Origin Agritech Limited Reports Third Quarter Financial Results for Three Months ended June 30, 2009

Origin Agritech Limited (NASDAQ: SEED) (“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, 2009. 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 2009, the Company generated revenues of RMB 477.17 million (US$69.84 million), a decrease of 2.76% from RMB 490.71 million (US$71.54 million) generated in the three months ended June 30, 2008. However, this 3Q09 revenue figure is exclusive of the RMB 53.69 million (US$7.86 million) in Deferred Revenue for the three-months ended June 30, 2009, carried as a liability on the balance sheet, which should be recognized in Q409 pending a price confirmation. These fluctuations in the timing of the pricing of our seed shipments are common in the industry and are dependant upon the schedule of the shipment based on customer preferences.

Gross profit for the three-months ended June 30, 2009 was RMB151.56 million (US$22.18 million) compared to RMB144.09 million (US$21.01 million) in the same period of the prior year, mainly due to increased demand and pricing across all product categories this season.

Total operating expenses for the three-months ended June 30, 2009 were RMB 32.61 million (US$4.77 million) compared with RMB 45.71 million (US$6.66 million) reported for the same period in 2008. Selling and marketing expenses were RMB 12.08 million (US$1.77 million) for the third quarter of 2009, representing a decrease of 28.18% from RMB 16.82 million (US$2.45 million) for the same period of the last year. This decrease was mainly due to a lower transportation costs. General and administrative expenses of RMB 14.25 million (US$2.09 million) for the third quarter ended June 30, 2009, decreased 25.24% from RMB 19.06 million (US$2.78 million) for the three months ended June 30, 2008, mainly due to the lower consulting fees. Research and development expenses decreased to RMB 6.28 million (US$0.92 million) for the three-months ended June 30, 2009 from RMB 9.83 million (US$1.43 million) for the same quarter last year, with a decrease of 36.11%. This decrease was mainly due to a lower amount of charges for scientific cooperation projects this year. With the completion of 3Q09 season, this marks the third consecutive quarter of lower year over year expenses for Origin.

Income from operations for the third quarter of 2009 amounted to RMB 118.95 million (US$17.41 million) compared with the income from operations of RMB 98.38 million (US$14.34 million) for the same period in 2008.

Net income for the third quarter of 2009 was RMB 74.97 million (US$10.98 million), or RMB 3.26 (US$0.48) per diluted share, as compared to a net income of RMB 60.12 million (US$8.77 million), or RMB 2.62 (US$0.38) per diluted share in the same period one year ago.

Year-to-Date Results

For the nine months ended June 30, 2009, the Company generated revenues of RMB 534.66 million (US$78.26 million), an increase of 3.09% from RMB 518.63 million (US$75.61 million) generated in the three months ended June 30, 2008.

Gross profit for the nine-months ended June 30, 2009 was RMB163.59 million (US$23.94 million) compared to RMB144.13 million (US$21.01 million) in the same period of the prior year. Both the gains in revenue and gross profit for the year to date were a result of stronger product demand and pricing in the revenue recognized in 3Q09 across all product categories.

Total operating expenses for the nine-months ended June 30, 2009 were RMB 103.85 million (US$ 15.20 million) compared with RMB 126.56 million (US$ 18.45 million) reported for the same period in 2008.

In Q209, the company repurchased their outstanding convertible notes from Citadel Investment Group (CIG). While this event had no material impact on our Q309 financial results, the repurchase event does affect our year-to-date financial figures. As a result, a GAAP vs. Non GAAP calculation has been calculated for reference.

On a non-GAAP basis, excluding non-recurring charges related to the convertible notes charged mainly in the second quarter of 2009, net income for the nine months ended 2009 was US$3.98 million, or US$0.17 per diluted share, as compared to a net income of US$0.7 million, or US$0.03 per diluted share in the same period one year ago.

GAAP and non-GAAP Q3 2009
Origin Agritech Limited
Consolidated Statements of Income Data (USD in thousands, except per share amounts)
(unaudited)
		Nine Months Ended June 30
		2008						2009
		GAAP (1)		Difference		Non-GAAP (2)		GAAP (1)		Difference		Non-GAAP (2)
Income from Operations		2,562		-		2,562		8,742		-		8,742
Interest Expense		(4,262)		(1,633)		(2,629)		(2,159)		(763)		(1,396)
Other Income/ (Expense)		10		-		10		(7,476)		(7,483)		7
Changes in Fair Value of Embedded Derivatives
		3,095		3,095		0		483		483		0
Share of Earnings in Equity Investee, Interest Income, Income Tax Expenses, and Minority Interests
		779		-		779		(3,372)		-		(3,372)
Net Income (Loss)		2,184		1,462		722		(3,782)		(7,763)		3,981
EPS		0.10		0.06		0.03		(0.16)		(0.34)		0.17
Weighted Average
Number of Shares
Basic and Diluted		22,978,463				22,978,463		23,013,692				23,013,692

(1) Reflects operating results in accordance with U.S. generally accepted accounting principles (or GAAP).

(2) Non-GAAP amounts exclude repurchase-related special items, the amortization of the discount of the convertible notes and the gains from the write-downs of the fair value of embedded derivatives.

BALANCE SHEET

Origin's balance sheet at June 30, 2009 included cash and cash equivalents of RMB 156.30 million (US$22.88 million), and shareholders' equity of RMB 241.03 million (US$35.28 million).

Deferred revenue was RMB 53.69 million (US$7.86 million) as of June 30, 2009 as compared to RMB 3.28 million (US$ 0.48 million) as of June 30, 2008.

The Company received advances from customers of RMB 163.48 million (US$23.93 million) as of June 30, 2009 as compared to RMB 130.92 million (US$19.09 million) as of June 30, 2008.

FISCAL 2009 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2009 in the range of RMB 560 million to RMB 580 million and operating cash flow range of RMB 80 million for the fiscal year ending September 30, 2009.

About Origin

Founded in 1997 and headquartered in Beijing, Origin Agritech Limited (NASDAQ GS: SEED) is China’s leading, vertically-integrated agricultural technology company specializing in agri-biotech research, development and production to supply the growing populations of China. Origin develops, grows, processes, and markets crop seeds to farmers throughout China and parts of Southeast Asia via a network of approximately 3,800 first-level distributors and 65,000 second-level distributors and retailers. The hybrid seed industry is estimated at US $2.5 billion and that is expected to double within the next five years. The Company currently operates facilities in 30 of 32 provinces in China. Since Origin launched its first entirely internally developed seed in 2003, the Company has developed 26 proprietary corn seed products, 19 proprietary rice seed products, 5 proprietary cotton seed products and 4 proprietary canola seed products that are in commercial production and distribution as of December 2008. For further information, please log on www.originagritech.com.

Forward Looking Statement

This release contains forward-looking statements. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "continue," or variations of such words, similar expressions, or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither we nor any other person can assume responsibility for the accuracy and completeness of forward-looking statements. Important factors that may cause actual results to differ from expectations include, but are not limited to, those risk factors discussed in Origin's filings with the SEC including its annual report on Form 20-F filed with the SEC on March 23, 2009. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data)
		Three months ended June 30,
		2008		2008		2009		2009
		RMB		US$		RMB		US$
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues		490,709		71,541		477,169		69,844
Cost of revenues		(346,616)		(50,534)		(325,611)		(47,660)
Gross profit		144,093		21,007		151,558		22,184
Operating expenses:
Selling and marketing		(16,819)		(2,452)		(12,080)		(1,768)
General and administrative		(19,063)		(2,779)		(14,251)		(2,086)
Research and development		(9,832)		(1,433)		(6,275)		(918)
Total operating expenses		(45,714)		(6,664)		(32,606)		(4,772)
Income from operations		98,379		14,343		118,952		17,412
Interest expense		(10,305)		(1,502)		(3,146)		(460)
Share of earnings in equity investee companies		3,398		495		4,266		624
Interest income		873		127		810		119
Other income (loss)		97		14		(299)		(44)
Changes in the fair value of embedded derivatives		(2,752)		(401)		-		-
Income before income taxes and minority interests		89,690		13,076		120,583		17,651
Income tax expense
Current		(7,210)		(1,051)		(6,232)		(912)
Deferred		(7,488)		(1,092)		(21,331)		(3,122)
Income tax expense		(14,698)		(2,143)		(27,563)		(4,034)
Income before minority interests		74,992		10,933		93,020		13,617
Minority interests		(14,872)		(2,168)		(18,047)		(2,642)
Net income		60,120		8,765		74,973		10,975
Net income per share – basic		2.62		0.38		3.26		0.48
Net income per share – diluted		2.62		0.38		3.26		0.48
Shares used in calculating basic net income per share		22,987,272		22,987,272		23,013,692		23,013,692
Shares used in calculating diluted net income per share		22,987,272		22,987,272		23,013,692		23,013,692
Cash dividend per share		-		-		-		-

		Nine months ended June 30,
		2008		2008		2009		2009
		RMB		US$		RMB		US$
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues		518,627		75,612		534,660		78,259
Cost of revenues		(374,497)		(54,598)		(371,074)		(54,315)
		-		-
Gross profit		144,130		21,014		163,586		23,944
		-		-
Operating expenses:
Selling and marketing		(42,441)		(6,188)		(34,960)		(5,117)
General and administrative		(59,300)		(8,645)		(47,581)		(6,966)
Research and development		(24,823)		(3,619)		(21,310)		(3,119)
		-		-
Total operating expenses		(126,564)		(18,452)		(103,851)		(15,202)
		-		-
Income from operations		17,566		2,562		59,735		8,742
Interest expense		(29,231)		(4,262)		(14,750)		(2,159)
Share of earnings in equity investee companies		5,297		772		4,972		728
Interest income		3,856		562		1,475		216
Other income (loss)		71		10		(51,075)		(7,476)
Changes in the fair value of embedded derivatives		21,232		3,095		3,297		483
		-		-
Income before income taxes and minority interests		18,791		2,739		3,654		534
Income tax expense
Current		(8,386)		(1,223)		(6,305)		(923)
Deferred		8,420		1,228		(11,152)		(1,632)
		-		-
Income tax expense		34		5		(17,457)		(2,555)
		-		-
Income (loss) before minority interests		18,825		2,744		(13,803)		(2,021)
Minority interests		(3,844)		(560)		(12,032)		(1,761)
		-		-
Net income (loss)		14,981		2,184		(25,835)		(3,782)
Net income (loss) per share – basic		0.65		0.10		(1.12)		(0.16)
Net income (loss) per share – diluted		0.65		0.10		(1.12)		(0.16)
Shares used in calculating basic net income (loss) per share		22,978,463		22,978,463		23,013,692		23,013,692
Shares used in calculating diluted net income (loss) per share		22,978,463		22,978,463		23,013,692		23,013,692
Cash dividend per share		-		-		-		-

CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
		September 30,				June 30
		2008		2008		2009		2009
		RMB		US$		RMB		US$
						(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents		102,263		15,061		156,303		22,878
Accounts receivable, net		4,686		691		9,608		1,406
Due from related parties		8,458		1246		4,854		710
Advances to suppliers		1,937		285		2,685		393
Advances to growers		45,488		6,699		11,604		1,699
Inventories		387,734		57,104		355,040		51,968
Income tax recoverable		1,697		250		1,694		248
Prepaid expenses and other current assets		13,279		1,956		16,725		2,448
Total current assets		565,542		83,292		558,513		81,750
Land use rights, net		21,055		3,101		20,628		3,019
Plant and equipment, net		146,372		21,557		142,500		20,858
Equity investments		65,384		9,630		69,157		10,123
Goodwill		16,665		2,454		16,665		2,439
Acquired intangible assets, net		32,305		4,758		28,910		4,232
Deferred income tax assets		26,192		3,857		15,040		2,201
Other assets		20,781		3,061		13,029		1,909
Total assets		894,296		131,710		864,442		126,531
Liabilities, minority interests and shareholders’ equity
Current liabilities:
Short-term borrowings		163,940		24,145		119,340		17,468
Loan to Citadel						118,015		17,274
Accounts payable		7,924		1,166		18,848		2,759
Due to growers		14,033		2,067		237		35
Due to related parties		15,671		2,308		24,922		3,648
Advances from customers		138,804		20,443		163,480		23,929
Deferred revenues		34,848		5,132		53,685		7,858
Income tax payable		39,059		5,753		45,490		6,658
Other payables and accrued expenses		73,297		10,796		25,905		3,792
Total current liabilities		487,576		71,810		569,922		83,421
Long-term borrowings		940		138		-		-
Convertible notes, net of discount		65,294		9,616		-		-
Embedded derivatives-redemption feature		33,580		4,946		-		-
Other long-term liabilities		3,658		539		2,230		326
Total liabilities		591,048		87,049		572,152		83,747
Minority interests		39,224		5,777		51,256		7,502
Commitments and contingencies
Shareholders’ equity:
Preferred stock (no par value; 1,000,000 shares authorized, none issued)		-		-		-		-
Common stock (no par value; 60,000,000 shares authorized, 23,013,692 shares issued and outstanding as of September 30, 2008 and June 30, 2009		-		-		-		-
Additional paid-in capital		388,860		57,270		391,417		57,293
Retained earnings (deficit)		(84,690)		(12,473)		(110,523)		(16,177)
Treasury stock at cost (498,851 shares)		(29,377)		(4,327)		(29,377)		(4,300)
Accumulated other comprehensive loss		(10,769)		(1,586)		(10,483)		(1,534)
Total shareholders’ equity		264,024		38,884		241,034		35,282
Total liabilities, minority interests and shareholders’ equity		894,296		131,710		864,442		126,531