Third Quarter Highlights:

• Revenue increased 65 per cent year-over-year to $9.2 million due to higher selling prices and unit sales of breeder hogs and market hogs
• Market hog sales increased 88 per cent, driven by a 58 per cent increase in average price per hog
• Retail sales contributed $1.1 million of revenues in initial quarter of operations
• Cash flows from operations were $5.6 million for the first nine months of 2011

Tianli's Chairwoman and CEO, Hanying Li, stated, "Our strong third quarter results were driven by robust underlying demand for pork in China. Despite a shift toward market hogs this quarter, our sales and margins benefited from higher pricing. As we ramp capacity at our 10th farm, we expect continued growth in units and pricing for the remainder of 2011 and added revenue contributions from our AnPuluo Foods retail programme."

Sales by Products

Revenue for the third quarter of 2011 increased $3.7 million, or 65 per cent, to $9.2 million from the prior year. The Company sold a total of 25,519 hogs, up slightly from 25,420 hogs sold in the comparable period in 2010. Sales of breeder hogs fell 2 per cent to $2.5 million as hog farmers delayed breeder hog purchases to capitalize on the increasing price of pork in China which, according to the National Bureau of Statistics, had increased 43.5 per cent in September 2011 while the average price per breeder hog increased only 35 per cent to $348 per hog. As a result, market hog sales surged 88 per cent to $5.6 million. The number of market hogs sold increased by 2,907 head to 18,350 head while the average price per hog increased a record 58 per cent year-over-year to $305 due to high market demand.

Through their cooperation with An Puluo Food, Tianli's retail segment generated $1.1 million in sales after its initial launch in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases in over 30 major retailers in greater Wuhan.

Gross profit in the third quarter of 2011 was $3.9 million, up 58 per cent over the same period last year. Gross margin was approximately 42 per cent and 44 per cent for the third quarter of 2011 and 2010, respectively. The slight decrease in margin was due to higher feed costs and the revenue and gross profit contribution from its lower margin retail business, which commenced operations in the third quarter of 2011.

Selling, general and administrative expenses were $0.9 million in the third quarter of 2011, an increase of approximately $0.5 million. Approximately $0.2 million of the increase was related to higher public company expenses and $0.3 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income for the three months ended 30 September 2011 was approximately $2.9 million, up 33 per cent from $2.2 million last year. Earnings per fully diluted share were $0.29 compared to $0.23 the previous year. Share counts were 10.1 million and 9.7 million in the third quarter of 2011 and 2011, respectively.

First nine months 2011 Results

Net sales increased 47 per cent to $22.7 million during the nine months ended September 30, 2011. Tianli sold 76,128 hogs at an average sales price of $285 per hog, an increase of 5 per cent and 34 per cent, respectively. Breeder hog sales increased 24 per cent to $7.7 million, accounting for 34 per cent of total sales in the first nine months of 2011. Market hog sales were $13.9 million, up 50 per cent from $9.3 million in the first nine months of 2010.

Gross profit increased $2.8 million to $9.5 million. Gross margin percentages were 42 per cent and 43 per cent for the first nine months of 2011 and 2010, respectively.

Selling, general and administrative expenses were $2.3 million compared to $0.8 million in the prior year. The Company incurred $0.2 million of non-cash stock compensation expenses, $0.6 million public company expenses and $0.1 million of bad debt provisions in the first nine months of 2011. Operating income was $7.2 million, up 23 per cent from the first nine months of 2010.

Net income and earnings per share was $7.3 million and $0.72 in the nine months ended 30 September 2011 and 2010, respectively, compared to $6.0 million and $0.69 in the previous nine month periods.

Financial Position

As of 30 September 2011, the Company had $7.5 million in cash, compared to $8.0 million as of 31 December 2010. The Company generated $5.6 million of cash from operations in the first nine months of 2011. Working capital as of 30 September 2011 was $13.0 million, including $8.8 million of inventories and $1.1 million of loan to An Puluo Food which should be collected within 12 months. Inventories increased to support the launch of its retail business in the third quarter of 2011.

Tianli invested approximately $9.7 million in capital expenditures and breeding stock during the first nine months of 2011 to facilitate its continued growth.