DALIAN, China, April 15 /PRNewswire-Asia-FirstCall/ -- China Sun
Group High-Tech Co., Ltd. (OTC Bulletin Board: CSGH) ("China Sun
Group" or the "Company"), a leading vertically integrated supplier
of cobalt-based raw materials for rechargeable Lithium-ion (Li)
batteries in China today announced its financial results for the
third quarter ended February 28,
2010.
Third Quarter Fiscal Year 2010 Highlights
-- Revenue increased 22.7% to $10.8 million from $8.8 million in the
quarter ended February 28, 2009
-- Gross profit increased 4.2% to $3.4 million from $3.2 million in same
period 2009
-- Operating income increased 6.6% year-over-year to $3.4 million from
$3.2 million
-- Net income increased 8.2% year-over-year to $2.2 million, or $0.04 per
diluted share
-- Lithium iron phosphate (LIP) anode materials made by China Sun have
been used in the manufacture of LIP power batteries manufactured by
Beijing Shuangsheng Technology Company.
-- The batteries passed all 32 tests required by the Chinese government on
Feb 26, 2010. This is a strong endorsement of China Sun as a key
component vendor for a new energy-saving vehicle.
"In the third quarter of fiscal year 2010, selling prices of our
cobalt oxide product declined in tandem with the falling cobalt
prices. Our cobalt inventory was purchased in advance of the drop
in cobalt prices, which impacted gross margin. While some domestic
competitors turned unprofitable due to this factor, we were able to
maintain profitability due to higher yields and better capacity
utilization," stated Mr. Bin Wang, Chairman of China Sun Group.
"We also launched our LIP product, which is expected to become
an important revenue contributor in our future business operations.
The urgent need to develop low emission vehicles to reduce air
pollution in China has and will continue create huge demand for
clean energy and related products. Our LIP product is a core
material of lithium power batteries for zero emission automobiles.
As one of the few major LIP manufacturers in China, we believe we
are well positioned to achieve rapid and profitable growth over the
time."
Third Quarter Fiscal Year 2010 Results
Revenue for the three months ended February 28, 2010 increased 22.7% year over year
to $10.8 million compared to
$8.8 million for the same period in
2009. The increase in revenue was mainly due to sales of the
Company's newly launched LIP product, which accounted for about
19.7% of total sales in the quarter.
During the quarter ended February 28,
2010, China Sun Group started to produce and sell LIP, the
core material of lithium power batteries for the automotive market.
China Sun Group acquired the advanced LIP patent in early 2009 and
has become one of the few domestic manufacturers that can
independently produce LIP. Currently China Sun Group has two LIP
production lines with annual production capacity of 500 tons. Gross
margins of the Company's LIP business lies between 38%-42% is above
the 30%-33% gross margin of the Company's cobalt-based products.
The Company anticipates its LIP business segment to grow rapidly in
calendar year 2010 and beyond.
Gross profit was $3.4 million
compared to $3.2 million for the
three months ended February 28, 2009,
an increase of 4.2% year over year. Gross margin was 31.3% compared
to 36.9% in the same period last year. The decrease in gross margin
was due primarily to a decrease in the selling prices of
cobalt-based products sold by the Company driven by a decline in
the market price of cobalt, while the cobalt raw materials held in
inventory were purchased a quarter in advance of production and in
advance of the market price decline of cobalt. The Company expects
gross margins to recover in the fourth quarter of fiscal 2010 once
the higher cost raw materials held in inventory are used.
Selling, general and administrative expenses decreased to
$0.3 million in the third quarter of
2010, compared to $0.9 million in the
same period last year.
Operating income increased slightly to $2.9 million in the third quarter 2010, compared
to $2.8 million in the same period
last year.
Net income was $2.2 million in the
three months ended February 28, 2010,
or $0.04 per fully diluted share,
compared with net income of $2.0
million, or $0.04 per fully
diluted share, during the same period of 2009. The diluted weighted
average number of shares outstanding was 53.4 million in the
quarter ended February 28, 2010.
Nine Months 2010 Results
Net revenue was $30.2 million in
the nine months ended February 28,
2010, up 10.3% from $27.4
million in the same period last year. Gross profit was
$9.5 million equivalent to a gross
margin of 31.3%, down 7.0% from $10.2
million and a gross margin of 37.2% in the nine months ended
February 28, 2009. The overall
decline in gross profit and gross margin was due to the consistent
decline in selling prices of cobalt-based products ahead of the
decrease in the cost of cobalt-based raw materials held in
inventory.
Operating income was $8.4 million,
up slightly from the same period last year. Net income was
$6.3 million, or $0.12 per fully diluted share, up slightly from
$6.2 million, or $0.12 per fully diluted share in the nine months
ended February 28, 2009. The diluted
weighted average number of shares outstanding was 53.4 million in
the nine months ended February 28,
2010.
Financial Condition
At the end of third quarter of fiscal 2010 on February 28, 2010, cash reached $12.5 million, up 35.5% from $9.2 million on May 31,
2009. Account receivables were $2.7
million at the end of the quarter, as compared to
$1.6 million at the end of
May 2009. The increase of cash and
account receivable were mainly due to an increase in sales and net
income compared with the same period of 2009. At the end of
February 2010, China Sun Group had no
accounts receivable outstanding over 180 days, as the Company
applies a strict collections practice and normally collects over
80% of its accounts receivables within 90 days. The Company had
working capital of $14.7 million and
a current ratio of 7.2 to 1. Stockholders' equity totaled
$38.1 million, up from $31.9 million on May 31,
2009.
Net cash provided by operations was $5.6
million for the nine months ended February 28, 2010, compared with net cash
provided from operations of $9.3
million for the same period in 2009.
Business Outlook
"Having been a leader in the cobalt oxide manufacturing industry
for years, China Sun Group has recently expanded our business to
the more advanced and profitable LIP segment. We will strategically
increase our productivity and research efforts of LIP over the next
few years to achieve long term sustainable growth for our
shareholders. We will also significantly improve our corporate
governance and communications with the investment community going
forward and look forward to listing our shares on a senior stock
exchange soon," concluded Mr. Wang.
For the quarter ended May 31st,
2010, China Sun Group anticipates to generate approximately
$11.0-$12.0 million in revenue and
$2.0-$2.5 million in net income.
About China Sun Group High-Tech Co., Ltd.
China Sun Group High-Tech Co., ("China Sun Group") produces
anode materials used in Li batteries. Through its wholly-owned
operating subsidiary, Dalian Xinyang High-Tech Development Co. Ltd
("DLX"), the Company primarily produces cobaltosic oxide and
lithium cobalt oxide. According to the China Battery Industry
Association, DLX has the second largest cobalt series production
capacity in the People's Republic of
China. Through its research and development division, DLX
owns a proprietary series of nanometer technologies that supply
state-of-the-art components for advanced Li batteries. Leveraging
its state-of-the-art technology, high-quality product line and
scalable production capacity, the Company plans to create a fully
integrated supply chain from the primary manufacturing of cobalt
ore to finished products, including Li batteries. For more
information, visit http://www.china-sun.cn .
Safe Harbor Statement
The statements contained herein that are not historical facts
are considered "forward-looking statements." Such forward-looking
statements may be identified by, among other things, the use of
forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. In particular,
statements regarding the potential growth of the markets are
examples of such forward-looking statements. The forward-looking
statements include risks and uncertainties, including, but not
limited to, the Company's ability to successfully expand its
presence in the LIP market, achieve anticipated revenue and net
income targets, the effect of political, economic, and market
conditions and geopolitical events; legislative and regulatory
changes that affect our business; the availability of funds and
working capital; the actions and initiatives of current and
potential competitors; investor sentiment; and our reputation. We
do not undertake any responsibility to publicly release any
revisions to these forward-looking statements to take into account
events or circumstances that occur after the date of this report.
Additionally, we do not undertake any responsibility to update you
on the occurrence of any unanticipated events, which may cause
actual results to differ from those expressed or implied by any
forward-looking statements. The factors discussed herein are
expressed from time to time in our filings with the Securities and
Exchange Commission available at http://www.sec.gov.
-FINANCIAL TABLES FOLLOW-
CHINA SUN GROUP HIGH-TECH Co., Ltd.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE THREE MONTHS AND NINE MONTHS
ENDED FEBRUARY 28, 2010 AND 2009
Three months ended Nine months ended
February 28, February 28,
2010 2009 2010 2009
Revenue, net $10,808,702 $8,807,184 $30,232,058 $27,400,292
Cost of revenue
(inclusive of
depreciation and
amortization) 7,427,144 5,561,556 20,760,441 17,211,727
Gross profit 3,381,558 3,245,628 9,471,617 10,188,565
Gross Margin 31.3% 36.9% 31.3% 37.2%
Operating expenses:
Sales and marketing 30,057 94,586 83,195 559,881
Research and development 26,328 25,536 77,501 75,823
Depreciation 64,612 64,371 193,709 192,785
General and administrative 311,932 296,307 700,991 978,798
Total operating expenses 432,929 480,800 1,055,396 1,807,287
Income from operations 2,948,629 2,764,828 8,416,221 8,381,278
27.3% 31.4% 27.8% 30.6%
Other income:
Interest income 9,414 6,372 26,228 24,988
Income before
income taxes 2,958,043 2,771,200 8,442,449 8,406,266
Income tax expense -756,920 -737,536 -2,160,300 -2,173,840
NET INCOME 2,201,123 2,033,664 6,282,149 6,232,426
20.4% 23.1% 20.8% 22.7%
Other comprehensive
income:
- Foreign currency
translation (loss)
gain -41,340 -50,599 -52,300 364,445
COMPREHENSIVE INCOME $2,159,783 $1,983,065 $6,229,849 $6,596,871
Net income per share -
Basic and diluted $0.04 $0.04 $0.12 $0.12
Weighted average number
of shares outstanding
during the period -
Basic and diluted 53,422,971 53,422,971 53,422,971 53,422,971
CHINA SUN GROUP HIGH-TECH Co., Ltd.
CONSOLIDATED BALANCE SHEETS
AS OF FEBRUARY 28, 2010 AND 2009
28-Feb-10 31-May-09
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $12,481,120 $ 9,209,953
Accounts receivable, trade 2,670,876 1,580,220
Inventories 1,217,252 1,657,023
Value-added tax receivable -- 124,627
Deposits and prepayments 681,615 439,560
Total current assets 17,050,863 13,011,383
Non-current assets:
Technical know-how, net 2,516,809 2,608,059
Property, plant and equipment, net 20,947,981 19,630,119
TOTAL ASSETS $40,515,653 $35,249,561
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ -- $ 847,796
Income tax payable 1,506,309 1,476,030
Other payables and accrued liabilities 876,063 1,022,303
Total liabilities 2,382,372 3,346,129
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.001
par value; 2,000,000 shares authorized;
none of shares issued and outstanding
as of February 28, 2010 and May 31, 2009 -- --
Common stock, $0.001 par value; 100,000,000
shares authorized; 53,422,971 shares
issued and outstanding as of February 28,
2010 and May 31, 2009 53,423 53,423
Additional paid-in capital 9,585,204 9,585,204
Accumulated other comprehensive income 3,015,249 3,067,549
Statutory reserve 2,277,248 1,387,775
Retained earnings 23,202,157 17,809,481
Total stockholders' equity 38,133,281 31,903,432
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,515,653 $35,249,561
CHINA SUN GROUP HIGH-TECH Co., Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 28, 2010 AND 2009
Nine months ended February 28,
2010 2009
Cash flows from operating activities:
Net income $6,282,149 $6,232,426
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of property, plant and equipment 971,821 499,419
Amortization of technical know-how 86,762 --
Changes in operating assets and liabilities:
Accounts receivable, trade -1,093,057 -1,560,900
Inventories 436,813 3,425,615
Deposits and prepayments -242,740 -873,536
Accounts payable, trade -846,110 72,913
Customer deposits -- -343
Value-added tax, net 402,760 854,534
Income tax payable 32,795 547,321
Other payables and accrued liabilities -423,155 98,206
Net cash provided by operating activities 5,608,038 9,295,655
Cash flows from investing activities:
Purchase of plant and equipment -1,298,131 -1,065,334
Addition of construction in progress -1,024,771 --
Net cash used in investing activities -2,322,902 -1,065,334
Effect of exchange rate changes on
cash and cash equivalents -13,969 75,968
NET CHANGE IN CASH AND CASH
EQUIVALENTS 3,271,167 8,306,289
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 9,209,953 3,879,114
CASH AND CASH EQUIVALENTS, END OF
PERIOD $12,481,120 $12,185,403
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for income taxes $ 2,127,504 $ 1,626,155
Cash paid for interest $ -- $ --
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Transfer from construction in progress
to property, plant and equipment $ 2,560,385 $ --
For more information, please contact:
Company Contact:
Mr. Guosheng Fu, Vice President
China Sun Group High-Tech Co., Ltd.
Tel: +86-411-8288-9800/8289-2736 (China)
Email: fgsh_2009@163.com
Investor Relations Contact:
Mr. Pierre Maccagno, Account Manager
Email: pierre.maccagno@ccgir.com
Tel: +1-646-833-3422
Mr. Crocker Coulson, President
Email: crocker.coulson@ccgir.com
Tel: +1-646-213-1915
CCG Investor Relations
Web: http://www.ccgirasia.com
SOURCE China Sun Group High-Tech Co., Ltd.