BEIJING, May 15 /Xinhua-PRNewswire-FirstCall/ -- Sino Gas
International Holdings, Inc. (OTC:SGAS.OB) (BULLETIN BOARD:
SGAS.OB) ("Sino Gas" or the "Company"), a leading developer of
natural gas distribution systems in small- and medium- sized
cities, as well as a distributor of natural gas to residential,
commercial and industrial customers in China, today reported
financial results for the first quarter ended on March 31, 2007.
First Quarter 2007 Highlights -- Revenue reached $2.4 million, up
272% from the first quarter of 2006; -- Gross profits reached $0.6
million, up 336% from the first quarter of 2006; -- Operating
income totaled $103,025, up 822% from the first quarter of 2006; --
Net income rose to $115,383, up 1043% from $10,092 in the first
quarter of 2006 ; -- Sales of natural gas totaled 6.2 million m3,
up 162% from the first quarter of 2006; -- Number of new households
connected in the first quarter of 2007 was 2,250 up 1790 households
from the first quarter of 2006. "Our first quarter result was
greatly enhanced by the fact that we have completed the acquisition
of Chenguang and picked up the pace in the development of new
projects using the net proceeds from our private financing
transactions", commented Mr. Yu-Chuan Liu, President and CEO of the
Company. "Going forward in 2007, we remain confident in our
business plan and the opportunities ahead for growing our business
profitably." First Quarter 2007 Results Revenues for the three
months ended March 31, 2007 increased 272% over the same period in
2006 to $2.4 million, driven by connection fees from 2,250 new
households as well as a substantial increase in natural gas sales
to 6.2 million cubic meters, up 162% over the same period in 2006.
Connection fees accounted for 25% of revenues this quarter, with
natural gas sales accounting for the balance. Gross profit for the
three months ended March 31, 2007 increased 336% from the same
period last year to $600,597, or 25% of revenues compared to
$137,909, or 21% of revenues in the first quarter of 2006. This
increase in gross profit and margin resulted from the overall
increase in net sales. Gross margin in the quarter was down
relative to the average obtained over the twelve months ended
December 31, 2006 due to the composition of revenues in the quarter
being skewed towards natural gas sales, which attract much lower
margins than connection fees. Selling, general and administrative
expenses in the first quarter of 2007 were up 293% to $497,572 or
20% of revenue, versus 126,733 or 19% of revenue, in the comparable
period last year. The increase in operating expenses in the quarter
relative to the same period last year was in line with the overall
growth in net revenues. Operating income for the three months
ending March 31, 2007 increased 822% to $103,025, or 4% of sales,
compared to $11,176 or 2% of sales for the same period of 2006. Net
income during the quarter increased 1043% year-over-year to
$115,383, up from $10,092 in the first quarter of 2006. Financial
Condition At March 31, 2007, the Company had $2.3 million in total
cash and short- term investments, $1.1 million in working capital,
and no debt. Cash flow from operations for first quarter 2007
totaled $3.5 million, up from $0.6 million in the same period last
year. Capital expenditures totaled $4.7 million for the quarter.
Shareholders' equity stood at $25.7 million, compared to $12.6
million the end of the first quarter in 2006. Business Outlook The
Company believes that the natural gas market is at a very early
stage of its development, representing only 3% China's current
energy consumption, compared to a world average of 24%. The Chinese
government is actively encouraging the development of the natural
gas industry in order to take advantage of China's substantial gas
reserves, while diversifying energy sources and improving the
environment. As a result, industry analysts forecast 270 cities in
China to be supplied by natural gas in 2010, compared to 140 in
2005. "We remain confident we have the right strategy and
management team to take our business to the next level. We plan to
continue to focus on acquiring small- and mid-sized cities through
internal development or acquisitions while further penetrating our
existing markets. We expect both connection fees and the percentage
of connection fees to sales to increase," added Mr. Liu. "And we
expect to add 30,000-40,000 new household users and two industrial
users as well as to sell a total of 21 million m3 of natural gas
during the year, which we estimate will drive net income growth of
30% in 2007, compared to 2006." Recent Events In January 2007, the
Company entered into a stock purchase agreement to acquire all the
capital stock of Beijing Chenguang Gas Co., Ltd., a privately held
natural gas distribution business in Beijing, China for
approximately $3.35 million in cash. This transaction included the
exclusive concession rights to operate seven gas distribution
systems and added 25,202 residential customers and four industrial
projects to Sino Gas's distribution system. This transaction was
completed on 18th of February 2007. About Sino Gas The Company,
through its indirectly wholly-owned subsidiary, Beijing Zhong Ran
Wei Ye Gas Co., Ltd. ("Beijing Gas"), and the subsidiaries of
Beijing Gas, is a leading developer of natural gas distribution
systems in small- and medium-sized cities in China, as well as a
distributor of natural gas to residential, commercial and
industrial customers in China. The company owns and operates 23
natural gas distribution systems serving approximately 63,000
residential and eight commercial and industrial customers.
Facilities include approximately 700 kilometers ("km") of pipeline
and delivery networks with a designed daily capacity of
approximately 70,000 cubic meters of natural gas ("m3"). The
company is currently constructing four additional natural gas
distribution systems and is planning two more natural gas
distribution systems. Beijing Gas Company owns and operates natural
gas distribution systems primarily in Hebei, Jiangsu and Anhui,
Shandong Provinces. For further information, visit the Company's
website at http://www.sino-gas.com/ . Safe Harbor Statement This
announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. All statements other than statements of
historical fact in this announcement are forward-looking
statements, including but not limited to, the Company's ability to
raise additional capital to finance the Company's activities; the
effectiveness, profitability, and the marketability of its
products; legal and regulatory risks associated with the share
exchange; the future trading of the common stock of the Company;
the ability of the Company to operate as a public company; the
period of time for which its current liquidity will enable the
Company to fund its operations; the Company's ability to protect
its proprietary information; general economic and business
conditions; the volatility of the Company's operating results and
financial condition; the Company's ability to attract or retain
qualified senior management personnel and research and development
staff; and other risks detailed in the Company's filings with the
Securities and Exchange Commission. These forward-looking
statements involve known and unknown risks and uncertainties and
are based on current expectations, assumptions, estimates and
projections about the companies and the industry. The Company
undertakes no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes
in its expectations, except as may be required by law. Although the
Company believes that the expectations expressed in these forward
looking statements are reasonable, they cannot assure you that
their expectations will turn out to be correct, and investors are
cautioned that actual results may differ materially from the
anticipated results. All information in this release is as of May
15, 2007. The Company undertakes no duty to update any
forward-looking statements to conform the release to actual results
or changes in its circumstances or expectations after the date of
this release. The financial information stated above and in the
tables below has been abstracted from the Company's Form 10-K,
filed with the SEC on May 15, 2007, and should be read in
conjunction with the information provided therein. -- FINANCIAL
TABLES FOLLOW -- Sino Gas International Holdings, Inc. AND
SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (US
Dollars) Three Months Ended Fiscal Year Ended 31-Mar December 31
2007 2006 2006 2005 Unaudited Unaudited Net revenues $ 2,438,227 $
655,092 $10,870,718 $10,907,289 Cost of revenues (1,837,630)
(517,183) (4,389,142) (4,132,391) Gross profit $ 600,597 $ 137,909
$ 6,481,576 $ 6,774,898 Selling and marketing expenses (56,198)
(10,154) (95,779) (99,768) General and administrative expenses
(441,374) (116,579) (1,155,849) (874,181) Total Operating Expense
(497,572) (126,733) (1,319,316) (973,949) Income from continuing
operations $ 103,025 $ 11,176 $ 5,229,948 $ 5,800,949 Finance
costs, net (5,370) (86) (78,237) (2,486) Other income 36,088 --
438,186 437,750 Other expenses (1,495) -- (856) (1,865) Income
before taxation $ 132,248 $ 11,090 $ 5,589,041 $ 6,234,348 Income
tax (16,865) (998) (423,284) (531,915) Net income $ 115,383 $
10,092 $ 5,165,757 $ 5,702,433 Net income per share, Basic 0.008
0.001 0.36 0.4 Diluted 0.004 0.001 0.32 0.4 Weighted average shares
outstanding of common stock, Basic 14,730,597 14,361,646 14,471,980
14,361,646 Diluted 28,724,652 14,361,646 16,085,778 14,361,646 Sino
Gas International Holdings, Inc. AND SUBSIDIARIES CONSOLIDATED
CONDENSED BALANCE SHEET ON MARCH 31 (US Dollars - Unaudited) 2007
2006 Current assets Cash and cash equivalents $ 2,345,164 $ 937,436
Notes receivable 64,592 -- Accounts receivable 5,529,115 5,898,898
Advances to suppliers 572,455 364,131 Prepaid expenses 99,378
24,790 Other receivables 1,910,158 704,623 Total current assets $
10,520,862 $ 7,929,878 Long term assets Investments in equity
securities 3,310,647 2,437,844 Plant and equipment, net 13,890,374
3,219,033 Construction in progress 5,973,513 3,223,493 Intangible
assets 630,040 432,072 Goodwill 875,754 -- TOTAL ASSETS $
35,201,190 $ 17,242,320 Current liabilities Accounts payable $
3,744,612 $ 2,979,506 Other payables 2,693,084 1,392,388 Unearned
revenue 16,879 175,093 Accrued liabilities 1,048,150 87,423
Acquisition payable 1,937,759 -- Total current liabilities $
9,440,484 $ 4,634,410 TOTAL LIABILITIES $ 9,440,484 $ 4,634,410
Minority interest 64,592 -- STOCKHOLDERS' EQUITY Preferred stock A
US$0.001 par value; 20,000,000 authorized; nil and nil issued and
outstanding as of March 31, 2007 and 2006 respectively -- Preferred
stock B US$0.001 par value; 5,000,000 authorized; 3,795,571 and nil
issued and outstanding as of March 31, 2007 and 2006 respectively $
3,796 Common stock US$0.001 par value; 250,000,000 authorized;
14,920,344 and 14,361,646 issued and outstanding as of March 31,
2007 and 2006 14,920 14,362 Additional paid-in-capital 12,069,176
4,812,650 Statutory reserves 2,025,022 1,219,720 Retained earnings
10,584,954 6,321,886 Accumulated other comprehensive income 998,246
239,292 $ 25,696,114 $ 12,607,910 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 35,201,190 $ 17,242,320 SINO GAS
INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (Stated in US
Dollars) 2007 2006 Cash flows from operating activities Net income
$ 115,383 $ 10,092 Depreciation and amortization 38,844 32,966
Equity in investments (371,618) 5,534 Decrease in accounts and
other receivables 310,419 1,600,187 Increase/(decrease) in accounts
and other payables 3,394,913 (1,055,844) Net cash provided by
operating activities $ 3,487,941 $592,935 Cash flows from investing
activities Purchase of plant and equipment (3,320,688) (51,317)
Pledge deposits 3,124,541 -- Payment for the construction in
progress (1,345,436) (151,996) Payment of cost of intangible assets
(172,210) 5,193 Acquisition of subsidiaries (930,801) -- Net cash
used in investing activities $ (2,644,594) $ (198,120) Cash flows
from financing activities Repayment of bank borrowings (2,430,445)
-- Net cash used in financing activities $ (2,430,445) $ -- Net in
cash and cash equivalents sourced/(used) (1,587,098) 394,815 Effect
of foreign currency translation on cash and cash equivalents
293,589 (28,573) Cash and cash equivalents - beginning of year
3,638,673 571,194 Cash and cash equivalents - end of year $
2,345,164 $ 937,436 For more information, please contact: Sino Gas
International Holdings, Inc. Ms. Fang Chen, Chief Financial Officer
Tel: +86-10-8260-0527(China) Email: CCG Elite Investor Relations
Crocker Coulson, President Phone: +1-646-213-1915(New York) Email:
Ed Job, CFA Tel: +1-646-213-1914(New York) Email: DATASOURCE: Sino
Gas International Holdings, Inc. CONTACT: Ms. Fang Chen, Chief
Financial Officer of Sino Gas International Holdings, Inc.,
+86-10-8260-0042, or ; or CCG Elite Investor Relations - Crocker
Coulson, President, +1-646-213-1915 (New York), or , or Ed Job,
CFA, +1-646-213-1914 (New York), or , both for SGAS Web Site:
http://www.sino-gas.com/
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