved."


Wednesday, May 2, 2012
Shareholder Letters

Dear fellow shareholders,

I am pleased that the Zhongpin team achieved an outstanding year in 2011. Sales revenues grew by 54% to $1.45 billion, with our chilled and prepared pork products registering increases in both average prices and tonnage, while frozen pork sales increased in price on slightly lower volume.

We are committed to meeting the needs of contemporary lifestyles with China's favorite meat product, pork, by delivering flavor, convenience, and variety. Our philosophy and drive have helped us to stand out in a changing marketplace, where China's traditional wet markets and butchers are being replaced by cold-chain logistics and supermarket distribution.

Financial results

We had an excellent year in sales, exceeding our expectations. Net income increased by 10% to $64.2 million, with a gross profit margin of 10.4% and a net profit margin of 4.4%. Net income and profit margins were a little less than we had provided in our guidance for the year, due to market and competitive pressures in hog and pork prices.

We ended the year with cash of $135.8 million, an increase of $51.7 million over 2010, and a moderate debt level with a debt ratio of 34.9% net debt to total capital, subtracting cash and cash equivalents. Interest coverage for the year was 4.2 times net interest expense. Our moderate debt leverage and reasonable coverage give us adequate financial flexibility should we need it.  Full letter.


Friday, April 13, 2012
Going Private News

BEIJING and CHANGGE, China, April 13, 2012 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. ("Zhongpin" or the "Company," NASDAQ: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that it has established a special committee of its board of directors (the "Special Committee") to consider the preliminary, non-binding proposal received from Zhongpin's Chairman and Chief Executive Officer, Mr. Xianfu Zhu, on March 27, 2012 to acquire all of the outstanding shares of the Company's common stock not currently owned by him in a going private transaction (the "Zhu Proposal").

The Special Committee is composed of the following independent directors of the Company: Mr. Raymond Leal, Mr. Xiaosong Hu, and Mr. Yaoguo Pan. The Special Committee has retained Akin Gump Strauss Hauer & Feld LLP as its legal advisor and intends to retain independent financial advisors to assist it in its evaluation of the Zhu Proposal and any additional proposal that may be made by Mr. Zhu and his affiliates, if any.

No decisions have been made by the Special Committee with respect to the Company's response to the Zhu Proposal and there can be no assurance that any definitive offer will be made, that any agreement will be executed, or that the Zhu Proposal or any other transaction will be approved or consummated.


Monday, April 9, 2012
Investor Alert

The SEC has obtained a court-ordered freeze of the assets of six Chinese citizens and one British Virgin Islands entity charged with insider trading in Zhongpin Inc., a China-based pork processor whose shares trade in the U.S. The SEC’s complaint, filed in U.S. District Court in Chicago on April 4, alleges the defendants reaped more than $9M by trading in Zhongpin ahead of a March 27 announcement of a proposal to take the company private. The SEC alleges that the defendants violated federal anti-fraud laws, namely Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.


Tuesday, March 27, 2012
Going Private News

CHANGGE and BEIJING, China, March 27, 2012 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. (NASDAQ: HOGS) ("Zhongpin" or the "Company"), a leading meat and food processing company in the People's Republic of China, today announced that its Board of Directors has received a preliminary, non-binding proposal from its Chairman and Chief Executive Officer, Mr. Xianfu Zhu ("Mr. Zhu"), which stated that Mr. Zhu intends to acquire all of the outstanding shares of the Company's common stock not currently owned by him in a going private transaction at a proposed price of $13.50 per share in cash. Mr. Zhu currently beneficially owns approximately 17.5% of the Company's common stock. A copy of the proposal letter is attached hereto as Exhibit A.

The Company's Board of Directors intends to form a special committee of independent directors to consider this proposal and any additional proposal that may be made by Mr. Zhu and his affiliates, if any. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that a transaction with Mr. Zhu or any other transaction will be approved or consummated.


Wednesday, March 14, 2012
Comments & Business Outlook

Full Year 2011 Results

  • Revenues increased 54% to $1,456.2 million in 2011 from $946.7 million in 2010.
  • Net income increased 10% to $64.2 million in 2011 from $58.3 million in 2010.
  • Basic earnings per share decreased 0.6% to $1.66 in 2011 from $1.67 in 2010 on average basic shares outstanding that were 10.5% higher than 2010.
  • Diluted earnings per share increased 0.6% to $1.66 in 2011 from $1.65 in 2010 on average diluted shares outstanding that were 9.3% higher than 2010.
  • Guidance for 2012: Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012. Gross profit margin is expected to be within the range of 8.6% to 10.2%. Net profit margin is expected to be within the range of 3.3% to 4.2%. The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions supporting the guidance are shown below.
  • Zhongpin added 201,000 metric tons of annual capacity for pork and pork products during 2011 to bring total capacity at yearend 2011 to 904,760 metric tons.
  • Zhongpin will be investing about $10.5 million in a by-product processing plant in Changge, Henan province, to product sausage casings and the raw material used to make heparin sodium. Annual production capacity will be 100 million meters of casings and 300 billion units of the raw material for heparin sodium. The construction is scheduled to start in the first quarter of 2012 and operations should begin in fourth quarter of 2012.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "We continued to deepen our penetration in our current markets and aggressively increase our geographic markets, sales locations, customers, and operations in 2011 to support higher sales, profits, and operating cash flow in the years ahead, so the year was good in operations.

"Our financial results in 2011 reflected new aggressive price competition in the markets and our higher expenses in operations, promotion, marketing, and sales to build our market share in 2011 and prepare the Company for increasing success in the future.

"Most of our 54% increase in sales revenues in 2011 came from our pork products prices for which rose an average of 44% for the year, on tonnage that was up 7%. With the prices of both hogs and pork expected to decline from 15% to 20% in 2012, it will be difficult to report higher results in 2012 compared with 2011.

"In 2012, we will slow the rate of our capacity expansions and focus on greater use of existing facilities, which we believe should help our financial results.

"As of today, China expects its economy to grow at a good rate in 2012, with its gross domestic product continuing to increase but perhaps at a slower rate of growth.

"Despite challenging competition that is likely to continue in the marketplace in 2012, and given the good outlook for the China's economy, we expect to report somewhat higher revenues in 2012 than 2011, a somewhat lower gross profit margin and a somewhat lower net profit margin than in 2011, and diluted earnings per share within the range of $1.36 to $1.92 per share in 2012. The lower margins are expected because we are facing tough competition in the markets and must simultaneously prepare the Company for improved operating and financial performance that we expect will create substantial additional value for shareholders in the years ahead.

Guidance:

"For the year 2012, we expect that Zhongpin's sales revenues should be within a range of US$1.55 billion to $1.72 billion.

"Gross profit margin is expected to be within the range of 8.6% to 10.2%. Net profit margin is expected to be within the range of 3.3% to 4.2%.

"Diluted earnings per share for the year 2012 are expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012.

"Zhongpin believes that China's meat and food industry will continue to consolidate in 2012 at a more rapid pace than in 2011, which may result in higher market shares for the leading producers. We believe that Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2012 can be achieved."


Wednesday, November 9, 2011
Comments & Business Outlook

Third Quarter 2011 Results

  • Revenues increased 65% to $398.1 million in the third quarter 2011 from $241.1 million in the third quarter 2010.
  • Gross profit margin was 10.1% in the third quarter 2011 compared with 11.3% in the third quarter 2010.
  • Operating profit margin was 6.2% in the third quarter 2011 compared with 6.6% in the third quarter 2010.
  • Net profit margin was 4.6% in the third quarter 2011 compared with 6.1% in the third quarter 2010.
  • Net income increased 25% to $18.3 million in the third quarter 2011 from $14.7 million in the third quarter 2010.
  • Basic earnings per share were $0.46 in the third quarter 2011, up 9.5% from $0.42 in the third quarter 2010 on average basic shares outstanding that were 15% higher in the third quarter 2011 than in the third quarter 2010.
  • Diluted earnings per share were $0.46 in the third quarter 2011, up 9.5% from $0.42 in the third quarter 2010 on average diluted shares outstanding that were 13% higher in the third quarter 2011 than in the third quarter 2010.
  • Zhongpin maintained its guidance for the year 2011.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "We continued to achieve good results in the third quarter 2011 in our operations, financial results, and geographic and capacity expansions.

"Our construction projects are on schedule, with three coming into operation in the fourth quarter. These projects will help support growth in our current markets and in our geographic market expansions in northern and eastern China, which we expect will result in higher sales and a larger market share of the national pork market. These three projects include two facilities for chilled and frozen pork and one facility for prepared pork products. The openings of these production facilities are timed to support the higher demand from our new markets during the Chinese New Year from the last week of January through first week of February 2012.

"We are continuing to increase consumer awareness and purchases of Zhongpin products through sustained marketing and promotion programs, especially in the geographic regions where we are expanding our operations to support the growing demand for pork and related products.

"Under our Stock Repurchase Program, Zhongpin has purchased a total of 1,822,438 shares of its common stock for $15.8 million (including sales commissions) through September 30, 2011. We believe that these purchases will create additional value for shareholders.

"We remain on plan to deliver a very good year in 2011."

Guidance for the year 2011

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are maintaining our guidance for the year 2011


Tuesday, October 18, 2011
Investor Alert

If you have not yet read "17 Reasons not to Take Chardan's Wavering Opinion on Zhongpin Seriously", you can now access the report openly.

It is obvious that the issues surrounding HOGS have developed into a multi-faceted story that can become difficult to digest. That is why we feel it necessary to peel the HOGS onion one layer at a time so investors can appreciate the breadth and importance of each layer individually. In this installment we discuss our view of Chardan Capital’s take on the HOGS story as well as a look at Chardan’s track record in the ChinaHybrid space. After this article, we will follow-up with evidence regarding what we feel are material misrepresentations made by HOGS management.

On September 27, 2011 Chardan Capital quietly downgraded HOGS from Buy to Neutral and cut HOGS price target to $9.00 from $14.50. The irony of this move is that it was only on August 9, 2011 that Chardan reiterated its "buy" rating on HOGS as Global Hunter Securities was being criticized for downgrading the company. Now it seems Chardan has had second thoughts about its seemingly unquestioned acceptance of whatever story the HOGS management team spins for the market. Could this be a sign that Chardan's motive for their initial reiteration of the buy rating was to support the stock?

read more...http://geoinvesting.com/companies/duediligence/Chardans_Wavering_Opinion_on_Zhongpin.aspx


Thursday, August 18, 2011
Notable Share Transactions

CHANGGE and BEIJING, China, August 18, 2011 /PRNewswire-FirstCall/ -- Zhongpin Inc. ("Zhongpin", Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that its board of directors has approved an increase in the stock repurchase program of 30 million of its outstanding stock over the next 12 months. The stock repurchase program is authorized to be in effect through August 17, 2012.

Mr. Xianfu Zhu, Zhongpin's Chairman and Chief Executive Officer, said, "We have strong confidence in our growth prospects as the Chinese economy continues to grow and our industry consolidates further, and in the fundamental strengths of the Company. This substantial increase in the size of our stock repurchase program is a clear sign of our strong commitment to create value for our loyal shareholders."

Zhongpin's board of directors will periodically review the share repurchase program and may authorize adjustments to the program's terms and size. The board may also suspend or discontinue the repurchase program at any time.

Under the stock repurchase program, Zhongpin is authorized to repurchase up to $40 million of its issued and outstanding common shares, from time to time, in open-market transactions on Nasdaq at prevailing market prices, in negotiated transactions off the market, in block trades, in trades pursuant to a Rule 10b5-1 repurchase plan, or otherwise, in accordance with applicable federal securities laws, including Rule 10b-18.


Company Rebuttal

CHANGGE and BEIJING, China, August 18, 2011 / PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. ("Zhongpin" or the "Company," Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China ("China"), announced today that it disagrees with a recent story that appeared on the GeoInvesting homepage.

The article contains numerous errors of fact and is riddled with unsupported speculation, innuendo, hyperbole, sensationalism, and leaps of logic. There are so many errors in the story, that most rational readers would easily conclude that the story was heavily slanted to support the writer's short position in Zhongpin shares.

Zhongpin again states that the information contained in its filings with the SEC is accurate.

The Company reserves all rights to take legal action against the writer and publisher of this inaccurate and misleading story.


Investor Alert

Yesterday we released our thorough due diligence on Zhongpin Inc. (HOGS). Based on our work and the observations of our investigators who have visited HOGS facilities on various occasions, we conclude that: HOGS is in fact processing and selling pork products in China. However, while HOGS is clearly not an "empty shell" we did find clear and substantial evidence of possible fraudulent activities.
Summary of Findings

  1. Overstatement of SEC net income vs. SAIC filings by nearly 500% in 2009.
  2. GEO estimates 2010 net income of $10-20 million vs. $58 million reported to the SEC.
  3. Deliberate manipulation of SAIC filings.
  4. Likely diversion of almost $150 million of reported capex.
  5. Inconsistent trends between inventories and sales.
  6. Repeated capital raisings, despite assurances to investors that none were needed.
  7. Capex concerns already noted by Roth Capital resulting in downgrade.

Please see our full report.


Tuesday, August 9, 2011
Comments & Business Outlook

Second quarter 2011 highlights:

  • Revenues increased 70% in the second quarter 2011 to $366.5 million from $215.1 million in the second quarter 2010.
  • Gross profit margin was 10.7% in the second quarter 2011 from 11.8% in the second quarter 2010. Operating profit margin was 6.5% in both second quarters. Net profit margin was 5.3% in the second quarter 2011 from 5.7% in the second quarter 2010.
  • Net income increased 56% to $19.3 million in the second quarter 2011 from $12.4 million in the second quarter 2010.
  • Basic earnings per share increased 33% to $0.48 in the second quarter 2011 from $0.36 in the second quarter 2010 on average basic shares outstanding that were 16% higher.
  • Diluted earnings per share increased 37% to $0.48 in the second quarter 2011 from $0.35 in the second quarter 2010 on average diluted shares outstanding that were 15% higher.
  • Zhongpin revised its guidance for the year 2011.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "Our operations and growth strategy continued on plan in the second quarter.

"Revenues were up 70% and net income was up 56% from the prior second quarter, even with the expense associated with our aggressive expansions in markets and facilities. Total tonnage was up 6%, with average prices up 60%, second quarter over second quarter.

"Given our good results in the first half of 2011, we have revised our guidance and have fine-tuned our assumptions supporting our guidance.

"Product quality and safety, which remain our highest priorities, are engineered into our raw material selection, production, quality assurance and control processes, integrated I.T. system, and cold-chain logistics. Consumers and customers, when they choose Zhongpin products, can be sure that they are getting the highest food quality and safety, as well as great taste.

"We are on schedule in our construction projects. Those expansions will support growth in our current markets and in our geographic market expansions in northern and eastern China, which we expect will result in higher sales and a larger market share in the national pork market.

"In 2011, we are continuing our proven strategy and actions to sustain the trend-line growth we have achieved in the past several years. Our actions include supporting the breeding of premium sire boars to produce better hogs for food, expanding our geographic markets and distribution channels, building more production capacity to serve current and new markets, aggressive marketing to increase brand awareness and encourage higher sales, further streamlining our supply chain, extending our cold-chain logistics system, continuing to leverage our integrated information technology system, continuing product and process improvements, developing new products, and continuing employee training, all to sustain our rapid healthy growth to deliver our company's good financial performance for our shareholders.

"Although we usually prefer our own greenfield expansions, to augment our internal growth, we may also consider acquiring companies that have strong regional brand recognition and that produce prepared pork products using high-quality facilities. These additional operations would likely help us to build Zhongpin into an even stronger national brand; increase our market share, revenues, and net income; and strengthen our ability to take advantage of consolidation opportunities in China's meat industry."

"We remain on track to deliver a very good year in 2011."

Guidance for the year 2011

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "We are revising our guidance for the year 2011.

"The revised guidance for 2011 is based on several assumptions and judgments that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth.
  • Average pork prices in China are expected to remain the relative high level for the rest of 2011, based on the assumption of steady economic growth and the forecast trend for the supply of live hogs and the cost to raise hogs.
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2011 than in 2010, while continuing to increase the sales volume of processed pork products to optimize our product structure.
  • Average capacity utilization for the year of about 75% for pork products.
  • Increasing distribution efficiencies and reduction in the duration of delivery times by expanding our cold-chain logistics system, networks, and service.
  • Continuing to reinforce awareness, recognition, and selection of Zhongpin brand products in the major regional markets, to expand awareness of the brand across China, and to increase market share and the brand's price premium.
  • And continuation of the Chinese government's support and subsidies for producers of agricultural products, such as Zhongpin. Total government subsidies for Zhongpin are expected to exceed $5 million in 2011.


 

"Given those comments and assumptions, here are the revised numbers.

"For the year 2011, we expect that Zhongpin's sales revenues should be within a range of US$1.33 billion to $1.37 billion.

"Gross profit margin is expected to be within the range of 11.2% to 11.8%.

"Net profit margin is expected to be within the range of 5.2% to 5.8%.

"Diluted earnings per share for the year 2011 is currently expected to be within the range of $1.80 to $2.05 per share, assuming average diluted common shares outstanding of about 38.0 million shares in 2011.

"Zhongpin believes that China's meat and food industry will continue to consolidate in 2011 at a more rapid pace than in 2010, which may result in higher market shares for our main competitors. However, we believe that Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2011 can be achieved."


Saturday, July 30, 2011
Analyst Reports

NEW YORK, NY--(Marketwire - Jul 29, 2011) - Pork prices have skyrocketed close to all-time this year, prompting the Chinese government to step in to stabilize the market. This is welcome news for larger Chinese agricultural firms, as generous government investments are encouraging increased hog production. The Bedford Report examines the outlook for companies in China's Consumer Goods Sector and provides equity research on AgFeed Industries, Inc. (NASDAQ: FEED) and Zhongpin, Inc. (NASDAQ: HOGS)

Latest statistics show China's pork prices surged 57 percent year-on-year in June, stoking inflation worries while setting pork suppliers fidgeting upon the potential shake-up in the industry. Despite surging consumption, China's pork is largely supplied by small family farms, which has been one contributor and victim to the price fluctuations. "About 60 percent of Chinese pig farms are small ones that produce fewer than 50 hogs each and every year," said Li Binglong, professor at China Agricultural University.

The central government said it would invest heavily in the large-scale pig farms and raise subsidies to encourage pig farmers to stay in the business. The Chinese Government says that it will invest 2.5 billion yuan ($390 million) in large pig farms this year. Also, all farmers and pig farms will receive a subsidy of 100 yuan for every sow they raise.

The Bedford Report releases investment research on China's consumer goods sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

AgFeed Industries declares its operating philosophy to be: "AgFeed, Government, Farmer." According to AgFeed, the company and the local government together act in partnership with local farmers to secure the necessary financing, provide the necessary guidance, technical and nutritional support in order for the farmers to improve their productivity, yields and profit in "finishing" hogs within AgFeed's production system.

Zhongpin is a meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. The company recently posted a 40 percent year-on-year surge in first quarter revenues as the company says it "built up its brand image and brand recognition through general advertising display promotions and sales campaigns."

The Bedford Report provides Market Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. The Bedford Report has not been compensated by any of the above-mentioned companies. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at: http://www.bedfordreport.com/disclaimer.

NEW YORK, NY--(Marketwire - Jul 29, 2011) - Pork prices have skyrocketed close to all-time this year, prompting the Chinese government to step in to stabilize the market. This is welcome news for larger Chinese agricultural firms, as generous government investments are encouraging increased hog production. The Bedford Report examines the outlook for companies in China's Consumer Goods Sector and provides equity research on AgFeed Industries, Inc. (NASDAQ: FEED) and Zhongpin, Inc. (NASDAQ: HOGS)

Latest statistics show China's pork prices surged 57 percent year-on-year in June, stoking inflation worries while setting pork suppliers fidgeting upon the potential shake-up in the industry. Despite surging consumption, China's pork is largely supplied by small family farms, which has been one contributor and victim to the price fluctuations. "About 60 percent of Chinese pig farms are small ones that produce fewer than 50 hogs each and every year," said Li Binglong, professor at China Agricultural University.

The central government said it would invest heavily in the large-scale pig farms and raise subsidies to encourage pig farmers to stay in the business. The Chinese Government says that it will invest 2.5 billion yuan ($390 million) in large pig farms this year. Also, all farmers and pig farms will receive a subsidy of 100 yuan for every sow they raise.

The Bedford Report releases investment research on China's consumer goods sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

AgFeed Industries declares its operating philosophy to be: "AgFeed, Government, Farmer." According to AgFeed, the company and the local government together act in partnership with local farmers to secure the necessary financing, provide the necessary guidance, technical and nutritional support in order for the farmers to improve their productivity, yields and profit in "finishing" hogs within AgFeed's production system.

Zhongpin is a meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. The company recently posted a 40 percent year-on-year surge in first quarter revenues as the company says it "built up its brand image and brand recognition through general advertising display promotions and sales campaigns."

The Bedford Report provides Market Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. The Bedford Report has not been compensated by any of the above-mentioned companies. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at: http://www.bedfordreport.com/disclaimer.


Wednesday, July 6, 2011
Notable Share Transactions

CHANGGE and BEIJING, China, July 6, 2011 /PRNewswire-FirstCall/ -- Zhongpin Inc. ("Zhongpin", Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that its board of directors has approved a stock repurchase program of up to $10 million of its outstanding stock over the next 12 months. The stock repurchase program was approved by Zhongpin's board of directors onJuly 5, 2011, became effective on July 5, 2011, and is authorized to be in effect through July 4, 2012.

Mr. Xianfu Zhu, Zhongpin's Chairman and Chief Executive Officer, said, "Our board of directors approved this share repurchase program to demonstrate its confidence in the long-term growth outlook for Zhongpin and its desire to create value for our shareholders. Our good cash position gives us the flexibility both to continue our aggressive growth strategy and to buy our shares through the stock repurchase plan."

Under the stock repurchase program, Zhongpin is authorized to repurchase up to $10 million of its issued and outstanding common shares from time to time in open-market transactions on Nasdaq at prevailing market prices, in negotiated transactions off the market, in block trades, in trades pursuant to a Rule 10b5-1 repurchase plan that allows Zhongpin to repurchase its shares during periods in which it may be in possession of material non-public information, or otherwise, in accordance with applicable federal securities laws, including Rule 10b-18.

The repurchases will be made at management's discretion, subject to restrictions on price, volume, and timing. The timing and extent of any purchases will depend upon market conditions, the trading price of its shares, and other factors. The repurchase program does not obligate Zhongpin to make repurchases at any specific time or situation.

Zhongpin's board of directors will periodically review the share repurchase program and may authorize adjustments to the program's terms and size. The board may also suspend or discontinue the repurchase program at any time.

Zhongpin expects to pay for the repurchased shares using internally available cash. As of March 31, 2011, Zhongpin's cash and cash equivalents totaled $177.6 million.

Zhongpin had 40.3 million common shares outstanding as of March 31, 2011.


Monday, June 20, 2011
Notable Share Transactions

CHANGGE and BEIJING, China, June 20, 2011 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. ("Zhongpin", Nasdaq: HOGS), a leading meat and food processing company in the People's Republic of China, today announced that Mr. Xianfu Zhu, Zhongpin's Chairman and Chief Executive Officer, and Mr. Baoke Ben, Director and Executive Vice President, expect to use their personal funds to purchase up to an aggregate total of $1 million worth of Zhongpin's common stock in open market transactions within the next six months.

Mr. Xianfu Zhu, Zhongpin's Chairman and Chief Executive Officer, said, "Mr. Ben and I are confident that Zhongpin's outlook continues to be very attractive, especially given Zhongpin's aggressive growth strategy, China's good economy, and the strong market in China for Zhongpin's food products. Our expected purchases also indicate our belief that our stock is currently undervalued."

The share purchases will be made in a manner consistent with Zhongpin's stock trading policy and appropriate securities laws.


Tuesday, May 10, 2011
Analyst Reports

Rodman and Renshaw on HOGS                   5/10/2011

1Q11 Results a Touch Shy of Expectations; Tweaking Price Target to $21

Zhongpin Inc. (“Zhongpin”, Nasdaq: HOGS, “Market Outperform”) reported 1Q11 results that were either in-line or slightly below our expectations. Total revenue increased 40% YoY to $285.8 million, but was below our estimate of $288.3 million. Gross profit came in at $35.9 million, a touch shy of our estimate of $36.2 million. Actual gross margin of 12.6% however, was almost in-line with our estimate of 12.5%. Net income increased 27% YoY to $16.9 million, below our estimate of $17.9 million. This translates to diluted EPS of $0.47, a penny shy of our estimate of $0.48. The company reiterated its prior 2011 guidance of realizing revenue of $1.18-1.23 billion, gross margin between 11.7% and 12.4%, and net margin between 5.7% and 6.3%. It also provided an updated EPS guidance (after the March secondary issuance) of $1.66-1.91 for the year.

1Q11 Highlights and Discussions

Product segment contributions Chilled pork, with 1Q11 sales of $168.6 million, continued to be the largest revenue contributor for Zhongpin, generating 59.0% of the company’s total revenue. During Q1, chilled pork tonnage increased 9% YoY while the average selling price increased 35% YoY. Frozen pork revenue also increased, up 46% YoY, to $73.5 million. It benefited from an average selling price increase of 46% YoY while sales volume actually decreased 0.3% YoY. Prepared pork provided revenue of $41.3 million on higher sales volume (up 25% YoY) and lower average price (down 9% YoY). It is worth noting that revenue from prepared pork products actually decreased sequentially from $45.7 million in 4Q10.

Rest of 2011 looks to be supported by firm hog price and capacity expansion Hog price in China has been firm in the first half of 2Q11, and we expect it will remain strong for the rest of 2011 in light of China’s increasingly inflationary environment. We also believe Zhongpin will benefit from its capacity expansion efforts as the 36,000-MT prepare pork plant in Tianjin is expected to come on-line in Q2 and the 25,000-MT frozen pork and 70,000-MT chilled pork plants are expected to start operations in Q4. In this regard, we expect the company will have no problem achieving its 2011 financial performance guidance.

The Clenbuterol Pork Scandal and its effect on Zhongpin On March 15, CCTV (China’s sole national TV network) exposed some tainted pork products from Henan province containing chemical clenbuterol. The chemical, harmful to human, was illegally used as a feed additive by unscrupulous pig farmers for the purpose of producing leaner pork. Henan Shuanghui (SHE: 000895, Not Rated), China’s largest pork processor, was at the center of this scandal, while China Yurun (HKG: 1068, Not Rated), another major domestic meat processor, also announced a recall of 100 boxes of luncheon meat that contained the chemical. The scandal provoked a nationwide outrage that even led to comments on food safety by China’s president, Hu Jintao.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.


Monday, May 9, 2011
Comments & Business Outlook

First quarter 2011 highlights:

  • Revenues increased 40% in the first quarter 2011 to $285.8 million from $204.3 million in the first quarter 2010.
  • Net income increased 27% to $16.9 million in the first quarter 2011 from $13.3 million in the first quarter 2010.
  • Basic earnings per share increased 24% to $0.47 in the first quarter 2011 from $0.38 in the first quarter 2010 on average basic shares outstanding that were 3% higher.
  • Diluted earnings per share increased 24% to $0.47 in the first quarter 2011 from $0.38 in the first quarter 2010 on average diluted shares outstanding that were 3% higher.
  • Gross profit margin increased to 12.6% in the first quarter 2011 from 12.2% in the first quarter 2010.
  • Zhongpin reaffirmed its prior guidance for the year 2011 and revised its guidance earnings per share numbers for the higher average shares that are outstanding as a result of its successful offering of 5 million common shares that was completed on March 22, 2011.
  • In mid-April 2011, Zhongpin signed a framework agreement with China Construction Bank, Henan Branch, that is expected to provide approximately RMB 10 billion in financial support and services to assist Zhongpin in its growth.

"With our good results in the first quarter, we have reaffirmed our previous guidance and have revised only our guidance earnings per share numbers to account for the higher average shares that are outstanding during 2011 as a result of the completion of our follow-on offering.

  • "For the year 2011, we expect that Zhongpin's sales revenues should be within a range of US$1.18 billion to $1.23 billion.
  • "Gross profit margin is expected to be within the range of 11.7% to 12.4%.
  • "Net profit margin is expected to be within the range of 5.7% to 6.3%.
  • "Revising only for the higher average shares expected for the year 2011, the resulting diluted earnings per share for the year 2011 is currently expected to be within the range of $1.66 to $1.91 per share, assuming average diluted common shares outstanding of about 40.5 million shares in 2011.
  • "Zhongpin believes that China's meat and food industry will continue to consolidate in 2011 at a more rapid pace than in 2010, which may result in higher market shares for our main competitors. However, we believe that Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2011 can be achieved."

Wednesday, March 23, 2011
Deal Flow

NEW YORK, March 23, 2011 /PRNewswire-Asia/ -- Zhongpin Inc., a leading meat and food processing company in the People's Republic of China, today announced the closing on March 22, 2011 of its follow-on underwritten registered public offering of 5,000,000 shares of common stock at a price of $14.10 per share.

The total gross proceeds of the Offering to Zhongpin were $70,500,000. The aggregate net proceeds received by the Company totaled approximately $66,420,000 after deducting underwriting discounts and commissions and the offering expenses paid by the Company.

Zhongpin intends to use the net proceeds from the Offering for the construction of new processing and cold chain logistics facilities and for general corporate purposes.


Friday, March 18, 2011
Deal Flow

NEW YORK, March 18, 2011 /PRNewswire-Asia/ -- Zhongpin Inc. today announced that it has priced a follow-on underwritten registered public offering (the "Offering") of 5,000,000 shares of common stock at a price of $14.10 per share. The total gross proceeds of the Offering to Zhongpin will be $70,500,000. The Offering is expected to close on March 22, 2011, subject to customary closing conditions.

Zhongpin intends to use the net proceeds it will receive from the Offering for the construction of new processing and cold chain logistics facilities and for general corporate purposes.


Tuesday, March 8, 2011
Analyst Reports

Rodman & Renshaw on HOGS

4Q10 Results Strong, but Lowering Price Target Due to Dilution 

Zhongpin Inc.(“Zhongpin”, Nasdaq: HOGS, Market Outperform) reported 4Q10 results that mostly matched or exceeded our and Street’s expectations. Total revenue climbed 32.9% YoY to $286.3 million, higher than our estimate of $264.3 million and Street consensus of $269 million. Gross margin was 11.6%, 20bps lower than 4Q09 but in-line with our expectation. Non-GAAP net income (excluding stock compensation expenses) grew 50.3% YoY to $18.6 million, above our estimate of $14.4 million and Street consensus of $16.1 million. Non-GAAP EPS increased 46.3% YoY to $0.52, easily beating both our estimate of $0.41 and consensus of $0.42. On a yearly basis, total revenue rose 30.4% YoY to $946.7 million, exceeding the company’s guidance range of $900 million to $940 million. Net income reached $58.3 million, or $1.65 per diluted share, also higher than the respective guidance range of $52-57 million and $1.49 to $1.64 per diluted share. 

4Q10 Highlights and Discussions 

Prepared pork products became the largest growth driver: During 4Q10, revenue from prepared pork products grew 62.5% YoY to $45.7 million, primarily due to larger volume sold partially offset by lower ASP. The segment contributed 16.0% of total revenue in the quarter. We expect this growth will continue to outpace that of frozen pork and chilled pork. Since the prepared pork segment carries a much higher gross margin (~20% vs. 11% for chilled pork and 8% for frozen pork), we expect it will drive margin expansion considerably going forward as it contributes a larger portion of revenue. 

Aggressive capacity expansion bears fruits: Zhongpin has been aggressively expanding production capacity in various new markets, which significantly drove its volume growth. As of December 31, 2010, the company had annual capacity of 563,760 MT for chilled and frozen pork, 90,000 MT for prepared pork products, 20,000 MT for pork oil, and 30,000 MT for vegetables and fruits. Looking forward to 2011, Zhongpin will have additional capacity come online, including 195,000 MT for chilled and frozen pork and 86,000 MT for prepared pork products. The company expects to lease, acquire, or build new facilities to support new market development, which we believe is appropriate and prudent. We note that, except the facilities in Gongzhuling, Jilin (leased) and Deyang, Sichuan (acquired), all other current facilities were built or being built by Zhongpin. 

Guidance for 2011 provided: Zhongpin expects revenue will be in the range of $1.18 billion and $1.23 billion. Gross margin is expected to be within the range of 11.7% to 12.4% and net margin within the range of 5.7% to 6.3%. Diluted EPS is guided to between $1.89 and $2.18, assuming average diluted common shares outstanding of 35.5 million in 2011. 

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.


Monday, March 7, 2011
Comments & Business Outlook

Year 2010 highlights:

  • Revenues increased 30% to $946.7 million in 2010 from $726.0 million in 2009.
  • Net income increased 28% to $58.3 million in 2010 from $45.6 million in 2009.
  • Basic earnings per share increased 13% to $1.67 in 2010 from $1.48 in 2009 with average basic shares outstanding being 13% higher than 2009.
  • Diluted earnings per share increased 13% to $1.65 in 2010 from $1.46 in 2009 on average diluted shares outstanding being 13% higher than 2009.
  • Zhongpin's 2010 results exceeded the Company's guidance of revenues within a range of $900 million to $940 million, net income within the range of $52 million to $57 million, and diluted earnings per share within the range of $1.49 to 1.64 per share.
  • Gross profit margin decreased to 11.7% in 2010 from 11.9% in 2009.
  • Zhongpin added 89,000 metric tons of annual capacity for pork products, vegetables, and fruits during 2010 to bring total capacity at year end to 703,760 metric tons.
  • Adjusted EPS was $1.68 vs. $1.46

2010 vs. 2009 Fourth quarter EPS was  $0.54 vs. $0.36

Mr. Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said, "The year 2010 was a very good year in operations and financial results, especially given some unusual sustained increases in hog prices during part of the year. Our revenues increased mainly due to our capacity expansions, higher sales to existing customers, new sales volume in new geographic markets, expanded points of sales, new customers, and emphasis on our higher margin products. These factors together with the marketing of our brand, advertising, in-store promotions, and the effort of the sales team helped to grow revenues by 30% in 2010."

Outlook for pork demand in China

Mr. Zhu continued, "Our fundamental strategy has proven its effectiveness in the past several years. The major objectives, which are designed to create additional value for our shareholders, include:

  • increase our brand recognition and sales,
  • expand our market presence,
  • increase our production capacity,
  • expand and optimize our product lines, and
  • maintain our technological superiority.

"China's economy continues to grow rapidly, and pork continues to be Chinese consumers' preferred protein. We believe the outlook for China's pork processing industry remains quite positive. We plan to build a leading brand and gain increased market share and are expanding our processing plants and distribution networks to satisfy increasing demand for our high quality products."

In 2011, Zhongpin expects demand for pork in China and the results of the pork and pork products segment of its business to remain strong. While supply is expected to be ample, live hog prices are expected to increase in the first half of 2011. Zhongpin anticipates that its gross profit margin in 2011 will remain stable.

Mr. Zhu continued, "The outlook for the Chinese economy, Chinese food processing industry, and for Zhongpin continues to be encouraging, so for our guidance for the year 2011, we expect to report higher revenues, net income and earnings per share. We believe it will be another very good year for Zhongpin."

Guidance for the year 2011

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "For the year 2011, we expect that Zhongpin's sales revenues should be within a range of US$1.18 billion to $1.23 billion, with gross profit margin within the range of 11.7% to 12.4%, and net income margin within the range of 5.7% to 6.3%. The resulting diluted earnings per share for the year 2011 is currently expected to be within the range of $1.89 to $2.18 per share, assuming average diluted common shares outstanding of about 35.5 million shares in 2011.

"This guidance is based on several assumptions and strategies that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth.
  • Average pork prices in China are assumed to increase between 5 and 10% in 2011 from 2010, which would be consistent with steady economic growth and relatively modest inflation.
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2011 than in 2010, while continuing to increase the sales volume of processed pork products to optimize our product structure.
  • Average capacity utilization for the year of about 79% for pork products.
  • Increasing distribution efficiencies and reduction in the duration of delivery times by expanding our cold-chain logistics system, networks, and services.
  • Continuing to expand awareness, recognition, and selection of Zhongpin brand products in the major regional markets, to reinforce awareness of the brand across China, and to increase market share and the brand's price premium.
  • And continuation of the Chinese government's support and subsidies for producers of agricultural products, such as Zhongpin. Total government subsidies for Zhongpin could exceed $5 million in 2011.

"Zhongpin believes that China's food processing industry will continue to consolidate in 2011 at a more rapid pace than in 2010, which may result in higher market shares for our main competitors. However, we believe Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2011 can be achieved."


Deal Flow

NEW YORK and BEIJING, China, March 7, 2011 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc, today announced that it has begun a follow-on common stock offering.  Zhongpin will offer 5 million shares of common stock and non management stockholders will offer 530,000 shares of common stock, with an over-allotment option of up to 15 percent of the offering size.  

Contradicts verbaige in the just released  2010 10K

We believe our existing cash and cash equivalents, together with our ability to secure bank borrowings, will be sufficient to finance our investment in new facilities, with budgeted capital expenditures of approximately $142.8 million over the next 12 months, and to satisfy our working capital needs. We intend to satisfy our short-term debt obligations that mature over the next 12 months through additional short-term bank loans, in most cases by rolling the maturing loans into new short-term loans with the same lenders as we have done in the past.


Monday, December 13, 2010
Comments & Business Outlook

BEIJING and CHANGGE, China, Dec. 13, 2010 /PRNewswire-FirstCall/ -- Zhongpin Inc. today announced that it would build a new production, research & development, test, and training complex in its home city of Changge in Henan province of China.

The new facility will add 100,000 metric tons of capacity for prepared pork products, including Chinese-style, western-style, half-cooked, and easy-to-cook pork products. Adjacent to the production facility will be a new center for advanced research & development, test, training, and other support functions.

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "This expansion will add capacity for our higher-margin downstream products and will serve our central China market and adjacent markets. It will substantially enhance our R&D and further support our expanding market share in the growth regions of China. This new facility proves that we remain committed to doing everything possible -- using the most advanced technologies and processes -- to continue delivering new product innovations that will be desired by China's citizens, delivering food at the highest standards of product quality and safety to every customer, and delivering strong long-term returns to our shareholders."

Zhongpin plans to invest $58.5 million on the construction, excluding the land use rights that Zhongpin already owns. More than 80% of the production equipment will be internationally sourced. Zhongpin consistently selects the best and most advanced equipment, processes, and integrated information systems for its plants. The company's advanced cold-chain logistics system will support the expanding capacity. The payback period for the project is expected to be about 5.75 years.

Construction for the first phase of 50,000 metric tons for prepared pork products is scheduled to start in the first quarter 2011 and be completed by the third quarter 2011, and the second phase, also with an annual capacity of 50,000 metric tons for prepared pork products, is expected to be completed in the fourth quarter 2012. The R&D, test, and training center is also expected to open by the fourth quarter 2012.


Saturday, December 11, 2010
Deal Flow

We may sell any combination of these securities in one or more offerings, up to an aggregate offering price of $250,000,000 on terms to be determined at the time of offering. In addition, from time to time, the selling stockholders identified in this prospectus under the heading “Selling Stockholders,” may sell up to an aggregate of 9,562,505 shares of our common stock held by them. We will not receive any proceeds from the sale of our common stock by the selling stockholders.

Unless otherwise specified in the applicable prospectus supplement, we intend to use the net proceeds from the sale of our securities offered by this prospectus for general corporate purposes, including, without limitation, the construction of new processing and cold chain logistics facilities as well as repayment of bank loans and working capital needs. Pending the application of the net proceeds, we expect to invest the proceeds in investment grade, interest bearing securities.


Monday, November 22, 2010
Comments & Business Outlook

HOGS commented on price trends

Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "We noticed that China's State Council issued 16 measures to stabilize consumer prices and to ensure market supplies. Excluding direct price intervention items, the 16 measures (listed below) focus on production development, stabilization of supply, reduction of delivery costs, standardization of market order, and enhancement of market supervision."


Thursday, November 18, 2010
Analyst Reports

Rodman & Renshaw

3Q10 results slightly missed expectations Zhongpin’s sales revenue for the quarter was $241.1 million, slightly below our expectation of $242.2 million, but clearly missed the much more optimistic Street consensus of $246.6 million. GAAP net income for the quarter was $14.7 million, below our estimate of $15.0 million. Diluted GAAP EPS for the quarter was $0.42, a penny shy of both Street and our expectations of $0.43. On the margin side, gross margin was 11.3%, below our estimate of 12.0%. Net margin was 6.1%, a touch shy of our 6.2% projection. 

The company also maintained its previous guidance for 2010: revenue for the year will be between $900 million and $940 million; gross profit will be between $106 million and $115 million; net income will be within the range of $52 million to $57 million; and full year diluted EPS will be between $1.49 and $1.64.

Our take In our opinion, the company has actually delivered a fairly respectable financial performance. We believe the slight miss was largely due to the Street as a whole having an overly optimistic expectation on the back of increasing hog prices in China during the past quarter. Unfortunately for the company, pork prices did not increase as much and as fast as hog prices did. This, coupled with a typical seasonality (Q3 tends to be a weaker quarter for pork sales) and the company’s efforts of controlling sales in regions with what it believed were less-than-ideal pork prices, led to the below-expectation top line result as well as some pressure on the margin front. Aside from that, we believe Zhongpin’s operations were pretty much as-expectedly strong. Looking forward to Q4, we expect pork prices will catch up to the increases in hog prices for the second half of the quarter and the spread between the two should return to more of a normal level. Thus we expect Zhongpin’s margins will improve from their Q3 levels. 

Maintaining Market Outperform while increasing PT to $26 We are maintaining our Market Outperform rating while increasing our price target on the shares of Zhongpin to $26, from $18 previously. We now expect the company will report 2010 revenue, gross profit, and EPS of $924.8 million, $108.2 million, and $1.63, respectively. Our new $26 price target is based on the shares trading at 13x our 2011 EPS estimate of $2.01. The 13x multiple represents a slight discount to the average P/E multiple of 14x currently commanded by Zhongpin’s American and Chinese peers. We believe Zhongpin, with its Chinese industry leadership position and strong growth potential, justifies such a valuation. 

Major Risks to our rating include the company's ability to maintain an adequate hog supply, movement in pork prices, government and environmental regulations, additional capital needs for future growth, currency exchange risk, as well as country and political risks related to operating in China.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.


Tuesday, November 9, 2010
Comments & Business Outlook

Third Quarter 2010 and recent highlights:

  • Net sales revenues increased 24 percent in the three months ended September 30, 2010 to $241.1 million from $194.9 million in the third quarter 2009.
  • Net income increased 11 percent to $14.7 millionin the third quarter 2010 from $13.2 million in the third quarter 2009.
  • Basic and diluted earnings per common share declined $0.02 or 5 percent to $0.42in the third quarter 2010 from$0.44in the third quarter 2009, on higher net income but with higher weighted average number of shares outstanding in the third quarter 2010.
  • Since the end of the second quarter of 2010 through early November, hog prices have increased more rapidly than pork prices. We estimate that pork prices will gradually increase so that the spread between pork prices and hog prices will return to their historical relationship.

Guidance maintained

Zhongpin is maintaining its prior guidance for the year 2010.

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "For the year 2010, we continue to believe that Zhongpin's

  • Sales revenues should be within a range of$900 million to $940 million
  • Gross profit within the range of $106 million to $115 million
  • Net income within the range of$52 million to $57 million.
  • The resulting diluted earnings per share for the year 2010 is currently expected to be within the range of $1.49 to $1.64 per share."

This guidance is based on several assumptions and strategies that include:

  • Continuation of China's policies designed to stimulate domestic consumption and economic growth;
  • Higher average pork prices in China in 2010 than in 2009;
  • A higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2010 than in 2009, while increasing the sales volume of processed pork products as the priority to optimize our product structure;  
  • Average capacity utilization of about 75 percent for pork products;
  • Increasing distribution efficiencies from expansion of our cold-chain logistics system and service areas;
  • Growing awareness of the Zhongpin brand in regional markets and emerging brand awareness across China; and
  • Continuation of the Chinese government's support and subsidies for producers of agricultural products, such as Zhongpin.

Zhongpin believes that China's food processing industry will continue to consolidate, which may result in higher market shares for our main competitors. However, we believe Zhongpin is equipped to meet the challenge of increasing competition and that our guidance for 2010 can be achieved.


Liquidity Requirements
We believe our existing cash and cash equivalents, together with our available lines of credit ($341.2 million at September 30, 2010), will be sufficient to finance our investment in new facilities, operating requirements and anticipated capital expenditures of approximately $105.8 million over the next 12 months. We intend to use such funds over the next 12 months to fund our capacity expansion and the construction of supporting facilities and to supplement our working capital requirements to enable us to strengthen our market position and accelerate our growth. We intend to satisfy our short-term debt obligations that mature over the next 12 months through additional short-term bank loans, in most cases by rolling the maturing loans into new short-term loans with the same lenders as we have done in the past. We also we intend to optimize our loan structure by replacing certain of our short-term indebtedness with additional long-term debt.

Analyst Reports

Globa lHunter on HOGS

We initiated coverage of Zhongpin in June 2010 with an $18 price target and selected it as one of our top picks for the year. Subsequently, on October 11, 2010, we raised our price target to $24 citing the recent positive trends in pork prices coupled with increased investor interest in the name, leading to a multiple expansion. Our $24 price target was based on 11.1x FY2011 on a P/E basis and 9.1x FY2011 on an EV/EBITDA basis. Zhongpin’s stock price has had a phenomenal run since our initiation, appreciating over 100% from recent lows. At the current price of approximately $23.16 per share, we believe Zhongpin’s stock is fairly valued based on our 2011 estimates and do not foresee material appreciation in the near term.
 
Zhongpin reported Q3 results, basically in line with estimates, showing a slight miss relative to both top and bottom line estimates and reiterating its previous FY10 guidance. We are concerned that the recent run up in share price, which has achieved our price target of $24, indicates that investors were expecting an ahead of consensus quarter and likely increase of guidance. As a result of both our price target having been met and our concern regarding investor expectations, we are reducing our rating to Neutral. Shares have appreciated over 80% since our June initiation, closing at $23.16 yesterday, which translates to 11.7x FY2011 on a P/E basis and 9.8x FY2011 on an EV/EBITDA basis. We remain positive on the Chinese agriculture and food processing industries as a whole and Zhongpin’s prospects in particular; however, we feel shares of Zhongpin have become fairly priced at these levels relative to near term earnings growth prospects.
 
Key points:

Zhongpin reported Q3 results and reiterated its previous FY10 guidance. Revenues for the quarter came in at $241.1MM, corresponding to 23.7% Y/Y growth; however, the number was slightly below ours and consensus estimates of $246.2MM and $246.7MM, respectively. Gross margins have contracted by ~90bps Y/Y, showing 11.3%, below our estimate of 12%, while gross profits in dollar terms grew by 15.1% Y/Y to $27.3MM. The primary reason behind the revenue miss and margin contraction was the significant increase in hog prices since late October due to government purchases initiated to stabilize hog prices and protect hog farmers. This inflated Zhongpin’s input costs but was not reflected in an increase in pork product ASP by enough to offset it. The company expects pork prices to continue to rise in the near term due to the approaching holiday season and resulting strong demand, which should help to normalize the company’s margins going forward.
 
Operating income in Q3 increased by 2.2% Y/Y to $15.8MM, while operating margin contracted by 130bps to 6.6%; below our expectations of $18.4MM and 7.5%. SG&A expenses increased Y/Y due to higher advertising costs and depreciation, as well as a $0.5MM increase in bad debt provision. Interest expense also increased during the quarter as a result of additional $35.7MM in long term and $3.2MM in short term debt. The company benefited during the quarter from $1MM in government subsidies and $1.1MM in other income stemming from the reversal of a tax payable accrued from the sale-lease back transaction. Zhongpin reported net income of $14.7MM, or $0.42 per fully diluted share, vs. our and consensus estimates of $0.43.
 
On the earnings call, management reaffirmed its prior full year 2010 guidance. Zhongpin continues to expect full year revenue in the $900MM-$940MM range and gross profit in the $106MM-$115MM range, corresponding to approximately 12% gross margin. The company further stated that it expects net income in the $52MM-$57MM range, which comes out to fully diluted EPS of $1.49-$1.64.


Thursday, November 4, 2010
Analyst Reports

Maxim on HOGS

 We expect HOGS to report quarterly results inline with or slightly below consensus estimates. Consensus estimates are revenue of $246M and GAAP EPS of $0.43, above our estimates of revenue of $237M and EPS of $0.39. Our revenue estimate represents 10% q/q and 22% y/y growth, respectively, while our EPS estimate represents a 10% q/q increase but a 12% y/y decline.

We are raising our price target to $27, from $18. The new price target is based on 17x and 15x our 2010 and 2011 EPS estimates, respectively, or 50% and 40% discounts to Chinese peers. With pork retail prices likely to continue increasing in China and the company’s deep discount to its peers, we believe this higher price target is well supported. Our estimates remain unchanged.


Monday, August 9, 2010
Comments & Business Outlook

Second quarter 2010 and recent highlights:

  • Net sales revenues increased 33 percent in the three months ended June 30, 2010 to $215.1 million from $161.8 million in the second quarter 2009.
  •  Net income increased 16 percent to $12.4 million in the second quarter 2010 from $10.7 million in the second quarter 2009.
  • Basic earnings per share were unchanged at $0.36 per share for both second quarters on 17 percent higher basic weighted average shares outstanding. Diluted earnings per share decreased 3 percent to $0.35 in the second quarter 2010 from $0.36 in the second quarter 2009 on higher diluted weighted average shares outstanding.
  • Hog and pork prices in the second quarter 2010 decreased about 10 percent from the second quarter 2009, primarily because the supply of hogs was higher than the market demand. Hog and pork prices appear to have reached bottom in mid-June, since prices have rebounded about 15 to 20 percent higher from mid-June through early August. Zhongpin believes prices will continue to increase gradually during the remainder of 2010.
  • Prior guidance for the year 2010 has been maintained.

For this current year, given our good performance during the first half, we believe the outlook for 2010 continues to be quite encouraging, so we are reaffirming our previous performance guidance." Guidance maintained Zhongpin is maintaining its prior guidance for the year 2010. Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "For the year 2010, we continue to believe that Zhongpin's:

  • Sales revenues should be within a range of $900 million to $940 million.
  • Gross profit within the range of $106 million to $115 million.
  • Net income within the range of $52 million to $57 million.
  • The resulting diluted earnings per share for the year 2010 are currently expected to be within the range of $1.49 to $1.64 per share."

Tuesday, March 16, 2010
Comments & Business Outlook

Mr. Warren Wang, Zhongpin's Chief Financial Officer, said, "For the year 2010, we continue to believe that Zhongpin's sales revenues should be within a range of $900 million to $940 million, with gross profit within the range of $106 million to $115 million and net income within the range of $52 million to $57 million. The resulting diluted earnings per share for the year 2010 is currently expected to be within the range of $1.49 to $1.64 per share vs $1.46 in 2009."

Source: PR Newswire (March 11, 2010)


Monday, January 11, 2010
GeoBargain Notes

We are removing Zhongpin from the GeoBargain list.  The Company has issued 2010 guidance that will result in earnings per share growth of less than 30.0%.  This comes off the heals of a recent reduction in its 2009 guidance.  We will certainly revisit  HOGS for a reassessment of our decision .   Zhongpin  was placed on the GeoBargain list on May 6 2009 at $9.54.

Source: (PR Newswire January 11, 2009)


Thursday, June 11, 2009
Potential Valuation Scenarios
Valuation Scenarios

Data Inputs:

Fiscal Year Ends in December
 
Date 06/10/2009
Price $12.17
12 Months Trailing EPS a,b $0.95
2009 Average Company EPS Guidance a,b $1.12 
Future EPS Growth Rate Based on 2009 Average Company EPS Guidance a,b 28.74%
Trailing P/E Ratio a,b 12.81
PEG Ratio (P/E divided by growth rate) a,b 0.45

a Zhongpin  is not paying a full U.S. tax rate.  Therefore, all EPS numbers have been adjusted by the GeoTeam® to reflect a standard U.S. tax rate of 36%.  Zhongpin's stated average EPS guidance was $1.57.

b Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information .  The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.

Short-Term Valuation Scenarios

Date 06/10/2009
Price Based on P/E of 25 on Four Quarters Trailing EPS $22.50
Price Based on P/E of 20 on Four Quarters Trailing EPS $19.00
Price Based on P/E of 15 on 2009 Average Company EPS Guidance $16.80

Long-Term (12 Months Forward) Valuation Scenarios

Date 06/10/2009
Price Based on P/E of 25 on 2009 Average Company EPS Guidance $28.00
Price Based on P/E of 20 on 2009 Average Company EPS Guidance $22.40

Peg Ratio Analysis - Common rule of thumb that PEG ratio should be less than 1.0

PEG Ratio Less than 1? YES

These scenarios are not investment advice, but are scenarios based on some commonly used investment guidelines.  They are provided to aid investors in making their own investment decisions.

Monday, June 8, 2009
Financials
1st QUARTER 2009 vs. 2008 FINANCIAL SNAPSHOT ENDED MARCH

  1st Quarter 2009 1st Quarter 2008 Period Change
GAAP Revenue $153.8 million $108.7 million 41.5%
GAAP EPS $0.33 $0.24 38.5%
Geo Supplied Non-GAAP EPS a  $0.33 $0.25 41.7%
Tax Rate 6.9% 6.7% 3.0%
Fully Tax-Adjusted GAAP EPS b $0.23 $0.17 35.3%
Fully Tax-Adjusted Geo Supplied Non-GAAP EPS b $0.24 $0.17 41.2%
Fully Diluted Shares 29,609,028 30,748,961 3.7%

Source: See Release




FULL YEAR 2008 vs.2007 FINANCIAL SNAPSHOT ENDED DECEMBER

  Full Year 2008 Full Year 2007 Period Change
GAAP Revenue $539.8 million $291.4 million 85.2%
GAAP EPS $1.05 $0.90 16.7%
Company Supplied Non-GAAP EPS $1.18 $0.90 31.1%
Geo Supplied Non-GAAP EPSa  $1.17 $0.90 30.0%
Tax Rate 7.3% 7.2% 1.4%
Fully Tax-Adjusted GAAP EPS b $0.75 $0.64 17.2%
Fully Tax-Adjusted Company Supplied Non-GAAP EPS b $0.88 $0.64 31.3%
Fully Tax-Adjusted Geo Supplied Non-GAAP EPS b $0.87 $0.64 29.7%
Fully Diluted Shares 29,834,513 23,077,864 29.3%

Source: See Release  

a Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to the referenced financial press releases. The GeoTeam® non-GAAP figures may, from time to time,  differ from company supplied figures.

b For valuation purposes, The GeoTeam® prefers to adjust EPS to reflect a standard United States tax rate of 36%


Thursday, May 7, 2009
GeoBriefs
“We’ve started to see signs of pork prices stabilizing in the past month and I think there’s a possibility prices will start to climb in the third quarter”

Thursday, May 29, 2008
Research
HOGS has been able to put together a series of impressive quarters from both a revenue and EPS standpoint. They have easily exceeded the GeoTeam minimum EPS growth preference of 30%, despite an increase in outstanding shares of over 40%. Return On Equity for 2007 of (10%) was less than the 15% GeoTeam preference. However, based on first quarter results and published estimates the company should be very close to meeting this preference in 2008.

The company has issued a 2008 EPS guidance range of $1.05 to $1.10. This would imply an EPS growth rate of between 11% to 22% , which is below the GeoTeam minimum preference. According to published estimates, EPS growth will start to accelerate in the fourth quarter of 2008 and continue throughout 2009 as additional capacity is added:

"Zhongpin is ahead of schedule in the construction of its western Henan Province facility (Luoyang) which is now expected to begin operations by the end of second quarter of 2008."


Furthermore the company's guidance does not include potential acquisitions:

"we are actively evaluating additional acquisition targets that have to potential to enhance our organic revenue and earnings growth in the future."

(Source: Press, March 12, 2008)

The GeoTeam has overlooked the short-term EPS growth scenario in favor of the longer-term trend and chance for upside surprise.

The GeoTeam currently holds a position in HOGS.

Comments & Business Outlook
"Based on its current expansion plans, Zhongpin expects to achieve revenues for the full year 2008 of between $490 and $520 million, gross margin between 12.6% and 13% and net income of between $30 and $33 million, or between $1.00 and $1.10 per share, assuming a fully diluted share count of 30 million shares outstanding. This guidance excludes the impact of any future acquisitions."


( Source: Press March 25, 2008 )

Financials
2007 Financial Notes:

* Revenues doubled year-over-year to a record $291.4 million

* Non-GAAP net income grew 41.2% to a record $20.8 million

* Non-GAAP fully diluted EPS increased 25 % to $0.90

* 2007 Tax Rate was 6.4% up from 3.7%.

* Outstanding shares increased 44% to 29.7 million.

Adjusting financials for a standard tax rate:

* Non-GAAP net income of $14.6 million compared to $9.9 million

*
Non-GAAP fully diluted EPS increased 29% to $.63

*
Return On Equity of 10%

( Source 2007 10 K )

2008 First Quarter Financials:


* Revenues grew 94.9% to a record $108.7 million

*
Net income increased 81.8% year-over-year to a record $7.3 million

* 26%
rise in fully diluted EPS to $0.24

* Period Tax Rate was 6.7% up from 5.1%

* Outstanding shares were 47% higher at 30.7 million.

Adjusting financials for a standard tax rate:

*
Net income of $5.2 million

*
Fully diluted EPS increased 29% to $.17

* Return On Equity of 3%. ( Equates to a 13% annualized rate )

( Source 2008 First Quarter 2008 10 Q )