China: Tsingyuan Brewery Ltd. reports 442% increase in Q1 revenue

Tsingyuan Brewery Ltd., a Shandong-based manufacturer and distributor of brewer's malt and beer in China, announced on May, 25 its results for the first quarter ended March 31, 2011.

Zhang Dingyou, Chief Executive Officer, said, "We are very pleased to report a 442% increase in revenue to $21.1 million, which resulted from strong growth in both our malt and beer segments. At the same time, gross margin on our beer products increased to 27% in the first quarter of 2011, from 15% for the same period last year. The demand for beer in second- and third-tier cities has grown rapidly, due in part to increasing disposable income in these areas. We attribute Tsingyuan's success to our ability to offer high quality and low cost beer, which appeals to consumers in our target markets. Specifically, our beers are crafted from high quality raw materials using advanced brewing techniques. As the largest malt producer in Shandong, our ability to internally source malt provides us a distinct pricing advantage. "

"Looking ahead, we plan to aggressively expand our distribution network, which already spans six provinces in eastern and northern China. In the first quarter alone, we added over 20 new sales representatives and launched a nationwide advertising campaign, which has helped drive awareness for our products. As we increase penetration of our target markets, we also plan to expand our production capacity to accommodate the growing demand. In the second half of 2010, we added a new canning line, which increased our beer production capacity to 98,000 metric tons. In 2011, we plan to further expand our beer production capacity through the addition of new bottling lines. Overall, we have built a highly scalable infrastructure with a well-established brand, which should allow us to achieve our goal to become one of the leading national beer companies in China."

Revenue for the first quarter ended March 31, 2011 increased 441.8% to $21.1 million, compared to $3.9 million for the first quarter ended March 31, 2010. Gross profit increased 529.1% to $4.2 million for the three months ended March 31, 2011, compared to $0.7 million for the first quarter ended March 31, 2010. Operating income increased 423.0% to $3.4 million for the three months ended March 31, 2011, compared to $0.7 million for the same period last year. Net income for the three months ended March 31, 2011 increased 404.4% to $2.6 million, or $0.02 per diluted share, compared to $0.5 million, or $0.00 per diluted share, for the same period last year.

About Tsingyuan Brewery Ltd.

Tsingyuan Holding Inc., located in Shandong province, is a leading manufacturer and distributor of brewer's malt and beer throughout northern and eastern China. Tsingyuan Holding has two business lines: brewer's malt and beer production. The brewer's malt is currently shipped to brewers in ten provinces across China. The company’s beer products are distributed throughout six provinces.

25 May, 2011