Full Press Release Details
ZHENGYE BIOTECHNOLOGY HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of RMB and US$, except for number of shares)
| As of | ||||||||||||
| December 31, 2024 | June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash | 18,604 | 45,607 | 6,366 | |||||||||
| Restricted cash | 2 | 2 | - | |||||||||
| Short-term investments | 1,433 | 2,021 | 282 | |||||||||
| Notes receivable, net | 25,592 | 25,251 | 3,525 | |||||||||
| Accounts receivable, net | 59,563 | 36,938 | 5,157 | |||||||||
| Advance to suppliers | 10,788 | 12,360 | 1,725 | |||||||||
| Inventories, net | 58,220 | 53,550 | 7,475 | |||||||||
| Prepayments and other current assets, net | 2,626 | 25,718 | 3,591 | |||||||||
| Other receivable - a related party | 738 | - | - | |||||||||
| Total current assets | 177,566 | 201,447 | 28,121 | |||||||||
| Non-current assets: | ||||||||||||
| Property, plant and equipment, net | 255,164 | 246,701 | 34,438 | |||||||||
| Land use rights, net | 7,930 | 7,802 | 1,089 | |||||||||
| Intangible assets, net | 14,850 | 15,368 | 2,145 | |||||||||
| Long-term prepayments | 18,698 | 16,979 | 2,370 | |||||||||
| Deferred initial public offering expenses | 8,048 | - | - | |||||||||
| Net deferred tax assets | 10,991 | 16,331 | 2,280 | |||||||||
| Total non-current assets | 315,681 | 303,181 | 42,322 | |||||||||
| Total assets | 493,247 | 504,628 | 70,443 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term loans | 74,443 | 80,863 | 11,288 | |||||||||
| Current maturities of long-term loans | 7,190 | 200 | 28 | |||||||||
| Accounts payable | 42,960 | 42,801 | 5,975 | |||||||||
| Contract liabilities | 3,485 | 5,001 | 698 | |||||||||
| Taxes payable | 2,066 | 2,180 | 304 | |||||||||
| Amount due to related parties | 146 | - | - | |||||||||
| Accrued expenses and other liabilities | 5,617 | 3,790 | 529 | |||||||||
| Total current liabilities | 135,907 | 134,835 | 18,822 | |||||||||
| Non-current liabilities: | ||||||||||||
| Long-term loans | 4,800 | 4,700 | 656 | |||||||||
| Total non-current liabilities | 4,800 | 4,700 | 656 | |||||||||
| Total liabilities | 140,707 | 139,535 | 19,478 | |||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders' equity: | ||||||||||||
| Ordinary shares (US$ 0.000025 par value; 2,000,000,000 shares authorized; 45,666,376 and 47,391,376 shares issued and outstanding as of December 31, 2024 and June 30, 2025, respectively) | 8 | 8 | 1 | |||||||||
| Additional paid-in capital | 203,150 | 240,752 | 33,608 | |||||||||
| Statutory reserves | 32,647 | 32,647 | 4,557 | |||||||||
| Retained earnings | 48,151 | 26,483 | 3,697 | |||||||||
| Accumulated other comprehensive income | 3 | ( 966 | ) | ( 135 | ) | |||||||
| Total Zhengye Biotechnology Holding Limited's shareholders' equity | 283,959 | 298,924 | 41,728 | |||||||||
| Noncontrolling interests | 68,581 | 66,169 | 9,237 | |||||||||
| Total equity | 352,540 | 365,093 | 50,965 | |||||||||
| Total liabilities and equity | 493,247 | 504,628 | 70,443 |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
ZHENGYE BIOTECHNOLOGY HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| For the six months ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | USD | ||||||||||
| Net revenues | 94,949 | 62,328 | 8,701 | |||||||||
| Cost of revenues | ( 41,725 | ) | ( 42,944 | ) | ( 5,994 | ) | ||||||
| Gross profit | 53,224 | 19,384 | 2,707 | |||||||||
| Sales and marketing expenses | ( 19,307 | ) | ( 23,243 | ) | ( 3,245 | ) | ||||||
| General and administrative expenses | ( 14,604 | ) | ( 16,770 | ) | ( 2,339 | ) | ||||||
| Research and development expenses | ( 5,444 | ) | ( 8,969 | ) | ( 1,252 | ) | ||||||
| Reversal for credit losses | 1,043 | 719 | 100 | |||||||||
| Total operating expenses | ( 38,312 | ) | ( 48,263 | ) | ( 6,736 | ) | ||||||
| Operating income (loss) | 14,912 | ( 28,879 | ) | ( 4,029 | ) | |||||||
| Other income (expenses): | ||||||||||||
| Interest income | 213 | 72 | 10 | |||||||||
| Interest expense | ( 2,052 | ) | ( 1,752 | ) | ( 245 | ) | ||||||
| Unrealized gains on short-term investments | 100 | 588 | 82 | |||||||||
| Unrealized foreign exchange loss | - | ( 1,421 | ) | ( 198 | ) | |||||||
| Government subsidy | 140 | 502 | 70 | |||||||||
| Other expenses | ( 30 | ) | - | - | ||||||||
| Total other expenses, net | ( 1,629 | ) | ( 2,011 | ) | ( 281 | ) | ||||||
| Income (loss) before income taxes | 13,283 | ( 30,890 | ) | ( 4,310 | ) | |||||||
| Income tax benefits (expenses) | ( 2,558 | ) | 5,340 | 745 | ||||||||
| Net income (loss) | 10,725 | ( 25,550 | ) | ( 3,565 | ) | |||||||
| Net loss (income) attributable to noncontrolling interests | ( 1,714 | ) | 3,882 | 542 | ||||||||
| Net income (loss) attributable to the Zhengye Biotechnology Holding Limited's shareholders | 9,011 | ( 21,668 | ) | ( 3,023 | ) | |||||||
| Comprehensive income (loss) | ||||||||||||
| Net income (loss) | 10,725 | ( 25,550 | ) | ( 3,565 | ) | |||||||
| Other comprehensive income (loss) | ||||||||||||
| Foreign currency translation adjustment | 3 | ( 969 | ) | ( 135 | ) | |||||||
| Total comprehensive income (loss) | 10,728 | ( 26,519 | ) | ( 3,700 | ) | |||||||
| Less: total comprehensive loss (income) attributable to non-controlling interest | ( 1,714 | ) | 3,882 | 542 | ||||||||
| Total comprehensive income (loss) attributable to the Zhengye Biotechnology Holding Limited's shareholders | 9,014 | ( 22,637 | ) | ( 3,158 | ) | |||||||
| Earnings (loss) per share: | ||||||||||||
| Ordinary shares - basic and diluted | 0.20 | ( 0.46 | ) | ( 0.06 | ) | |||||||
| Weighted average shares outstanding used in calculating basic and diluted earnings per share: | ||||||||||||
| Ordinary shares - basic and diluted | 45,666,376 | 47,316,793 | 47,316,793 |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
ZHENGYE BIOTECHNOLOGY HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts in thousands of RMB and US$, except for number of shares)
| Ordinary shares | Additional paid-in | Statutory | Retained | Accumulated Other Comprehensive Income | Total Zhengye Biotechnology Holding Limited's shareholders' | Non- controlling | Total | |||||||||||||||||||||||||||||
| Shares | Amount | capital | reserve | earnings | Deficit | equity | interests | Equity | ||||||||||||||||||||||||||||
| Balance, December 31, 2023 (RMB) | 45,666,376 | 8 | 203,150 | 31,311 | 38,381 | - | 272,850 | 66,422 | 339,272 | |||||||||||||||||||||||||||
| Net income | - | - | - | - | 9,011 | - | 9,011 | 1,714 | 10,725 | |||||||||||||||||||||||||||
| Dividend | - | - | - | - | ( 205 | ) | - | ( 205 | ) | - | ( 205 | ) | ||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | 3 | 3 | - | 3 | |||||||||||||||||||||||||||
| Balance, June 30, 2024 (RMB) | 45,666,376 | 8 | 203,150 | 31,311 | 47,187 | 3 | 281,659 | 68,136 | 349,795 | |||||||||||||||||||||||||||
| Balance, December 31, 2024 (RMB) | 45,666,376 | 8 | 203,150 | 32,647 | 48,151 | 3 | 283,959 | 68,581 | 352,540 | |||||||||||||||||||||||||||
| Issuance of shares in initial public offering | 1,725,000 | - | 37,602 | - | - | 37,602 | - | 37,602 | ||||||||||||||||||||||||||||
| Shareholders contribution | - | - | - | - | - | - | - | 1,470 | 1,470 | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( 21,668 | ) | - | ( 21,668 | ) | ( 3,882 | ) | ( 25,550 | ) | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | ( 969 | ) | ( 969 | ) | - | ( 969 | ) | ||||||||||||||||||||||||
| Balance, June 30, 2025 (RMB) | 47,391,376 | 8 | 240,752 | 32,647 | 26,483 | ( 966 | ) | 298,924 | 66,169 | 365,093 | ||||||||||||||||||||||||||
| Balance, June 30, 2025 (US$) | 47,391,376 | 1 | 33,608 | 4,557 | 3,697 | ( 135 | ) | 41,728 | 9,237 | 50,965 |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
ZHENGYE BIOTECHNOLOGY HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$, except for number of shares)
| For the six months ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | 10,725 | ( 25,550 | ) | ( 3,565 | ) | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 11,275 | 12,251 | 1,710 | |||||||||
| Reversal for credit losses | ( 1,043 | ) | ( 719 | ) | ( 100 | ) | ||||||
| Impairment for inventory | 2,195 | 4,115 | 574 | |||||||||
| Deferred tax expenses (benefits) | 1,242 | ( 5,340 | ) | ( 745 | ) | |||||||
| Unrealized gains on short-term investments | ( 100 | ) | ( 588 | ) | ( 82 | ) | ||||||
| Unrealized foreign exchange loss | - | 1,421 | 198 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Notes receivable | 5,566 | ( 99 | ) | ( 14 | ) | |||||||
| Accounts receivable | 3,694 | 23,336 | 3,258 | |||||||||
| Advance to suppliers | ( 5,590 | ) | ( 1,572 | ) | ( 219 | ) | ||||||
| Inventories | ( 9,086 | ) | 554 | 77 | ||||||||
| Prepayments and other current assets | ( 942 | ) | ( 23,379 | ) | ( 3,264 | ) | ||||||
| Other receivable - a related party | ( 45 | ) | 738 | 103 | ||||||||
| Accounts payable | ( 2,533 | ) | ( 1,513 | ) | ( 211 | ) | ||||||
| Contract liabilities | ( 917 | ) | 1,516 | 211 | ||||||||
| Taxes payable | 1,560 | 115 | 16 | |||||||||
| Accrued expense and other liabilities | ( 1,312 | ) | 746 | 104 | ||||||||
| Net cash provided by (used in) operating activities | 14,689 | ( 13,968 | ) | ( 1,949 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Loans to a related party | - | ( 7,000 | ) | ( 977 | ) | |||||||
| Collection of lending to a related party | - | 7,000 | 977 | |||||||||
| Purchase of property, plant and equipment | ( 1,759 | ) | ( 255 | ) | ( 36 | ) | ||||||
| Prepayment for purchase of intangible assets | ( 14,071 | ) | ( 409 | ) | ( 57 | ) | ||||||
| Net cash used in investing activities | ( 15,830 | ) | ( 664 | ) | ( 93 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Proceeds from loans | 46,910 | 41,910 | 5,850 | |||||||||
| Repayment of loans | ( 49,370 | ) | ( 44,000 | ) | ( 6,142 | ) | ||||||
| Repayment of a related party | - | ( 146 | ) | ( 20 | ) | |||||||
| Dividend payment to shareholders | ( 15,858 | ) | - | - | ||||||||
| Deferred initial public offering expenses | ( 537 | ) | - | - | ||||||||
| Proceeds from initial public offering | - | 43,081 | 6,014 | |||||||||
| Shareholder contribution | - | 1,470 | 205 | |||||||||
| Net cash provided by (used in) financing activities | ( 18,855 | ) | 42,315 | 5,907 | ||||||||
| Effect of exchange rate changes on cash | 2 | ( 680 | ) | ( 96 | ) | |||||||
| Net increase (decrease) in cash and restricted cash | ( 19,994 | ) | 27,003 | 3,769 | ||||||||
| Cash and restricted cash at beginning of year | 27,186 | 18,606 | 2,597 | |||||||||
| Cash and restricted cash at end of year | 7,192 | 45,609 | 6,366 | |||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for: | ||||||||||||
| Interests | 2,052 | 1,700 | 237 | |||||||||
| Income taxes | 290 | - | - | |||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Liabilities assumed in connection with purchase of property, plant and equipment | 62 | 1,521 | 212 | |||||||||
| Reclassification of deferred initial public offering cost into additional paid-in capital | - | 8,663 | 1,209 |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
ZHENGYE BIOTECHNOLOGY HOLDING LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
Nature of operations
Zhengye Biotechnology Holding Limited (the "Company")
was incorporated in the Cayman Islands in March 2023 under the Cayman Islands Companies Act as an exempted company with limited liability.
The Company through its consolidated subsidiaries principally focuses
on the research, development, manufacture and sales of veterinary vaccines, with an emphasis on vaccines for livestock in the People's
Republic of China (the "PRC" or "China").
In preparation for its initial
public offering ("IPO") in the United States,
the following transactions were undertaken to reorganize the legal structure of Operating Entities. The Company was incorporated in connection
with a reorganization of Jilin Zhengye Biological Products Co., Ltd. ("Jilin Zhengye"). On April 3, 2023, the Company
incorporated a wholly-owned subsidiary, VVAX Skyline Holdings Limited ("VVAX Skyline"), in the British Virgin Islands.
On April 18, 2023, Peg Biotechnology (HK) Holding Limited ("Peg Biotechnology") was incorporated in Hong Kong as a company
with limited liability and as a wholly owned subsidiary of VVAX Skyline. On May 22, 2023, Peg Biotechnology incorporated a wholly-owned subsidiary,
Hainan Senhan Biotechnology Co., Ltd. ("Hainan Senhan") in the PRC. On May 30, 2023, VVAX Skyline acquired 100%
of the equity interests in Windsor Holdings Co., Ltd. ("Windsor Holdings") from its original shareholders. Windsor Holdings
was incorporated in the British Virgin Islands.
Prior to the reorganization described below, Jilin
Zhengye was controlled by several individual, corporate and institutional shareholders. A reorganization of the Company's legal
structure ("Reorganization") was completed on June 21, 2023. The Reorganization involved the transfer of 58.689% and
25.1524% interests of Jilin Zhengye from its former shareholders to Hainan Senhan and Windsor Holdings, respectively. As the result of
the Reorganization, Jilin Zhengye became a subsidiary of the Company.
Upon the completion of the Reorganization, the
Company became the ultimate holding company of all other entities mentioned above. The Company is effectively controlled by the same group
of controlling shareholders before and after the Reorganization; therefore, the Reorganization is considered as a recapitalization of
these entities under common control. The consolidation of the Company and its subsidiaries was accounted for at historical cost and prepared
on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying
consolidated financial statements. Results of operations for the period presented comprise those of the previous separate entries combined
from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
As of the date of this report,
the details of the Company's principal subsidiaries are as follows:
| Entity | Date of incorporation/ acquisition | Place of incorporation | Percentage of direct or indirect ownership by the Company | Principal activities | ||||
| Subsidiaries: | ||||||||
| VVAX Skyline Holdings Limited ("VVAX Skyline") | April 3, 2023 | British Virgin Islands | 100 % owned by the Company | Investment holding | ||||
| Windsor Holdings Co., Ltd. ("Windsor Holdings") | May 30, 2023 | British Virgin Islands | 100 % owned by VVAX Skyline | Investment holding | ||||
| Peg Biotechnology (HK) Holding Limited ("Peg Biotechnology") | April 18, 2023 | Hong Kong | 100 % owned by VVAX Skyline | Investment holding | ||||
| Hainan Senhan Biotechnology Co., Ltd. ("Hainan Senhan") | May 22, 2023 | PRC | 100 % owned by Peg Biotechnology | Investment holding | ||||
| Jilin Zhengye Biological Products Co., Ltd. ("Jilin Zhengye") | May 18, 2004 | PRC | 58.689 % owned by Hainan Senhan and 25.1524 % owned by Windsor Holdings | Research, development, manufacture and sales of veterinary vaccines | ||||
| Beijing Zhongnong Zhengye Biotechnology Co., Ltd. ("Beijing Zhengye") | April 16, 2025 | PRC | 51.00 % owned by Jilin Zhengye | Sales of veterinary vaccines |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S.
GAAP") and applicable rules and regulations of the U.S. Securities and Exchange Commission regarding financial reporting that are
consistent with those used in the preparation of the Company's audited consolidated financial statements for the years ended December
31, 2023 and 2024. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and
footnotes required by U.S. GAAP for annual financial statements.
In the opinion of the Company's management,
the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly
the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for
the six months ended June 30, 2025 are not necessarily indicative of results to be expected for any other interim period or for the year
ending December 31, 2025. The condensed consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated financial
statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited
condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for
the years ended December 31, 2023 and 2024.
Principles of consolidation
The unaudited condensed consolidated financial
statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation.
The preparation of the unaudited condensed consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported
revenue and expenses during the reported period in the unaudited condensed consolidated financial statements and accompanying notes. Significant
accounting estimates reflected in the Company's unaudited condensed consolidated financial statements mainly include, but are not
limited to, allowance for credit losses, depreciable lives of property, plant and equipment and amortization lives of intangible asset,
inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories, the valuation of derivative
instruments, and the valuation allowance for deferred tax assets.
Management bases the estimates on historical experience
and on various other assumptions as discussed elsewhere in the unaudited condensed consolidated financial statements that are believed
to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. On an
ongoing basis, management evaluates its estimates based on information that is currently available. Changes in circumstances, facts and
experience may cause the Company to revise its estimates. Changes in estimates are recorded in the period in which they become known.
Actual results could materially differ from these estimates.
The Company's reporting currency is the
Renminbi ("RMB"). The functional currency of the Company and its subsidiaries which are incorporated in British Virgin Islands
("BVI") and Hong Kong ("HK") are United States dollars ("US$"). The functional currencies
of the other subsidiaries are their respective local currencies. The determination of the respective functional currency is based on the
criteria set out by ASC 830, Foreign Currency Matters, ("ASC 830").
Transactions denominated in currencies other than
in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary
assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at