Origin Agritech Ltd (SEED) 2010 Q4 法說會逐字稿

(Audio in Progress) -- the company that allows you to participate from day one, and this can span at the very least five years. We remain the sole competitor, properly capitalized with a highly reputable nationwide, education-based distribution platform to bring the next generation of products to market.

（音訊進行中）—該公司允許您從第一天起就參與，並且這可能至少持續五年。我們仍然是唯一的競爭對手，資本充足，擁有信譽良好的全國性教育分銷平台，可將下一代產品推向市場。

We believe this position and platform is not only unique but invaluable as we are able to leverage additional products into the blossoming agriculture industry in China. With that, I'd like to move on to our yearly overview for our industry.

我們相信，這個地位和平台不僅是獨特的，而且是無價的，因為我們能夠將更多產品融入中國蓬勃發展的農業產業。 說到這裡，我想繼續我們行業的年度概述。

Next we'd like to go through the overview both for our industry and our company. I want to stress that the main trends surrounding the industry, surrounds the advent of higher-technology products as follows.

接下來我們想回顧一下我們的行業和我們公司的概況。 我想強調的是，圍繞該行業的主要趨勢圍繞著高科技產品的出現，如下所示。

Biotechnology development in China is moving at a rapid pace. Origin continues to expect to be an active participant in this development for the long-term future. We believe with GM's proven record of performance and penetration in the global market and rising demand for agricultural products, due to the improving standard of living among Chinese population, that there will be significant opportunities and a marketplace for GM in China in the foreseeable future.

中國的生物技術發展迅速。 Origin 期望在長遠的未來繼續積極參與這一發展。 我們相信，憑藉通用汽車在全球市場的良好業績和滲透率，以及中國人民生活水平不斷提高，對農產品的需求不斷增長，在可預見的未來，通用汽車在中國將擁有巨大的機會和市場。

While, though, the approval of GM is fully out of company control, we remain active believers that the future of the industry lies in the myriad biotechnology applications.

儘管通用汽車的批准完全不受公司控制，但我們仍然堅信該行業的未來在於無數的生物技術應用。

We also believe the real industry changes remain ahead of us. Our products are proving to be very active and viable in the test phases. We are fully confident of their efficacy for the commercial marketplace, and we are firm that Origin will become the leader in agriculture technology -- biotechnology and GMO product commercialization in China. We fully expect to be announcing our continued active participation in these developments in the near future.

我們也相信，真正的產業變革仍在前方。 事實證明，我們的產品在測試階段非常活躍且可行。 我們對其商業市場的功效充滿信心，我們堅信Origin將成為中國農業技術—生物技術和基因改造產品商業化的領導者。 我們完全期望在不久的將來宣布我們將繼續積極參與這些發展。

Secondly, these same long-term trends remain, are perhaps even more relevant today. Corn consumption in China continues to increase and higher land productivity is required. Over the last years we have continued to optimize our product line, eliminating poor-performing products and using a database of seed performance to sell the optimal seed into the optimal soil type.

其次，這些相同的長期趨勢仍然存在，而且在今天可能更為重要。 我國玉米消費量持續增加，對土地生產力提出更高要求。 在過去的幾年裡，我們不斷優化我們的產品線，消除性能不佳的產品，並使用種子性能資料庫將最佳種子銷售到最佳土壤類型。

Our level of sophistication is unparalleled in seed companies throughout China. That is why this year we saw our overall gross margin increase over 7% across all product lines. Corn seed plays the most active factor in increase of yield gains. In essence, prices should continue to rise.

我們的成熟程度在中國種子公司中是無與倫比的。 這就是為什麼今年我們所有產品線的整體毛利率成長超過 7%。 玉米種子是增產最活躍的因素。 從本質上講，價格應該會繼續上漲。

Our healthy financial position allowed us to capitalize on the upcoming trends. As you can see, our income and cash -- operating cash flow this year are again at all-time highs. And from a financial standpoint, we do not need to raise any capital, which we believe is extremely rare for many biotechnology-based companies on the cusp of a technology changeover with so great an opportunity ahead of them.

我們健康的財務狀況使我們能夠利用即將到來的趨勢。 正如您所看到的，我們今年的收入和現金營運現金流再次創下歷史新高。 從財務角度來看，我們不需要籌集任何資金，我們認為這對於許多處於技術變革風口浪尖的生物技術公司來說是極其罕見的，並且面臨著如此巨大的機會。

At this point I'd like to move onto the overview for our financial statements for the fiscal year 2010. Our revenues for the year ended September 2010 were $87 -- over $87m from over $86m in the fiscal year September 2009. For the year ended 2010, excluding scrap sale and the impairment of inventory, which were minimal in fiscal year 2010, our overall gross margins for the period were 47.2% as compared with our 35.6% gross margin for the 12 months ended 2009, an improvement of 32.6% in gross margin across all product types.

現在，我想概述我們 2010 財年的財務報表。年，不包括廢品銷售和存貨減損（這兩項在2010 財年為最低水準），我們該期間的整體毛利率為47.2%，與2009 年終了12 個月的毛利率35.6% 相比，提高了32.6%所有產品類型的毛利率百分比。

Of note, gross margin of our core corn products increased 22% to over 49% in fiscal year 2010. Our target gross margin remains to be in the 35% to 42% range for corn products, but with technology we expect these margins to continue to rise. This was a result of an increase in our corn seed price points and also our reorganization of the product pipeline, whereby we actively eliminated non-performing seed products to focus our sales effort on peak performing products.

值得注意的是，我們的核心玉米產品的毛利率在2010 財年增長了22%，達到49% 以上。發展，我們預計這些利潤率將持續下去上升。 這是由於我們的玉米種子價格點上漲以及我們對產品管道進行重組的結果，我們積極淘汰不良種子產品，將銷售重點集中在表現最佳的產品上。

Our gross profit for the year ended 2010 grew to CNY231m from CNY200m for the year ended September 2009. This represented an increase of 16% from the fiscal year ended 2009. We believe this increase suggests the leverage available as we raise prices by building higher quality products.

截至2010 年的毛利從截至2009 年9 月的年度的2 億元增至2.31 億元。高的品質來提高價格，從而發揮了槓桿作用。

Operating expenses for the year ended September 2010 were CNY169m, representing an increase of 10% from CNY154m for the fiscal year 2009. For all intents and purposes, our operating expenses were slightly up as compared to the year ended 2009, mostly as a result of our increased headcount, mostly in R&D and legal with regards to IP-protection personnel.

截至2010 年9 月的年度營運費用為1.69 億元人民幣，比2009 財年的1.54 億元人民幣增加了10%。上升，主要是由於我們增加了員工人數，主要是研發人員和智慧財產權保護法律人員。

However, of note, research and development expenses for the year were over CNY38.1m from CNY33.5m in 2009, an increase of 14.6%. These R&D expenses represented 6.6% of our total revenues, slightly above our 5% total revenue R&D expense targets.

但值得注意的是，全年研發費用超過3,810萬元人民幣，較2009年的3,350萬元成長14.6%。 這些研發費用占我們總營收的 6.6%，略高於我們 5% 總營收的研發費用目標。

As a result of the impact of the components described above, we had a significant gain on operations of CNY62m compared to CNY46m in 2009. Similarly we feel this is evidence of the operating leverage available to us as operating expenses were slightly up and we raised prices on higher quality products, producing a greater amount of operating income.

由於上述因素的影響，我們的營運收益顯著增加了6,200 萬元人民幣，而2009 年為4,600 萬元人民幣。提高了價格更高品質的產品，產生更多的營業收入。

Our net profit was $7.3m in the year ended September 2010, as compared to the net loss of $6m for the fiscal year September 2009. Net income for fiscal year ended 2010 was CNY2.2 (sic -- see press release) per share or CNY0.31 per diluted share, as compared to a loss of CNY0.26 per share a year ago. This is a dramatic CNY0.57 per share change in EPS.

截至2010 年9 月的財年，我們的淨利潤為730 萬美元，而2009 年9 月財年的淨虧損為600 萬美元。 ——請參閱新聞稿）稀釋後每股虧損 0.31 元人民幣，而一年前每股虧損 0.26 元人民幣。 每股 EPS 發生了 0.57 元人民幣的巨大變化。

I want to take some time to also highlight our operating cash flow, which rose to $44.56m in fiscal year 2010 from $30.59m in fiscal year 2009, which was up from $8.4m in fiscal year 2008. Additionally, as of September 30, 2010, we had approximately $44.72m in cash and cash equivalents which puts our company in a healthy financial position.

我還想花一些時間強調一下我們的營運現金流，從2009 財年的3,059 萬美元增至2010 財年的4,456 萬美元，而2008 財年的營運現金流為840 萬美元。 9 月30 日，我們擁有約 4,472 萬美元的現金和現金等價物，這使我們公司處於健康的財務狀況。

Regarding our outlook for the fiscal year 2011 season, we have optimized our current operations these past three years. We continue to focus on bringing the highest quality products and service to market in all four product categories. We expect Ag chemicals to take a larger portion of the revenues in the overall -- and the overall margins to increase at least 7% in 2011.

關於我們對 2011 財年的展望，過去三年我們優化了目前的營運。 我們繼續致力於將所有四個產品類別的最優質產品和服務推向市場。 我們預計銀化學品將在整體收入中佔據更大的比例，並且 2011 年整體利潤率將增加至少 7%。

Additionally, while we continue to operate in an improving pricing environment for seed, we are more excited about the multiple catalysts that lay ahead of us in the GM and technology for China and the world, as these have longer-term implications.

此外，雖然我們繼續在不斷改善的種子定價環境中運營，但我們對中國和世界的轉基因和技術方面擺在我們面前的多重催化劑感到更加興奮，因為這些具有長期影響。

We continue to possess worldwide rights to license both a novel glyphosate and Bt trait, and have the dominant position with respect to these products in China. When these industry changes occur, we stand first in line to utilize and capitalize on our company platform, our technology process and our product base.

我們繼續擁有新型草甘膦和 Bt 性狀的全球許可權，並在中國這些產品方面佔據主導地位。 當這些行業發生變化時，我們首先利用和利用我們的公司平台、技術流程和產品基礎。

And with these industry-changing catalysts still ahead of us, and the process ability to leverage our existing platform for higher quality seeds and other products into the world's second largest corn market, we feel the future of our company is not only bright, but there are few times in history where we can match this positioning.

憑藉這些改變產業的催化劑，以及利用我們現有平台將更高品質的種子和其他產品打入世界第二大玉米市場的加工能力，我們感到我們公司的未來不僅光明，而且還有潛力。我們很少能達到這樣的定位。

In other words, nothing has changed and we remain right on track.

換句話說，一切都沒有改變，我們仍然走在正軌上。

At this time, Jackie, we'd like to open the floor for questions from our listening audience.

傑基，現在我們想請聽眾提問。

Thank you. (Operator Instructions). Thank you, our first question is coming from Joe Giamichael of Global Hunter.

謝謝。 （操作員說明）。 謝謝，我們的第一個問題來自全球獵人的 Joe Giamichael。

Good evening, Irving, thank you for taking my questions. Just food inflation has been certainly a news item recently and we've seen it come through in the cost of produce and proteins. Can you talk a little bit about the effect that you're seeing of those inflationary pressures on pricing for your product and whether that's impacting demand at all?

晚上好，歐文，謝謝你回答我的問題。 最近，食品通膨肯定是一個新聞，我們已經看到它體現在農產品和蛋白質的成本上。 您能否談談您所看到的通膨壓力對產品定價的影響以及這是否會影響需求？

Sure, absolutely, and hanks and good evening, Joe. Sure, we definitely see the impact of food inflation and the demand of not only the end-commodity corn prices in turn trickling down to the corn seed price rising.

當然，絕對，漢克斯，晚上好，喬。 當然，我們肯定會看到食品通膨的影響以及終端商品玉米價格的需求反過來會影響玉米種子價格的上漲。

What ultimately it all points to is the need for the land again to produce more quantity and the burden on the land to produce more per acre. If you look at the acreage in the US at 140 bushels per acre, we believe that the Chinese land with higher quality seed should make inroads into producing along those same lines, those same quantities, so definitely we see those trends fall into place.

最終這一切都表明，土地需要再次生產更多的產量，以及土地每英畝生產更多產量的負擔。 如果你看看美國每英畝 140 蒲式耳的播種面積，我們相信擁有更高品質種子的中國土地應該沿著同樣的路線、相同的數量進入生產，所以我們肯定看到這些趨勢已經到位。

Okay, and then just from a bookkeeping standpoint, Q2 we should begin to see sales of phytase corn, is that correct?

好的，然後從簿記的角度來看，我們應該在第二季開始看到植酸酶玉米的銷售，對嗎？

Well, phytase corn is still in early market development phases. So we should see -- we're still testing with larger companies that have very high regard for the product. We ourselves have very high regard for the product as the product is in the -- as this is the first phytase corn in China that possesses the world's largest pig market.

植酸酶玉米仍處於早期市場開發階段。 所以我們應該看到——我們仍在與對該產品高度重視的大公司進行測試。 我們自己對該產品非常重視，因為這是中國第一個植酸酶玉米，而中國擁有世界上最大的生豬市場。

So we should -- it's possible to see the revenues trickle in in Q2, but most of all, the most important is that we've integrated this phytase gene with our best-performing hybrids and that these hybrids, if they're not received in this year they definitely should be very soon within the market with 12 to 24 months.

因此，我們應該——有可能在第二季度看到收入逐漸增加，但最重要的是，最重要的是，我們已經將這種植酸酶基因與我們表現最好的雜交品種相結合，並且這些雜交品種，如果沒有收到的話今年他們肯定會很快在 12 到 24 個月內上市。

And of course, obviously, sales of the phytase corn will be cannibalizing to some extent your existing corn products. How does the pricing of the product and the margin to the company compare with the existing corn products?

當然，顯然，植酸酶玉米的銷售將在某種程度上蠶食您現有的玉米產品。 與現有玉米產品相比，該產品的定價和公司利潤如何？

Definitely if we're selling seed into the market, we're going to sell the phytase at a higher price than the existing product. So it will be a higher technology cannibalization, similar to what you see at Intel and other technology companies where they believe that cannibalizing yourself is probably the best way to go in developing higher quality products.

當然，如果我們向市場銷售種子，我們將以比現有產品更高的價格出售植酸酶。 因此，這將是一種更高層次的技術蠶食，類似於你在英特爾和其他科技公司看到的情況，他們認為蠶食自己可能是開發更高品質產品的最佳方式。

But along those lines we think we'll also be making inroads into unique niches that would be more receptive to the product. So -- but at this stage we're still developing the market. I think there's still a lot of market to be played out, and so I think that the as it stands right now, it is conceivable in the future that every seed sold in China has phytase. So that wouldn't be so farfetched.

但沿著這些思路，我們認為我們也將進軍更容易接受該產品的獨特利基市場。 所以——但現階段我們仍在開發市場。 我認為還有很大的市場有待發揮，所以我認為就目前情況而言，可以想像，未來在中國銷售的每一粒種子都含有植酸酶。 這樣就不會那麼牽強了。

Just one last question and I'll get out of the way. I think the softening stance of the government towards GMO products is directionally clear. But as an outsider I'm not sure I'm able to develop an opinion on what the likely path will be as it relates to foreign-developed technologies. Right now any product has to go through the five stages of Ministry of Ag approval, creating a meaningful time lag and a regulatory loophole that really precludes many of the leading GMO companies to bring their products to market in China unless they JV or license the rights.

最後一個問題我就結束了。 我認為政府對基因改造產品的軟化立場是方向明確的。 但作為一個局外人，我不確定我是否能夠對可能的路徑發表意見，因為它與外國開發的技術有關。 目前，任何產品都必須經過農業部批准的五個階段，這造成了相當大的時間滯後和監管漏洞，這實際上阻礙了許多領先的基因改造公司將其產品推向中國市場，除非它們合資或許可權利。

I know that your Advisory Board is obviously very well tied to the Ministry of Ag. Do you foresee a change in the approval process or some of the structural interaction with competition?

我知道你們的顧問委員會顯然與農業部有著密切的聯繫。 您預計審批流程或與競爭的一些結構性互動會改變嗎？

Absolutely not. I think the policy remains the same and should remain the same. We feel that there should be no meaningful changes in how that is gone about. If anything there's more expediency towards internally developing higher quality products. So I think that's the avenue of choice.

絕對不是。 我認為政策保持不變，也應該保持不變。 我們認為，其實施方式不應有任何有意義的改變。 如果有什麼不同的話，那就是內部開發更高品質的產品更為方便。 所以我認為這是選擇的途徑。

Got it. Well, thank you very much for taking my questions.

知道了。 嗯，非常感謝您回答我的問題。

No problem, thanks for your questions, Joe.

沒問題，謝謝你的提問，喬。

Thank you. Our next question is coming from Tim Tiberio of Chardan Capital Markets.

謝謝。 我們的下一個問題來自 Chardan Capital Markets 的 Tim Tiberio。

Good evening, thanks for taking my question. I guess my first question is when we look at the revenue guidance that you provided, how should we look at that between volume and pricing?

晚上好，感謝您提出我的問題。 我想我的第一個問題是，當我們查看您提供的收入指引時，我們應該如何看待銷售和定價之間的關係？

Well, historically in the last few years, most of those gains have been had in the, I would say, at least 60%, 65% of the gains have been had in the pricing at the very least. And I think you should look at it the same way for the coming year.

嗯，從歷史上看，在過去幾年裡，大部分的收益都是在，我想說，至少 60%、65% 的收益至少在定價中獲得。 我認為來年你應該以同樣的方式看待它。

Okay, so you're confident I know that this past year you had somewhat of a more of a challenging environment of bringing volume back into the business, especially when you were calling out some of these other seed segments. It sounds then that you're increasingly confident that you can bring volume back in in 2011.

好吧，所以你有信心，我知道去年你在將銷量帶回業務方面面臨著更具挑戰性的環境，特別是當你呼籲其他一些種子細分市場時。 聽起來您對 2011 年恢復銷量的信心越來越大。

Well, I think volumes -- in 2011 volumes should be relatively stable. We think that we're in an environment where prices are going to continue to increase and that the real launch or catalyst still remain in the higher technology products.

嗯，我認為 2011 年的銷售量應該相對穩定。 我們認為，我們正處於一個價格將繼續上漲的環境中，而真正的啟動或催化劑仍然存在於更高技術的產品中。

And so I think that we would be remiss to say that all the upside we had in gains --- gains to the volumes, but I think realistically speaking that we believe that it really, in 2011, the pricing is where the high point is. So, and again I think I want to stress again that even beyond that, the challenge for this upcoming year remain in the long-term potential in addition with the glyphosate and the next GM seed approved, and additional the potential licensing of our products which we've spoken of before.

因此，我認為如果我們說我們在收益方面所獲得的所有好處——銷量的增加，那就太失職了，但我認為實事求是地說，我們相信，在 2011 年，定價確實是最高點。 因此，我想我想再次強調，即使除此之外，未來一年的挑戰仍然在於長期潛力，此外還有草甘膦和下一個基因改造種子的批准，以及我們產品的潛在許可，這些我們之前已經談過。

And so, while the base business is active and it's profitable and it's cash-flow positive, and presents a very good picture for us, we don't want to take away any of the picture by focusing on that because the real future of the industry lies in the GM applications. And so, while that presents a nice business in and of itself, and we're happy that many of the investors like it, we feel that it only presents a platform and beyond that is much more. So --.

因此，雖然基礎業務很活躍，盈利且現金流為正，並且為我們呈現了一幅非常好的圖景，但我們不想通過專注於這一點來奪走任何圖景，因為真正的未來產業關鍵在於轉基因的應用。 因此，雖然這本身就是一項不錯的業務，而且我們很高興許多投資者喜歡它，但我們認為它只提供了一個平台，除此之外還有更多。 所以 - 。

Okay. So I guess in the near term it doesn't seem like going after more market share in the conventional hybrid business is the key objective here?

好的。 因此，我想短期內，在傳統混合業務中追求更多市場份額似乎不是這裡的關鍵目標？

That's correct. Well, the key objective right now is to continue to invest in the R&D program in products that have been proven and that will work. And so that's the main objective right now. And I'm not saying that market share gains will not happen. It -- the market share gains, we think this year, are -- could be very solid but at the same time we're focused on developing the R&D aspects. So --.

這是正確的。 嗯，現在的主要目標是繼續投資於已經被證明有效的產品的研發計劃。 這就是現在的主要目標。 我並不是說市場佔有率不會增加。 我們認為今年的市佔率成長可能非常穩固，但同時我們專注於發展研發方面。 所以 - 。

Okay, and just one last question, maybe around some of your other growth potential that you've talked about in the past. Are there any updates or any new opportunities that you're seeing on the horizon as far as potential licensing or outbound type of activities that you might be able to capitalize on in 2011?

好的，最後一個問題，也許是關於您過去談到的其他一些成長潛力。 就 2011 年可能利用的潛在許可或出境類型活動而言，您是否看到即將出現的任何更新或新機會？

Well, definitely, we've spoken on -- we've released that fact that we own the worldwide licensing rights not only to the glyphosate but also the Bt. And what we're expecting is perhaps to find partners with similar high quality germplasm, whether it be outside of China or elsewhere, that we can partner with and jointly expand our market presence. Basically, while we don't understand -- while we don't -- while we understand that the deregulation is essential of these products, what we know is that more companies don't have this technology than have this technology, and which puts us in a very good position to begin discussions. And so we think it's an ideal time, place, for this to occur. So --.

嗯，當然，我們已經說過——我們已經公佈了這樣一個事實：我們不僅擁有草甘膦的全球許可權，還擁有 Bt 的許可權。 我們期待的也許是找到擁有類似優質種質的合作夥伴，無論是在中國境外還是其他地方，我們都可以與之合作，共同擴大我們的市場份額。 基本上，雖然我們不明白——雖然我們不明白——雖然我們明白放鬆管制對於這些產品至關重要，但我們知道的是，不擁有這項技術的公司比擁有這項技術的公司還要多，這使得我們處於非常有利的位置來開始討論。 因此，我們認為這是實現這一目標的理想時間和地點。 所以 - 。

Okay. Well, thank you so much for taking my questions.

好的。 嗯，非常感謝您回答我的問題。

No problem, Tim. And thanks for being on the call.

沒問題，提姆。 感謝您接聽電話。

Thank you, our first -- our next question is coming from Rachel Yu of Rodman & Renshaw.

謝謝，我們的第一個問題 - 我們的下一個問題來自 Rodman & Renshaw 的 Rachel Yu。

Hi, good evening. Thank you for taking my call. I just have one question regarding your -- the product revenue and the gross margin breakdown. And then look at the -- from the -- on the gross margin side, actually all the products, almost all the products, have achieved a great improvement except the cotton seed, which has declined from 50% last year to 36% this year. And then could you provide some detail on the -- share, give more color on this?

嗨，晚上好。 感謝您接聽我的電話。 我只有一個關於您的問題—產品收入和毛利率細目。 然後看——從——毛利率方面來說，實際上所有的產品，幾乎所有的產品，除了棉籽以外，都實現了很大的提升，從去年的50%下降到了今年的36%。 然後您能否提供一些有關分享的細節，對此提供更多資訊？

And on the revenue side, the rice seed and the canola seed has also decreased, and just wondering can you shed some light on this?

在收入方面，水稻種子和油菜籽也有所減少，只是想知道您能否對此進行一些說明？

Right. Sure, absolutely. Just to give you a little bit of detail, just a bit, the -- as with the divestment of the Biocentury Transgene earlier this year, the Company just began to focus on the main food crop seeds and less of the cotton sales for the year. And so that has become less of a priority. In addition, if you look at the rice seed, that was impacted in part due to weather-related factors where the seed production farmers produced lower amounts of the [pod] seeds for the market this year; and we expect that to not be the case in the future.

正確的。 當然，絕對。 只是為了給您一點細節，一點點，就像今年早些時候剝離 Bio century Transgene 一樣，該公司剛開始專注於主要糧食作物種子，並減少了今年的棉花銷售。 因此，這已不再是優先事項。 此外，如果你看看稻米種子，你會發現這部分是由於天氣相關因素造成的，種子生產農民今年為市場生產的[豆莢]種子數量較少；我們預計未來不會出現這種情況。

And, as far as the canola seeds, canola is an off-season product. If you look at the deferred revenue on the balance sheet, there is CNY4.8m more in deferred revenue this year than last year and that is all canola seed sales. And if you add that together, the canola seed sales, even with the higher gross margin in revenues, is up year over year at 42.9% versus the 42.7% of last year. So, and that -- I can walk you through that calculation offline if you like.

而且，就油菜籽而言，油菜籽屬於淡季產品。 如果你看一下資產負債表上的遞延收入，今年的遞延收入比去年多了480萬元人民幣，這都是油菜籽的銷售量。 如果加在一起，即使收入毛利率較高，油菜籽銷售額仍年增 42.9%，而去年為 42.7%。 因此，如果您願意，我可以引導您離線完成該計算。

How about the gross margin side, cotton seed? The --.

棉籽的毛利率怎麼樣？這 - 。

The cotton seed is mainly, we're -- it's become less of a focus, so we're selling a higher portion of seeds; our seed inventory is at lower prices. And it's, as you can see, even that being the case, the cotton is such a low percentage of our overall sales, and so despite the slip from what you see to 35%, which is very -- still a very healthy margin, our overall gross margins are still well over 47%. And so it's a very little factor to impact any or our margins.

棉花種子主要是，我們——它不再是焦點，所以我們銷售了更高比例的種子；我們的種子庫存價格較低。 正如您所看到的，即使在這種情況下，棉花在我們總銷售額中所佔的比例仍然很低，因此儘管從您所看到的下降到35%，這仍然是一個非常健康的利潤率，我們的整體毛利率仍然遠高於 47%。 因此，影響我們利潤的因素很小。

Okay. And then I've just got another question about your SG&A expenses.

好的。 我還有一個關於你們的銷售管理及行政費用 (SG&A) 費用的問題。

Sure.

當然。

This is some increase this year from last year. Is this level of this year is the -- are we, can we expect this kind of expense to be maintained at the next year, 2011?

今年這個數字比去年有所增加。 今年的這個水準是--我們可以預期這種支出能夠在明年，2011 年維持下去嗎？

Sure. We can expect these to be relatively level. I mean we had some one-time items that were roughly probably about close to CNY10m in one-time, that were composed in the SG&A that would not be included in next year. And so it's not inconceivable -- it would be conceivable that it would be relatively flat.

當然。 我們可以預期這些將是相對水平的。 我的意思是，我們有一些一次性項目，大約一次性接近 1000 萬元人民幣，這些項目是在 SG&A 中組成的，不會包含在明年。 所以這並不是不可想像的——可以想像它會相對平坦。

Okay, thank you very much.

好的，非常感謝。

No problem, Rachel. Say hi to Lewis for me.

沒問題，雷切爾。 代我向路易斯問好。

Okay.

好的。

Thank you. (Operator Instructions). Our next question is coming from Peter Butler of Glen Hill Investment.

謝謝。 （操作員說明）。 我們的下一個問題來自 Glen Hill Investment 的 Peter Butler。

Good morning. Irving, on your balance sheet you have about $45m in cash, that's approximately $2 a share of cash on your balance sheet, you have no net debt. How are you going to invest this cash? It sounds like you're going to have a big increase in cash flow this year but you haven't mentioned any uses of the cash in terms of maybe investments or share repurchases, accretive acquisitions. What do you think the disposition of the cash is going to look like over the next year or so?

早安. 歐文，你的資產負債表上有大約 4500 萬美元的現金，相當於你的資產負債表上每股現金大約 2 美元，你沒有淨債務。 您將如何投資這筆現金？聽起來今年你的現金流將會大幅增加，但你沒有提到現金的任何用途，可能是投資或股票回購、增值收購。 您認為未來一年左右的現金處置情況會如何？

Sure, it's a good question, Peter, and thanks for coming on the call. We expect to, as always we expect to evaluate each opportunity on an individual basis. But more M&A, which, of course would be accretive, is not out of the question. We plan to invest more in projects; that's basically individual products which create more strategic value in setting our Company apart from any other company. This includes investing in R&D, investing in IP protection, investing in better seed conditioning facilities throughout our networks within China. And, ultimately if there's no other things to invest in, definitely we'd look at other things such as share repurchasing and other items. We view all these as valuable and necessary.

當然，這是一個很好的問題，彼得，感謝您接受電話採訪。 我們希望一如既往地對每個機會進行單獨評估。 但更多的併購也並非不可能，當然會帶來增值。 我們計劃加大項目投資；這些基本上是單獨的產品，它們創造了更多的策略價值，使我們的公司有別於任何其他公司。 這包括投資於研發、投資於智慧財產權保護、投資於我們在中國的網路中更好的種子調理設施。 而且，最終，如果沒有其他東西可投資，我們肯定會考慮其他事情，例如股票回購和其他項目。 我們認為所有這些都是有價值且必要的。

I have a couple of other things, maybe briefly, has anything happened in the last several months, any movement in the negotiations to license your technology? You've been talking about your -- the potential to license, has anything changed in the last couple of months?

我還有其他一些事情，也許是簡短的，過去幾個月裡發生了什麼事情嗎？您一直在談論您的授權潛力，過去幾個月有什麼變化嗎？

Well, obviously we'd -- we haven't announced anything yet, but the -- we still remain very, very positive that the fact that something can be done in the near future. And that's -- and that we sit in a very favorable position, meaning that our technology is desirable and that there's a lot of companies out there that need such a technology. And so, and we've seen that in our dealings with the industry and we feel very confident about that going forward.

嗯，顯然我們——我們還沒有宣布任何事情，但是——我們仍然非常非常積極地認為在不久的將來可以做一些事情。 那就是——我們處於非常有利的位置，這意味著我們的技術是理想的，並且有很多公司需要這種技術。 因此，我們在與該行業的合作中已經看到了這一點，並且我們對未來的發展充滿信心。

Irving, as an investor looking at your Company, you've done a superb job of being the face of Origin and the guy that we have the most contact with, and I thank you very much for your help and, but perhaps Dr. Han could comment on some of the other key players in -- or managers in -- at Seed? We -- could he give us a peek behind, and look at some of the key players and what's happening on your management, the development of management, issues like that?

歐文，作為關注貴公司的投資者，您作為 Origin 的代言人和我們接觸最多的人，做得非常出色，我非常感謝您的幫助，但也許韓博士能否對Seed 的其他一些關鍵人物或經理髮表評論？他能否讓我們了解一些關鍵人物，以及你們的管理階層、管理階層的發展以及諸如此類的問題發生了什麼事？

Sure absolutely. He's -- he'll take that.

當然絕對。 他——他會接受的。

Well, I'll take; I'm here, yes, religiously here as well.

好吧，我會接受；我在這裡，是的，也虔誠地在這裡。

I think he just, as you can see Dr. Han is right here with us. Our CEO, Mr. Yuan, made the opening statement. He's actually very influential and important in all the operations of the Company and has done a tremendous job of optimizing the Company. We also have several other of the other key managers, VPs that play a very significant role; [Miss Liu] from the R&D department; Mr. Huang from Corn and other areas in Rice now; all are -- [Mr. Hua] from the other departments, all very crucial pieces to the Origin team. And so, Peter, we'd love to have you out here to our facility and we can show you all the bright shiny faces at our headquarters. So, --.

我認為他只是，正如你所看到的，韓博士就在我們身邊。 我們的執行長袁先生致開幕詞。 他實際上在公司的所有營運中都非常有影響力和重要，並且為優化公司做出了巨大的工作。 我們還有其他幾位關鍵經理人、副總裁，他們扮演非常重要的角色；研發部【劉小姐】；現在玉米等水稻產區的黃先生；所有人都是－－[先生。 Hua] 其他部門的人員，對 Origin 團隊來說都是非常關鍵的部分。 因此，彼得，我們很樂意邀請您來到我們的工廠，我們可以向您展示我們總部所有閃亮的面孔。 所以， - 。

Okay. The last thing, Irving, as you look at all the possible catalysts that might help your stock, which are the things that you think are maybe the most likely or the ones that investors should focus on? How do we get the stock going in the near future?

好的。 最後一件事，歐文，當你審視所有可能對你的股票有幫助的催化劑時，你認為哪些是最有可能的，或哪些是投資人應該關注的？近期我們要如何讓股票繼續上漲？

I think just we're just happy that you continue to pay attention to our name; and I think that looking out for the releases and trying to understand, speaking with the analysts and I think they all do a great job of understanding where the true value is and the upside in the future. And so I would say to really look at the long term for the -- for, and what each event means in the long term for the Company.

我想我們很高興您繼續關注我們的名字；我認為，專注於發布的信息並嘗試理解，與分析師交談，我認為他們都很好地理解了真正的價值在哪裡以及未來的上行空間。 因此，我想說，要真正著眼於長期，以及每個事件對公司的長期意義。

We have always stressed that don't take us as a one-year company or a two-year company; that we're here to stay. And I would say that -- and look in light of what we're doing as what this means three years down the line, what this means five years down the line, what this year means 10 years down the line or 50 years down the line, and what implications it could have.

我們一直強調，不要把我們看成是一年期公司、兩年公司；我們會留下來。 我想說的是——看看我們正在做的事情，這意味著三年後、五年後意味著什麼、今年意味著十年後或五十年後意味著什麼。的影響。

And I think that's the real key, because bringing forth glyphosate or Bt or licensing that, or could have significant, significant ramifications, and that's what we really want just to emphasize.

我認為這是真正的關鍵，因為推出草甘膦或 Bt 或許可可能會產生重大影響，而這正是我們真正想要強調的。

Okay.

好的。

So.

所以。

Okay, well thanks for the help.

好的，好的，謝謝你的幫忙。

Thanks a lot, Peter, as always thank you.

非常感謝，彼得，一如既往地感謝你。

Thank you. (Operator Instructions). Thank you, there are no further questions. I'd like to hand the floor back over to management for any closing comments.

謝謝。 （操作員說明）。 謝謝，沒有其他問題了。 我想將發言權交還給管理階層，以徵求結束語。

Just wanted to thank all our investor base for attending our conference call this time around. We believe that our Company is in, again, one of the strongest financial positions and, again, we're building this for the long-term future. Please stay in touch with the Company and stay tuned with as to what we are doing and building. And we love to hear from you and hear your feedback. And thanks again. Bye-bye.

只是想感謝我們所有投資者這次參加我們的電話會議。 我們相信，我們的公司再次處於財務狀況最強勁的公司之一，我們正在為長期的未來打造這一點。 請與公司保持聯繫並關注我們正在做的事情和建立的事情。 我們很樂意聽取您的意見並聽取您的回饋。 再次感謝。 再見。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.

今天的電話會議到此結束。 此時您可以斷開線路。 感謝大家的參與。