CGDI China Growth Development Inc (CE)

China Growth Development Inc. (OTCBB:CGDI), a Chinese commercial property developer, investor, and operator of commercial property in Shanxi Provence, China, reported financial results for the second quarter ended June 30, 2009 on August 14, 2009.

Second Quarter 2009 Highlights

-- Net revenue increased to 4.18 million, a 12% increase from the second quarter of 2008.

-- Net income rose to $1.67million for the quarter ended June 30, 2009, a 70% increase year-over-year.

-- Earnings per share of $.03 for the quarter on a fully diluted basis as compared to $.02 from the second quarter of previous year.

“We are pleased at our progress and ability to deliver solid results this quarter," stated Mr. Sam Liu, COO of China Growth Development Inc. “Our expansion projects have lead the way to increased revenue, and that is a perfect example of our growth strategy succeeding. We are focused on continuing that strategy of growth via expansion, development, and acquisition throughout the third and fourth quarters of 2009.”

Second Quarter 2009 Financial Results

Revenue for the second quarter of 2009 was $4.18 million, a 12 percent increase as compared to $3.74 million for the same period in 2008, largely driven by the expansion of shopping malls and the initialization of their operations. Also, the associated deferred revenue collected previously from commercial tenants started to amortize and recognize over the leasing period. Management service income collected from the new commercial tenants also increased revenue. In addition, management also increased the management service income per square meter at several clothing mall booths at Xicheng Shopping Mall.

Selling, general and administrative expenses were $2.29 million, an 11% decrease from $2.58 million as compared for the same period in 2008. The higher expenses for the quarter ended June 30, 2008 were mainly due to one-time charges incurred in the closing of the reverse acquisition.

Income from continuing operations increased by $1.1 million, from $1.0 million for the quarter ended June 30, 2008 to $2.1 million for the quarter ended June 30, 2009, a 111% increase. Such increase was mainly attributable to increases in net revenue and other income as listed in the quarterly filing.

Income tax expense increased by $447,793 from $22,534 for the quarter ended June 30, 2008 to $447,793 for the quarter ended June 30, 2009. The increase was mainly due to change in the effective tax rate to our operations in PRC, increasing from 2.25% for the second quarter of 2008 to 21.20% for the current quarter, due to the lack of favorable tax policy granted by local governments to the Company.

Net income attributable to the common stockholders was $1,034,313 for the quarter ended June 30, 2009, compared to $608,754, for the quarter ended June 30, 2008, an increase of $425,558 or 70%. The higher net income for the current quarter was attributable to the increased net revenue and other income as described above and in the company’s quarterly filing.

Liquidity and Capital Resources

The Company currently generates its cash flow through operations which it believes will be sufficient to sustain current level operations for at least the next twelve months. In 2009, we intend to continue to work to expand our presence in the commercial real estate market, including the potential acquisition of another shopping mall.

To the extent we are successful in growing our business, identifying potential acquisition targets and negotiating the terms of such acquisition, and the purchase price includes a cash component, we plan to use our working capital and the proceeds of any financing to finance such acquisition costs.

2009 – 2010 Outlook

Over the course of the next few years, we intend to grow and expand our commercial real estate business. We currently generate positive cash flow and we expect to acquire an additional 2 shopping centers within the next three years.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes, expects, anticipate, optimistic, intend, will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS       June 30,

2009

    December 31,

2008

(Unaudited) (Audited)

Assets

Current Assets Cash and cash equivalents $ 1,707,156 $ 1,543,816 Other receivables, net of allowance for doubtful accounts $0 and $4,397 565,707 657,911 Loan to related parties 3,366,075 2,647,049 Prepaid expenses - 47,188 Advances to suppliers - related party 11,725,810 11,741,966 Assets from discontinued operations   -   46,280 Total Current Assets 17,364,748 16,684,210   Fixed assets, net 70,834,335 69,523,011 Deferred tax assets 359,762 360,258 Intangible assets, net   9,188,508   9,309,481   Total Assets $ 97,747,354 $ 95,876,960    

Liabilities and Equity

  Current Liabilities Accounts payable and accrued expenses $ 77,607 $ 622,589 Loans payable 4,446,246 4,075,344 Due to related parties 1,053,880 146,574 Construction payable 3,467,241 2,714,705 Income tax payable 2,461,570 1,643,045 Other payable 1,718,247 695,417 Deferred revenue - current 7,633,068 8,233,393 Liabilities from discontinued operations   -   75,634 Total Current Liabilities 20,857,860 18,206,701   Long-term debt 47,693 - Deferred revenue - non-current   32,242,257   35,299,821   Total Liabilities 53,147,810 53,506,521   Equity Preferred stock - $.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding - - Common stock - $.0001 par value; 200,000,000 shares authorized, 34,970,007 and 34,970,007 shares issued and outstanding 3,497 3,497 Additional paid-in capital 7,277,990 7,277,990 Other comprehensive income 3,061,379 2,813,503 Retained earnings   17,820,097   16,354,185 Total Stockholders' Equity 28,162,963 26,449,174 Noncontrolling interest   16,436,581   15,921,264 Total Equity   44,599,544   42,370,438   Total Liabilities and Equity $ 97,747,354 $ 95,876,960   CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS     June 30,

2009

    December 31,

2008

(Unaudited) (Audited)

Assets

Current Assets Cash and cash equivalents $ 1,707,156 $ 1,543,816 Other receivables, net of allowance for doubtful accounts $0 and $4,397 565,707 657,911 Loan to related parties 3,366,075 2,647,049 Prepaid expenses - 47,188 Advances to suppliers - related party 11,725,810 11,741,966 Assets from discontinued operations   -   46,280 Total Current Assets 17,364,748 16,684,210   Fixed assets, net 70,834,335 69,523,011 Deferred tax assets 359,762 360,258 Intangible assets, net   9,188,508   9,309,481   Total Assets $ 97,747,354 $ 95,876,960    

Liabilities and Equity

  Current Liabilities Accounts payable and accrued expenses $ 77,607 $ 622,589 Loans payable 4,446,246 4,075,344 Due to related parties 1,053,880 146,574 Construction payable 3,467,241 2,714,705 Income tax payable 2,461,570 1,643,045 Other payable 1,718,247 695,417 Deferred revenue - current 7,633,068 8,233,393 Liabilities from discontinued operations   -   75,634 Total Current Liabilities 20,857,860 18,206,701   Long-term debt 47,693 - Deferred revenue - non-current   32,242,257   35,299,821   Total Liabilities 53,147,810 53,506,521   Equity Preferred stock - $.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding - - Common stock - $.0001 par value; 200,000,000 shares authorized, 34,970,007 and 34,970,007 shares issued and outstanding 3,497 3,497 Additional paid-in capital 7,277,990 7,277,990 Other comprehensive income 3,061,379 2,813,503 Retained earnings   17,820,097   16,354,185 Total Stockholders' Equity 28,162,963 26,449,174 Noncontrolling interest   16,436,581   15,921,264 Total Equity   44,599,544   42,370,438   Total Liabilities and Equity $ 97,747,354 $ 95,876,960   CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)     For The Six Months Ended

June 30,

2009   2008 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,295,859 $ 1,659,550 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & amortization 1,295,577 1,182,313 Minority interest 823,200 1,054,236 Warrants issued for compensation - 191,138 Warrants issued in reverse acquisition - 689,347 Gain on disposal of discontinued operations (25,974 ) - Decrease (increase) in current assets: Accounts receivable - 8,883 Inventories - 17,683 Other receivable 91,362 (29,653 ) Interest receivable from related parties - 563 Advances to suppliers - related party - (74,853 ) Prepaid expenses 47,155 30,369 Increase (decrease) in liabilities: Construction payable (1,167,052 ) (765,553 ) Other payable 1,024,492 (62,080 ) Tax payable 825,440 25,605 Accrued expense (374,564 ) (206,256 ) Deferred revenue   (3,600,468 )   (4,440,735 ) Net cash provided by (used in) operating activities 230,939 (719,443 )   CASH FLOWS FROM INVESTING ACTIVITIES Cash surrendered in disposal of discontinued operations (3,380 ) - Cash acquired on reverse acquisition - 3,742 Advances to related parties (723,166 ) (53,086 ) Acquisition of property & equipment (671,445 ) (229,055 ) Proceeds from loan receivables from employees   -   9,216 Net cash used in investing activities (1,397,990 ) (269,183 )   CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from loans from related parties 908,132 394,383 Net proceeds from short-term loans from others 424,495 369,320 Net cash provided by financing activities 1,332,627 763,703   EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS   (2,236 )   67,800   NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 163,340 (157,123 )   CASH & CASH EQUIVALENTS, BEGINNING BALANCE   1,543,816   1,184,621   CASH & CASH EQUIVALENTS, ENDING BALANCE $ 1,707,156 $ 1,027,498   SUPPLEMENTAL DISCLOSURES: Interest paid $ 174,521 $ 172,617 Income tax paid $ 1,465 $ -