Yanglin Soybean, Inc. Reports Robust Revenue and Earnings Growth in the Third Quarter 2008

Revenues for the third quarter of 2008 rose 112% year-over-year to $48.7 million, as compared to $23.0 million for the three months ended September 30, 2007. Revenues for soybean meal, soybean oil and salad oil continue to experience significant growth.

18/11/08 Yanglin Soybean, Inc., a leading producer and processor of high-quality, non-genetically modified (non-GM) soybean products in China, announced unaudited financial results for the third quarter and nine months ended September 30, 2008.

Financial Results Overview

"The impressive sales performance across our product lines speak to the strength of our underlying businesses and product portfolio," said Mr. Shulin Liu, Yanglin's Chief Executive Officer. "These financial results are setting the stage for our performance for the 2008 year as well as our continued progress toward our long-term financial targets. We will introduce several new refined soybean oil products early next year to complement our existing products and generate additional sales."

In the third quarter of 2008, sales of soybean meal, soybean oil and salad oil were $32.5 million, $11.2 million, and $5.0 million, accounting for 66.7%, 23% and 10.3% of total revenues, respectively.

Gross profit for the 2008 third quarter was $3.4 million, as compared to $1.5 million for the same quarter last year, reflecting a 126% year-over-year increase. Gross margin, as a percent of revenue, was 7.1% for the third quarter of 2008. This percentage compares favorably to the gross margin of 5.8% achieved in the second quarter of 2008 and the 6.6% in the year-ago quarter. Soybeans continue to account for over 90% of total raw material costs in our production process. Gross margin for soybean meals, our biggest revenue contributor, increased to 8.1% in the third quarter of 2008 compared to 4.4% in the year-ago quarter. Gross margin for soybean oil was 3.9% this quarter compared with 8.9% the third quarter in 2007. Gross margin of salad oil was 7.6% this quarter of 2008 compared with 10.3% the third quarter in 2007. The reason for the lower gross margins in soybean oil and salad oil was mainly due to the higher raw material cost (soybean) and delayed price hike on these products. However, during the third quarter, we have successfully increased our prices on soybean meal and passed on the higher costs to the customers. We continue to improve our product mix and focus on higher margin product sales.

Total operating expenses for the three months ended September 30, 2008 increased to $567,739, from $245,420 in the same period last year. Selling expenses for the 2008 third quarter were $ 61,756 as compared to $ 29,386 in the 2007 third quarter. General and administrative expenses for the 2008 third quarter were $505,983, as compared to $216,034 in the year-ago quarter. The increase of G&A expenses was mainly related to increased costs associated as a US publicly listed company and the Sarbanes-Oxley Act compliance project with Ernst & Young. The SOX 404 project is progressing well and we expect to finish by the end of the year. Total SG&A expenses accounted for 1.2% of total revenue in 2008 third quarter, as compared to 1.0% in the same period of 2007.

Income from operations for the third quarter of 2008 amounted to $2.87 million, an increase of 125% compared with operating income of $1.27 million in the same period in 2007. The operating income margin was 5.9% for the third quarter of 2008 as compared to 5.0% for the second quarter of 2008, and 5.5% for the year-ago quarter, respectively.

Interest expenses for the third quarter of 2008 amounted to $195,075, compared with $57,064 for the three months ended September 30, 2007.

Net income for the third quarter of 2008 totaled $2.70 million, or $0.07 per diluted share, compared to net income of $1.23 million, or $0.06 per diluted share in the same period one year ago. The year-over-year net income growth was 120%. As noted in our last quarter's financial results, the disparity between the growth in net income and that of the diluted EPS is because of the large increase in the weighted average number of common stocks for the purpose of calculating EPS on fully diluted basis. The greater number of shares outstanding was caused by the issuance of a large number of preferred stocks and warrants in the financing closed in October 2007.

The Company continues to enjoy a tax holiday for the remainder of 2008, as we are recognized as a key leading enterprise in the agriculture industry by the Chinese government. As the new calendar year approaches, a review process is required to determine the Company's tax-exempt status. The current corporate income tax rate in China is 25%. As a leading soybean processor in China and given that the soybean product market is highly protected by Chinese government, Yanglin expects to continue to receive favorable tax treatment from local and central government.