Oppenheimer Downgrades China New Borun (BORN) to Perform; Revenues Grow, But Margins Erode
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Rating Summary:
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Today's Overall Ratings:
Up: 12 | Down: 19 | New: 8
Rating Summary:
1 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 8
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Oppenheimer downgraded China New Borun (NYSE: BORN) from Outperform to Perform.
Oppenheimer analyst said, "BORN grew 4Q11 revenue by 60.4%, exceeding our/Street estimates and guidance. Sales of crude corn oil, which BORN started in 1Q11, grew 64% qoq and made up 8.1% of revenue. However, an overall ASP increase could not catch up with the pace of cost increases, which led to 854/208bps yoy/qoq declines in gross margin. Gross margin has been shrinking for five consecutive quarters to a historically low 15.8% in 4Q11. Net income grew only 3.6% in 4Q, despite 60.4% growth in sales. We decide to move to the sideline, as we foresee margin pressure continuing in 2012 due to high corn prices and intense competition. We would look to be more constructive once margin stabilizes."
For an analyst ratings summary and ratings history on China New Borun click here. For more ratings news on China New Borun click here.
Shares of China New Borun closed at $3.10 yesterday, with a 52 week range of $2.78 -$11.72.
Oppenheimer analyst said, "BORN grew 4Q11 revenue by 60.4%, exceeding our/Street estimates and guidance. Sales of crude corn oil, which BORN started in 1Q11, grew 64% qoq and made up 8.1% of revenue. However, an overall ASP increase could not catch up with the pace of cost increases, which led to 854/208bps yoy/qoq declines in gross margin. Gross margin has been shrinking for five consecutive quarters to a historically low 15.8% in 4Q11. Net income grew only 3.6% in 4Q, despite 60.4% growth in sales. We decide to move to the sideline, as we foresee margin pressure continuing in 2012 due to high corn prices and intense competition. We would look to be more constructive once margin stabilizes."
For an analyst ratings summary and ratings history on China New Borun click here. For more ratings news on China New Borun click here.
Shares of China New Borun closed at $3.10 yesterday, with a 52 week range of $2.78 -$11.72.
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