DALIAN, China, April 14, 2011 /PRNewswire-Asia-FirstCall/ --
China Sun Group High-Tech Co. (OTC Bulletin Board: CSGH.OB - News)
("China Sun Group" or the "Company"), a vertically-integrated
supplier of anode materials for rechargeable Lithium–ion (Li-ion)
batteries in China, today
announced their fiscal year 2011 Q3 financial results.
Third Quarter Ended February
28, 2011 Financial Results Highlights
- Q3 revenue increased by 24% to $13.4
million compared to $10.8
million for the comparable period in 2010
- Q3 gross profit increased by 36% to $4.60 million compared to $3.38 million for the comparable period in
2010
- Q3 net income increased by 21% to $2.66
million compared to $2.20
million for the comparable period in 2010
- Q3 diluted net income per share was $0.05 compared to $0.04 for the comparable period in 2010
"Our financial results continue to be positively driven by the
increasing demand for our products. China Sun Group's sales and
earnings continue to benefit from the increasing demand for our new
higher margin product, lithium iron phosphate ("LIP product") and
the continued surge in demand for lithium batteries. We are
confident with our capability to develop high quality product to
meet our customer's needs. We ended the third quarter with three
production lines for our LIP product, and seven for producing our
cobaltosic and lithium oxide products," commented Chief Executive
Officer, Mr. Guosheng Fu.
Third Quarter Ended February
28, 2011 Financial Results
Net Revenue
Net revenue for the three months ended February 28, 2011 was $13.4 million, an increase of $2.55 million or 24% from net revenue of
$10.8 million for the comparable
period in 2010. 88 % of the increase in net revenue resulted from
an increase in sales of our new product, lithium iron phosphate.
Sales of lithium iron phosphate increased by 177% for the three
months ended February 28, 2011, which
was 205 tons compared to 74 tons for the comparable period in
2010.
Summarized financial information concerning the Company's major
products is shown in the following table for the three months ended
February 28, 2011 and 2010.
|
|
|
Three months
ended February 28,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Lithium iron
phosphate
|
|
$
|
3,828,224
|
|
|
$
|
1,579,166
|
|
|
Cobaltosic
oxide
|
|
|
9,531,706
|
|
|
|
9,229,536
|
|
|
|
|
$
|
13,359,930
|
|
|
$
|
10,808,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
Gross profit for the three months ended February 28, 2011 was $4.60 million, an increase of $1.22 million or 36% from $3.38 million for the comparable period in 2010.
The increase in gross profit was primarily attributable to
increased sales of our new higher margin product, lithium iron
phosphate. Gross margin for the quarter ended February 28, 2011 was 34.5% compared to 31.3% for
the same quarter in 2010.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended
February 28, 2011 were $47,493, compared to $30,057 for the three months ended February 28, 2010, an increase of 58% compared to
the same period in 2010. The increase was primarily attributable to
increased sales as a result of increased customer demand.
Research and Development Expenses
Research and development expenses for the three months ended
February 28, 2011 were $33,838, an increase of 28% compared to
$26,328 for the comparable period in
2010.
Income from Operations
Income from operations for the three months ended February 28, 2011 was $3.66 million, compared to $2.95 million for the same period in 2010, an
increase of 24% from the comparable period in 2010. The increase
primarily resulted from an increase in sales of our new product,
lithium iron phosphate.
Net Income
Net income for the three months ended February 28, 2011 was $2.66 million, an increase of 21% as compared to
the net income of $2.20 million for
the same period in 2010. The increase was attributable to the
revenue growth from the ascending sales of lithium iron
phosphate.
Business Update
Earnings were driven by the sharp growth in sales of lithium
iron phosphate in the third quarter, primarily as a result of the
new supply agreement entered into between the Company's PRC
operating subsidiary, Dalian Xinyang High-Tech Development co.,
Ltd. (DLXY), and Henan Huanyu Sai Er New Energy Technology Co., Ltd
("Huanyu"). Pursuant to the terms of this Supply Agreement,
the Company agreed to supply a minimum of 470 tons of lithium iron
phosphate to Huanyu during the 2011 calendar year. As of
February 28, 2011, the Company has
supplied 146.96 tons of lithium iron phosphate to Huanyu. During
the quarter, the Company also increased sales of lithium iron
phosphate to clients based in Shandong and Beijing. The purchase price of lithium iron
phosphate and other relevant commercial terms and conditions are
determined by the parties on a monthly basis. Sales of lithium iron
phosphate for the nine months ended February
28, 2011 was 517 tons, an increase of 366% from 111 tons for
the same period in 2010.
CEO Comments
"During this quarter, we see steady growth in sales of our
existing product and strong growth in sales of our new product
lithium iron phosphate," commented by Mr. Guosheng Fu, Chief Executive Officer of China
Sun Group. "Management will focus on accelerating the execution of
the Company's expansion strategy and upgrading our manufacturing
system to leverage production capabilities and efficiencies. The
Company participated in different international financial
conferences and interviewed by several media groups including
Bloomberg, which provided the Company with increased investor
visibility. The Company will continue to strengthen its investor
relations program to make it a more crucial component of our
everyday corporate operation and we look forward to more
opportunities to communicate with our existing and potential
investors, and keep them informed of China Sun Group's operation
and business development strategy," added Mr. Fu.
About China Sun Group High-Tech Co.
China Sun Group High-Tech Co. ("China Sun Group") produces anode
materials used in lithium ion 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 lithium ion batteries
("LIP"). Leveraging its state-of-the-art technology, high-quality
product line and scalable production capacity, the Company has
recently diversified into the manufacture of LIP and plans to
further integrate to manufacture power Li-ion 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 Company's
ability to become a leading anode material supplier for Li-ion
batteries used in the new energy automobile industry are examples
of such forward-looking statements. The forward-looking statements
include risks and uncertainties, including, but not limited to, 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.
CONTACT
CORPORATE:
|
|
China Sun Group High-Tech
Co.
|
|
Mr. Guosheng Fu, CEO
|
|
Tel: 86-411-8288-9800
|
|
ir@china-sun.cn
|
|
www.china-sun.cn
|
|
|
|
INVESTOR
RELATIONS:
|
|
Cooper Global
Communications
|
|
Mr. Richard E. Cooper,
President
|
|
rcooper@cgc-us.com
|
|
Ms. Sabrina Zhang,
Associate
|
|
szhang@cgc-us.com
|
|
Tel: 212-317-1400
|
|
|
Financial Table Follow
CHINA SUN GROUP HIGH-TECH
CO.
CONDENSED CONSOLIDATED BALANCE
SHEETS
AS OF FEBRUARY 28, 2011 AND MAY
31, 2010
(Currency expressed in United
States Dollars ("US$"), except for number of shares)
|
|
|
|
February 28,
2011
|
|
|
May 31,
2010
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
25,400,563
|
|
|
$
|
18,017,266
|
|
|
Accounts receivable,
trade
|
|
|
3,026,827
|
|
|
|
2,793,038
|
|
|
Inventories
|
|
|
550,154
|
|
|
|
1,218,336
|
|
|
Deposits and
prepayments
|
|
|
666,395
|
|
|
|
3,049
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
29,643,939
|
|
|
|
22,031,689
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
Technical know-how,
net
|
|
|
2,433,541
|
|
|
|
2,475,298
|
|
|
Property, plant and equipment,
net
|
|
|
20,150,743
|
|
|
|
20,567,954
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
52,228,223
|
|
|
$
|
45,074,941
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
$
|
170,135
|
|
|
$
|
2,127,244
|
|
|
Customer
deposits
|
|
|
191,078
|
|
|
|
--
|
|
|
Income tax
payable
|
|
|
635,336
|
|
|
|
1,488,619
|
|
|
Other payables and accrued
liabilities
|
|
|
959,839
|
|
|
|
984,189
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,956,388
|
|
|
|
4,600,052
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
Convertible
preferred stock, $0.001 par value; 20,000,000 shares authorized;
none issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, $0.001 par value; 100,000,000 shares authorized;
55,722,971 shares
and 53,422,971 shares issued and outstanding as of February 28,
2011 and May 31,
2010, respectively
|
|
|
55,723
|
|
|
|
53,423
|
|
|
Additional paid-in
capital
|
|
|
11,647,029
|
|
|
|
9,585,204
|
|
|
Accumulated other
comprehensive income
|
|
|
4,745,751
|
|
|
|
3,043,344
|
|
|
Statutory
reserve
|
|
|
3,335,588
|
|
|
|
2,277,365
|
|
|
Retained
earnings
|
|
|
30,487,744
|
|
|
|
25,515,553
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
50,271,835
|
|
|
|
40,474,889
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
52,228,223
|
|
|
$
|
45,074,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA SUN GROUP HIGH-TECH
CO.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS
ENDED FEBRUARY 28, 2011 AND 2010
(Currency expressed in United
States Dollars ("US$"), except for number of shares)
(Unaudited)
|
|
|
|
Three months ended
February 28,
|
|
|
Nine months ended
February 28,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, net
|
|
$
|
13,359,930
|
|
|
$
|
10,808,702
|
|
|
$
|
37,753,217
|
|
|
$
|
30,232,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(inclusive of depreciation and
amortization)
|
|
|
8,753,182
|
|
|
|
7,427,144
|
|
|
|
25,367,854
|
|
|
|
20,760,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,606,748
|
|
|
|
3,381,558
|
|
|
|
12,385,363
|
|
|
|
9,471,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
47,493
|
|
|
|
30,057
|
|
|
|
116,266
|
|
|
|
83,195
|
|
|
Research and
development
|
|
|
33,838
|
|
|
|
26,328
|
|
|
|
87,285
|
|
|
|
77,501
|
|
|
General and
administrative
|
|
|
858,580
|
|
|
|
376,544
|
|
|
|
3,454,394
|
|
|
|
894,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
|
939,911
|
|
|
|
432,929
|
|
|
|
3,657,945
|
|
|
|
1,055,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
3,666,837
|
|
|
|
2,948,629
|
|
|
|
8,727,418
|
|
|
|
8,416,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidy
income
|
|
|
291
|
|
|
|
-
|
|
|
|
44,722
|
|
|
|
-
|
|
|
Interest income
|
|
|
14,240
|
|
|
|
9,414
|
|
|
|
38,091
|
|
|
|
26,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
|
3,681,368
|
|
|
|
2,958,043
|
|
|
|
8,810,231
|
|
|
|
8,442,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(1,021,688)
|
|
|
|
(756,920)
|
|
|
|
(2,779,817)
|
|
|
|
(2,160,300)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
2,659,680
|
|
|
$
|
2,201,123
|
|
|
$
|
6,030,414
|
|
|
$
|
6,282,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Foreign currency translation
gain (loss)
|
|
|
650,847
|
|
|
|
(41,340)
|
|
|
|
1,702,407
|
|
|
|
(52,300)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$
|
3,310,527
|
|
|
$
|
2,159,783
|
|
|
$
|
7,732,821
|
|
|
$
|
6,229,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – Basic and
diluted
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
|
$
|
0.11
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock
outstanding – Basic and diluted
|
|
|
55,639,638
|
|
|
|
53,422,971
|
|
|
|
54,693,341
|
|
|
|
53,422,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA SUN GROUP HIGH-TECH
CO.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
FEBRUARY 28, 2011 AND 2010
(Currency expressed in United
States Dollars ("US$"))
(Unaudited)
|
|
|
|
Nine months
ended
February
28,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,030,414
|
|
|
$
|
6,282,149
|
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation of property,
plant and equipment
|
|
|
1,223,915
|
|
|
|
971,821
|
|
|
Amortization of technical
know-how
|
|
|
132,679
|
|
|
|
86,762
|
|
|
Shares issued for
services, non-cash
|
|
|
2,064,125
|
|
|
|
-
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
trade
|
|
|
(125,965)
|
|
|
|
(1,093,057)
|
|
|
Inventories
|
|
|
586,798
|
|
|
|
436,813
|
|
|
Value-added tax,
net
|
|
|
-
|
|
|
|
402,760
|
|
|
Deposits and
prepayments
|
|
|
(536,805)
|
|
|
|
(242,740)
|
|
|
Accounts payable,
trade
|
|
|
(1,999,474)
|
|
|
|
(846,110)
|
|
|
Customer
deposits
|
|
|
187,520
|
|
|
|
--
|
|
|
Income tax
payable
|
|
|
(892,542)
|
|
|
|
32,795
|
|
|
Other payables and accrued
liabilities
|
|
|
(54,348)
|
|
|
|
(423,155)
|
|
|
Net cash provided by operating
activities
|
|
|
6,616,317
|
|
|
|
5,608,038
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
Purchase of plant and
equipment
|
|
|
(52,513)
|
|
|
|
(1,298,131)
|
|
|
Addition of construction
in progress
|
|
|
-
|
|
|
|
(1,024,771)
|
|
|
Net cash used in investing
activities
|
|
|
(52,513)
|
|
|
|
(2,322,902)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
|
819,493
|
|
|
|
(13,969)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH
EQUIVALENTS
|
|
|
7,383,297
|
|
|
|
3,271,167
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
|
|
|
18,017,266
|
|
|
|
9,209,953
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END
OF PERIOD
|
|
$
|
25,400,563
|
|
|
$
|
12,481,120
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
Cash paid for income
taxes
|
|
$
|
3,742,036
|
|
|
$
|
2,127,504
|
|
|
Cash paid for
interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Transfer
from construction in progress to property, plant and
equipment
|
|
$
|
-
|
|
|
$
|
2,560,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Sun Group High-Tech Co., Ltd.