Tiens Biotech Group (NYSE AMEX:TBV)

• Revenue for the first quarter of 2011 was $13.1 million, compared to $11.4 million for 2010.  
• Net income for first quarter of 2011 was $2.9 million, or $0.04 per share, compared to $3.6 million, or $0.05 per share for 2010.

The 14.4% increase in revenue for the first quarter of 2011 mainly resulted from a 21.2% increase in domestic sales as compared to the year-ago period. There were two primary reasons for the robustness of the domestic market. First, distributors rushed to increase inventory in advance of the planned price increases for some products that were scheduled for March 2011. Additionally, Tiens began to see the effects of the long-awaited direct selling license that was awarded by the Ministry of Commerce of the People's Republic of China on March 11, 2011.  On the international front, Tiens experienced a modest 4.6% increase as a result of increased sales to South Africa.

Net income, however, was negatively impacted by an increase of $1.4 million in selling, general and administrative expenses. This increase was primarily responsible for the 18.3% decrease in net income for the quarter and was mainly due to increases in depreciation related to the transfer of construction in progress to fixed assets.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased by the increase in sales this quarter and expect our new domestic selling license to be a growing contributor to revenue in the months and years ahead. In the international arena, we are confident that our operations will gradually improve as worldwide economic conditions continue to recover. Likewise, operational improvements made at the distributor level should also boost results over time.  Our commitment to both domestic and international growth remains steadfast as we continue to manage our business through the economic recovery and look ahead toward further execution of our strategic growth plans in both China and abroad."

GeoTeam Note: Fourth quarter 2010 vs 2009 EPS was $(0.01) vs. $0.04. 

Jinyuan Li, Chairman, President and CEO of Tiens, said, “We remain confident that domestic sales will return to, and potentially exceed, previous levels, as distributors begin to replenish their stock of our products. In addition, we maintain this same positive sentiment regarding international sales, which we expect will benefit from the removal of export restrictions and gradual economic improvement. We are steadfast in our commitment to building greater market share in China, expanding our international customer base, and further implementing our strategic plans for long-term domestic and international growth.”

Life Resources Property

Life Resources is currently constructing research and development, manufacturing and logistic facilities, as well as administrative offices totaling approximately 420,000 square meters. The facilities are located in our current headquarters in Tianjin, China. As of December 31, 2010, the office buildings, dormitories, power center, boiler room, warehouse for wellness products had been transferred from construction in progress to fixed assets. The product exhibition center, quality control center and wash house were undergoing interior decoration and expect to be completed at the end of June 2011. The interior decoration of work plants and other warehouses has been nearly completed and these facilities will be put into use once the equipment is installed. We expect the equipment to be installed at the end of 2011. As of the end of 2010, the cost of the completed work of construction in progress and other facilities was $204,854,576 (based on an exchange rate of $1 = RMB 6.6120 as of December 31, 2010), which includes amounts paid for the underlying land use right. The office buildings, dormitories, power center, boiler room and warehouse for wellness products had been put into use from October 2010. We expect that other construction work and equipment installation will be completed in 2011.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report an increase in domestic sales which we believe will continue in the future. Our total revenue decline should be temporary since both our domestic and global affiliated companies have not witnessed significant declines in their overall revenue. We are committed to expanding our international customer base and generating long-term domestic and international growth."

• Revenue for the second quarter of 2010 was $8.2 million, compared to $20.6 million for the second quarter of 2009.
  
• For the six months ended June 30, 2010, net income was $4.1 million, or $0.5 per share, compared to $19.3 million, or $0.26 per share for the first six months of 2009.
  
• Revenue for the six months ended June 30, 2010 was $19.6 million, compared to $38.8 million for the first six months of 2009. 
  
•  Net income for the second quarter of 2010 was $0.5 million, or $0.01 per share, compared to net income of $10.3 million, or $0.14 per share, for the 2009 second quarter.

"The decrease in revenue was mainly due to a decrease in international sales which reflects China's Administration of Quality Supervision, Inspection and Quarantine carrying out a national campaign against unsafe food and substandard products in 2008, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales in the first two quarters of 2009. Second quarter 2010 sales to Indonesia, Russia, Vietnam and Peru further decreased due to the distributors in these countries purchasing more products in the first half of 2009, after the 2008 product scarcity. The decrease in sales in China was mainly due to domestic distributors' reduced purchasing demand following their stocking up of products during 2009. Management believes the decrease in revenues is temporary, and that revenue growth will resume in the near future."

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We believe that our international and domestic sales will return to and possibly exceed previous levels as our domestic and overseas affiliated companies have indicated that they are not seeing sizable declines of their revenue, and that they expect that the market fluctuation will be temporary. They believe that revenue growth will resume in the near future, consistent with what they have achieved during the majority of the past 15 years. We remain committed to building greater market share in China, expanding our international customer base, and remaining focused on our efforts to generate long-term domestic and international growth."

GeoTeam Note:

Readers should be aware that the company has been using the same excuse for its decline in business for several quarters, commenting that revenues will improve in the near future.

Net income for 2009 was $24.8 million, or $0.33 per share, compared to $30.0 million, or $0.39 per share for 2008.

Results for 2009 reflect, in part, a decrease in revenue in China to $27.2 million from $33.7 million for 2008. The revenue decrease is attributed, in part, to a decline in domestic distributors' demand after stocking up on products in 2008. During the third quarter of 2008, Tianshi Engineering announced plans to increase prices of its products which prompted customers to stock up on certain products. Consumer product demand decreases in the first and third quarters of 2009 were offset by some increases in sales during the second and fourth quarters of 2009, which reflect marketing efforts during those periods.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are steadfast in our commitment to building greater market share in China, expanding our international customer base, and further implementing our strategic plans for long-term domestic and international growth. We remain confident that domestic sales will return to, and potentially exceed, previous levels, as distributors begin to replenish their stock of our products. In addition, we maintain this same positive sentiment regarding international sales, which we expect will benefit from the removal of export restrictions and gradual economic improvement."

Source: PR Newswire (April 5, 2010)

Jinyuan Li, Chairman, President and CEO of Tiens, said, 'Tiens is pleased to report another quarter of positive results including a significant increase in net income. We are confident that international sales will remain strong and that domestic sales will return to, and potentially exceed, previous levels as customers begin to replenish stored up products. We are committed to further expanding our growing international customer base, gaining greater market share in China, and further implementing our strategic plans for long term growth.'

Source: PR Newswire (August 14, 2009)

Jinyuan Li, Chairman, President and CEO of Tiens, said, 'We are extremely pleased with the significant increase in both our domestic and international revenue and continued sequential growth since the first quarter of 2008. We continue to benefit from reduced international export restrictions and are optimistic that our international sales will further increase as additional export restrictions are lifted. We are well positioned to capitalize on our growing international customer base and remain committed to gaining greater market share in China for our high quality products as well.'

Source: PR Newswire (November 14, 2008)