Higher on earnings (SEED, rated BUY)

August 29, 2008

BEIJING, Aug 27, 2008 (BUSINESS WIRE) — Origin Agritech Limited ( SEED , Trade ) ("Origin" or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the third quarter ended June 30, 2008. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

Financial Results Overview

During the third quarter of fiscal 2008, the Company generated revenues of RMB 490.71 million (US$71.54 million), an increase of 7.73% from revenue of RMB 455.49 million (US$59.84 million) for the three months ended June 30, 2007. This was mainly due to a 6.2% increase in the average sales price of our products across all seed types with volumes also increasing 2.2%.

Corn revenues increased 7.75% year-over-year to RMB 366.04 million (US$53.37 million) from RMB 339.72 million (US$44.63 million). This was mainly due to a 10.25% increase in the average sales price of our products across corn seed types.

Gross margins for the third quarter improved to 29.36%, as compared to 23.91% achieved during the third quarter of 2007 caused by an increase in the average selling price.

Total operating expenses for the three months ended June 30, 2008 were RMB 45.71 million (US$6.66 million), a decrease of 7.79% from RMB 49.58 million (US$6.51million) in the same period of the prior year. The decrease was mainly due to the effective internal controls over daily operating costs and expenses.

— Selling and marketing expenses were RMB 16.82 million (US$2.45 million) for the third quarter of 2008, representing a decrease of 7.95% from RMB 18.27 million (US$2.40 million) for the same period of the last year, which was mainly due to the decrease in advertising expenses. Our marketing focus this year consisted mainly of setting up more effective and cost efficient field demonstration lots, and eliminating our spending on advertising and other media expenditures.

— General and administrative expenses of RMB 19.06 million (US$2.78 million) for the third quarter ended June 30, 2008, decreased 4.29% from RMB 19.92 million (US$2.62 million) for the three months ended June 30, 2007 due to an effective control over daily operating costs and expenses, which should continue to take further effect over the next 3 quarters.

— Research and development expenses during the quarter were RMB 9.83 million (US$ 1.43 million), as compared with RMB 11.39 million (US$ 1.50 million) for the three months ended June 30, 2007. R&D expenditures decreased slightly this quarter, but it has increased for the nine-month period as a result of the increased build out of our in-house biotechnology center at our Beijing headquarters. We expect to continue building our capabilities in an efficient, cost effective manner.

Income from operations for the third quarter of 2008 amounted to RMB 98.38 million (US$ 14.34 million) compared with an operating income of RMB 59.35 million (US$7.80 million) in the same period in 2007 reflecting a 65.77% increase year-over-year.

Interest expenses for the third quarter of 2008 were RMB10.31 million (US$1.50 million), representing an increase of 145.29 % from RMB 4.20 million (US$0.55 million) for the three months ended June 30, 2007, which was primarily attributable to the inclusion of the interest expenses on the convertible debt of RMB 5.51 million (US$0.80 million) in the third quarter of 2008.

Net income for the third quarter of 2008 rose by 62.98% to RMB 60.12 million (US$ 8.77 million), as compared to net income of RMB 36.89 million (US$4.85 million) in the same period a year ago. Earnings per share on a fully diluted basis were RMB 2.62 (US$0.38), as compared to RMB 1.50 (US$0.20) per diluted share in the same period one year ago, reflecting a 74.67% year-over-year increase.

Higher on earnings (SEED, rated BUY)

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