Yuhe Intl (PINK:YUII)

WEIFANG, Shandong, China, June 14, 2011 /PRNewswire-Asia/ -- Yuhe International, Inc. (NASDAQ: YUII) ("Yuhe" or the "Company"), a leading supplier of day-old chickens raised for meat production, or broilers, in the People's Republic of China ("PRC"), today announced that certain of its executive officers and directors have completed the previously announced executive stock purchase plan, by which they purchased the Company's common stock for their personal accounts on the open market at prevailing market prices. The Company further announced that its management will comment on the recent price volatility of the Company's shares through a special conference call before the market opens on Tuesday, June 14, 2011.

Pursuant to the previously announced executive stock purchase plan, the participating officers and directors collectively invested approximately RMB 2.1 million, or approximately US$330,000, in the shares of the Company. The participating executive officers and directors included the Company's Chief Executive Officer, Mr. Zhentao Gao, Chief Financial Officer, Mr. Gang (Vincent) Hu, and certain members of its Board of Directors. The executive stock purchase plan was funded by cash commitments made by the participating officers and directors and will not have any impact on the Company's financial statements or cash balance. The execution of the executive stock purchase plan was conducted in a manner consistent with the interest of all of the shareholders of the Company, taking into account of market conditions, stock prices, and other factors.

Mr. Zhentao Gao, Chairman and Chief Executive Officer of Yuhe International, commented, "The adoption and execution of the executive stock purchase program is a strong demonstration of our commitment to aligning the interests of our shareholders and our executive officers and Directors. The management and directors believe that the Company's fundamentals and growth prospects are not fairly reflected in its current share price, which represents an attractive opportunity for personal investments. We remain devoted to leveraging our operational expertise in China's day-old broiler industry to deliver superb operational results and long-term returns for our shareholders."

The Company also attach the following Chinese documents as evidence of its acquisitions conducted in December 2009, when it entered into an agreement to purchase 13 breeder farms from Weifang Dajiang Corporation, for a total acquisition consideration of approximately $15.2 million:

1. The formal Purchase Agreement between Weifang Yuhe Poultry Co., Ltd. and Weifang Dajiang Corporation, which was legally signed and stamped by both parties;

2. The pay check stub for the payment remitted to Weifang Dajiang Corporation upon signing the Agreement;

3. The bank statement showing the transaction history;

4. The stamped receipt from Weifang Dajiang Corporation for the payment; and

5. An independent asset evaluation report on the acquired farms issued by a third-party asset evaluation agency.

Conference Call

The Company will host a conference call at 8:30 a.m. Eastern Time on Tuesday, June 14, 2011, to discuss the executive stock purchase and to comment on the recent price volatility of the Company's shares. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time. Conference ID # 75607117

USA Toll-free:

18662421388

China Toll-Free:

4006988166

International Dial-In:

+ 61288236760

First Quarter 2011 Highlights

• Net revenue increased 128.47% year over year to $26.86 million
• Sales volume grew 102.91% year over year to 51.86 million birds
• Gross profit increased 90.41% year over year to $7.43 million
• Operating income increased 106% year over year to $6.12 million
• Net income increased 107.36% year over year to $6.07 million, or $0.30 per fully diluted share

"We are very pleased to report a strong first quarter of fiscal year 2011," commented Mr. Zhentao Gao, chairman and chief executive officer of Yuhe International, Inc. "While the first quarter is traditionally one of our slowest quarters in terms of sales as a result of the Chinese Lunar New Year, our year-over-year quarterly net revenue increased 128.47%, due to our successful market penetration into a wider customer base to absorb our increased production capacity. The first quarter average selling prices of our day-old broilers increased 9.81% year over year in the midst of the current inflationary marketplace. As more of our previously acquired breeder farms have begun contributing to our capacity since early 2011, we expect to continue leveraging on China's strong broiler market and to deliver superb operational and financial results."

Recent Development 

As of the date of this press release, the Company had officially taken possession of 13 breeder farms from its previous acquisitions conducted in December 2009 and July 2010. Of these, 11 breeder farms were taken over from Weifang Dajiang Corporation, and two breeder farms were taken over from Liaoning Haicheng Songsen Stock Farming and Feed Co., Ltd.

2011 outlook

Given the expected strong day-old broiler market in 2011 and the fact that the capacity ramp-up from the previous acquisitions will continue to contribute to the Company's sales volume of day-old broilers throughout 2011, the management of Yuhe International remains confident in the Company's capability to generate strong operational and financial results in 2011.

The management reiterates its previously issued guidance for 2011 of

• production volume totaling 250 million day-old broilers
• net income of between $33 million and $36 million.

WEIFANG, China, April 14, 2011 /PRNewswire-Asia/ -- Yuhe International, Inc. (NASDAQ: YUII) ("Yuhe" or the "Company"), today announced that its management wishes to comment on the recent price volatility of the Company's shares.  

"The Company's management is not aware of any negative allegations against the Company with respect to its operations that may result in the sudden price plunge of its stock," commented Mr. Zhentao Gao, chairman and chief executive officer of the Company, "we continue to operate our business well and the price of our day-old broilers remains in a favorable range. The Company has been and will continue to comply with the applicable U.S. securities regulations and to disclose any material information publicly in a timely fashion."

Fourth Quarter Results:

• Net revenue increased 64.06% to $21.8 million, as compared to $13.3 million for the fourth quarter of 2009.
• Gross profit increased 59.4% year over year to $7.5 million, with gross margin of 34.5%, as compared to $4.7 million, or 35.5% gross margin for the same period in 2009.
• Adjusted net income (non-GAAP) for the three months ended December 31, 2010 was $6.20 million, or $0.32 per fully diluted share, up 71.13% compared with net income of $3.6 million, or $0.23 per fully diluted share for the same period in 2009

"We are very pleased to report a strong fiscal year 2010 with solid financial and operational results." commented Mr. Zhentao Gao, Chairman and chief executive officer of Yuhe International, Inc. "Our 2010 non-GAAP net income of $19.5 million has surpassed our previously raised guidance of $18.5 million in net income. The growth was driven by an increase in both sales volume and average selling prices of our day-old broilers. In fiscal year 2010, we sold approximately 146 million day-old broilers, or an increase of 33% from 110 million in 2009. The full year 2010 average selling price for day-old broilers increased 9% year-over-year to RMB 2.97 per bird from RMB 2.74 per bird in 2009. We are particularly pleased with our gross margin performance in fiscal year 2010, which rose to 35.9% from 35.4% in 2009, due to our successful margin management in locking in favorable fixed-price supply contracts during the market downturn and capitalizing on the market rebounds during the third and fourth quarter of 2010."

Given the expected strong day-old broiler market in 2011 and the increased volume contribution from the Company's previous acquisitions made in December 2009 and July 2010, the management at Yuhe International forecasts its fiscal year 2011 net income to be in the range between $33 million and $36 million.

WEIFANG, Shandong, China, Jan. 4, 2011 /PRNewswire-Asia-FirstCall/ -- Yuhe International, Inc., today announced that the company's wholly owned subsidiary, Weifang Yuhe Poultry Co., Ltd. ("Weifang Yuhe"), entered into a series of asset purchase agreements to purchase ten breeder farms in Liaoning and Henan Provinces, China, for an aggregate purchase price of RMB 108,686,716, or approximately USD 16.4 million. The ten breeder farms are purchased from six individuals engaged in large-scale parent breeder raising businesses in China (collectively "Sellers"), where eight breeder farms are in Liaoning Province, and two are in Henan Province.

Pursuant to the terms of the asset purchase agreements, the acquisition consideration will be paid in combination of cash and Yuhe's stock.

• Total cash consideration amount to RMB 80,098,406, or approximately USD 12,099,457.
• The share consideration is calculated at a price of $10 per share with total share consideration equal to approximately RMB 28.6 million, or approximately $4.3 million, for approximately 431,848 restricted shares of Yuhe's common stock. The restricted shares are subject to a six-month lock-up period.

The ten breeder farms have a total production capacity of 950,000 sets of parent breeders, covering an area of approximately 91 acres (558 Mus) with a building coverage of approximately 1,471,869 square feet (136,740 square meters). The assets purchased include the buildings and breeding equipment for the breeder farms, as well as land lease rights with terms ranging between 20 years and 50 years.  

Upon closing, Yuhe will have an increased production capacity of 3.15 million sets of parent breeders, accounting for 8% of China's broiler market in terms of production capacity. Geographic details for the ten acquired breeder farms are as following: one farm in Anshan City, Liaoning Province; One farm in Wafangdian City, Liaoning Province; Two farms in Haicheng City, Liaoning Province; One farm in Dandong City, Liaoning Province; Three farms in Shenyang City, Liaoning Province; and two farms in Zhoukou City, Henan Province.

Mr. Zhentao Gao, Chairman and CEO of Yuhe International, commented, "We are very pleased to acquire the ten new breeder farms in China as planned. The highlights of this acquisition lie in two aspects, one being that the Company had gained access to a large quantity of breeding land with reasonable terms; and the other being that we were able to retain a large number of experienced and skilled workers. Both factors are current bottlenecks to self-constructing such breeder farms."

The average cost of acquiring a 100,000-set-parent-breeder-farm in this transaction was RMB 11,440,700 (approximately $1.85 million), approximately 25% higher than the average acquisition cost of RMB 9,176,000 (approximately $1.48 million) in June 2010 for a comparable breeder farm. The cost increase was mainly driven by the increased land lease right fees from RMB 1,000 per Mu to RMB 1,400 and RMB 1,700 per Mu in Liaoning and Henan Province, respectively. Cost for acquiring farm buildings increased slightly, as a result of purchasing more steel-structured farms with higher unit cost. The average costs for the Company to acquire these breeder farms remain lower than those to build such farms from scratch.

At the time of signing the contracts, the age of the existing breeding stocks at the acquired farms were between 23 and 52 weeks, and such existing breeding stocks are expected to retire at the 67th week. Due to quality assurance purposes, Yuhe will only take the ownership of the acquired breeder farms when all existing breeding stocks retire. Upon closing, Yuhe plans to spend RMB 10 million (approximately USD 1.6million) on a two to three-month facility restoration and employee training program. The Company plans to put the first batch of 550,000 sets of parent breeders into production by the end of the third quarter of 2011, and the remaining 400,000 sets by the end of the fourth quarter of 2011. The production increase will be reflected in the Company's broiler output in 2012, when the breeding stocks enter their egg-laying peaks. This revenue-contribution timeframe is similar to that in Yuhe's previous acquisitions in December 2009 and June 2010, where the production increase from an accumulated 1.05 million sets of parent breeders is expected to be reflected in the Company's broiler output in 2011.

The Company also announced that the constructions of its hatchery facilities were progressing well. The third hatchery facility equipped with 60 hatchers has completed construction and commenced operation with the first batch of 40 hatchers. The fourth hatchery designed to have 100 hatchers will begin construction in the first quarter of 2011.

Mr. Vincent Hu, CFO of Yuhe International, commented, "The Company's future profitability is expected to be improved as a result of this acquisition. We expect the consequential increase in sales volume in 2012 will translate into a lower unit administrative cost and higher operating margin."

"This acquisition was completed amid a booming broiler market in China," commented Mr. Zhentao Gao, CEO of Yuhe International, "The successful acquisition demonstrates that Yuhe is capable of leveraging on its industry experience and reputation to capture industry consolidation opportunities in both rising and falling markets."

"This is the third acquisition carried out by Yuhe, and is also the second acquisition that used our stock as partial acquisition consideration. Based on our previous experience in acquisition and post-acquisition integrations, we expect that this acquisition, being the largest in the Company's history, to be successfully completed as the previous ones," Mr. Gao added.

"It is a strategic milestone in our history that our production base expands into Henan Province after our expansion into Liaoning Province in 2010," Mr. Gao continued, "We currently focus our hatching and sales network in Shandong Province, and we plan to expand the sales network into wider geographic areas after commanding a meaningful market share in Shandong. Having production bases stationed outside of Shandong Province lays strategic foundation for the Company's future nation-wide market penetration. We will continue to leverage on our core competencies and in-depth knowledge of China's broiler industry to carry out our long-term strategy." Concluded Mr. Gao.

The Company raised its net income guidance for fiscal year 2010 to $18.5 million, up from previously announced $17 million. The raised guidance represents growth in net income of 44.5% as compared with fiscal year 2009. The Company expects the production volume of day-old broilers to be 145 million heads for fiscal year 2010, slightly down for 0.5% from previously expected 150 million day-old broilers. The updated guidance does not take into account of the impact of any potential acquisitions.

"The upward adjustment to our net income guidance was mainly due to an increase in average selling prices of the day-old broilers, which have exceeded our initial expectations," commented Mr. Zhentao Gao, Chairman and CEO of Yuhe. "The day-old broiler prices have stayed in high range from the third quarter of this year, and is still gaining upward momentum going into December. As one of the largest suppliers of day-old broilers in China, we are highly confident that the favorable supply and demand dynamic in the day-old broiler market will continue to support high unit selling prices throughout and beyond 2010, allowing us to reach our updated financial guidance for the fiscal year 2010," concluded Mr. Gao.

"Our strong third quarter sales growth was driven by an increase in both volume and average selling prices," commented Mr. Zhentao Gao, Chairman and Chief Executive Officer of Yuhe. "We are particularly pleased with our gross margin performance which benefited from higher average selling prices and our ability to optimize our input costs by locking in favorable fixed prices for external eggs when the market was not as strong as it is today. Yuhe's management team, based on its many years of experience and industry expertise, correctly forecast the current supply shortage and took action to capitalize on the opportunity.  As a result, we are benefiting from a situation where average selling prices are rising at a faster rate than our input costs.  The current average selling price of day-old-broilers is approximately RMB 3.4 and we expect this favorable supply/demand imbalance to persist into at least the first half of next year."  

Outlook

Mr. Gao added, "We are pleased to announce that we began to generate revenues from the new parent breeders that we purchased in Shangong Province in 2009 and early 2010.  Of the 13 farms purchased, nine have begun operations and the other four farms are expected to commence operations by the end of the first quarter of 2011.  We also completed the construction of our new hatchery in September 2010.  Given our increased capacity and the higher average selling prices in the market, we believe our full year 2010 broiler output and net income will surpass our previously provided forecast.  For 2011, we continue to expect broiler output of approximately 250 million.  

"Our acquisition of the five breeder farms in Liaoning Province provides us with a production base outside of Shandong Province and is an important milestone in our path toward becoming the leading company in the national broiler market in China.  We are in the process of upgrading the facilities and training the employees at these farms and plan to put the first four farms into production by the end of the first quarter of 2011 and the fifth farm into production by the end of the second quarter of 2011.  Upon full operations of all of our acquired farms, we expect to have in total 430,000 sets of hatchers with a hatching capacity of 43 million broilers per year.

"The capital we raised in our recent financing, combined with our internally generated cash resources, provides us with flexibility to capitalize on potential acquisition opportunities within our industry.  We continue to view this as a very attractive time to make acquisitions and are currently evaluating additional targets that represent a total capacity of between 1.0 million and 1.2 million sets of parent breeders.  We are committed to delivering sustainable growth in shareholder value and keeping this principle foremost in our mind when evaluating any potential future acquisitions."  

• Sales revenue amounted to $12.48 million for the three months ended June 30, 2010, increased by $2.64 million, or 27%, from $9.83 million for the three months ended June 30, 2009.
  
  • The revenue increase was driven by the increase in sales volume of the Company’s day-old broilers by 8.9 million birds, or 34%, from 25.7 million birds in 2009 to 34.6 million birds in 2010 for the three-month period ended on June 30.
    
  • The increase in sales volume of the broilers was a result of capacity expansion in the first quarter of fiscal year 2010.
    
  • Nevertheless, the sales revenue increase as a result of the broiler sales volume increase was partially offset from $3.12 million to $2.64 million by the revenue decrease in retired parent broilers and by-products by $0.48 million.
    
  • The unit selling price of the broilers of RMB 2.38 per bird remained unchanged year over year for the three months ended June 30, 2010.
    
• Net profit increased by $0.96 million, or 46%, to $3.06 million for the three months ended June 30, 2010 from $2.09 million for the three months ended June 30, 2009.
  
• EPS was $0.19 vs. $0.13.

Outlook:

The Company's management expects sales volume and net income to rise in the second half of the year, given the seasonality of the business and the fact that the new parent breeders that were purchased in 2009 and 2010 will begin to generate revenue in the fourth quarter of 2010. Therefore, management re-affirms its previously issued guidance for 2010 with production of 150 million broilers in total and net income of approximately $17 million.

Considering the contribution of the five newly acquired breeder farms, management expects the output of broilers in 2011 to reach 250 million. Management also believes their existing sales network is capable of absorbing the increased output in the short run. The Company plans to build sales networks gradually around those production facilities outside Shandong province to provide pre-sales services, marketing, and after-sales support.

The construction of Yuhe's new hatchery was, to some extent, affected by the recent hot weather because the Chinese government enforces shorter working hours for construction workers on high temperature days. Management expects the new hatchery to commence operations in September 2010.

Mr. Gao added, "We believe Yuhe is very well positioned to capitalize on the opportunities in our market. With our recently closed and announced acquisitions and the construction of our new hatchery, we are confident that we are making the right investments today to position our Company for profitable growth. We have a very experienced team that understands our market very well and is adept at optimizing our input costs and maximizing our sales potential to drive both sales and earnings. We are very pleased with our first half performance. As we enter the second half of the year, we are encouraged by the market environment. We previously stated that we believe there will be a supply shortage in our market going forward and we are beginning to see tangible signs of this. Our day-old broilers are currently commanding average selling prices that are up significantly from the prices we were seeing in the second quarter. We believe that demand and prices for high-quality day-old broilers will stay strong through at least the second half of the year. This together with our expanding capacity gives us confidence that we will be able to deliver strong results for our shareholders through the balance of the year and beyond."

"While the first quarter is traditionally one of our slowest in terms of sales due to the cold weather and the Chinese Spring Festival, we saw an uptick in sales volume of our day old broilers," commented Mr. Zhentao Gao, Chairman and Chief Executive Officer of Yuhe International. "At the same time, gross margin was impacted by slightly lower selling prices and higher feed costs. We expect our financial performance to accelerate in the second half of the year when the approximate 176,000 parent breeders we recently purchased mature and begin contributing to production capacity."

The Company's management expects sales volume and net income to rise throughout the remainder of 2010. Yuhe's strongest results will occur in the second half of the year, given the seasonality of the business and the fact that the new parent breeders that were purchased in early 2010 will begin to generate revenue in the fourth quarter of 2010.

Therefore, management re-affirms its previously issued guidance for 2010 of:

• Production totaling 150 million day-old broilers
• Net income of approximately $17 million.