Chiho-Tiande Announces 2010 Audited Interim Results

Revenue Surged 261.8% to HK$2.44 Billion

Sourcing and securing supplies of raw materials via a well established network

Striving to increase procurement and processing volumes

HONG KONG, Aug. 27 /PRNewswire-Asia/ --

Note 1: The Group has recorded an inventory provision of HK$308.6 million as at 31 December 2008, as a result of its inventories being stated at net realisable value instead of at cost (the “Inventory Provision”).

Note 2: Without taking into account the write back of the Inventory Provision, the Group had turned gross loss of HK$55.3 million, net loss of HK$16.3 million and basic loss per share of HK$0.02 in the first half of 2009 into gross profit of HK$276.2 million, net profit of HK$156.9 million and basic earnings per share of HK$0.21 respectively for the six months ended 30 June 2010 (the "period under review").

Chiho-Tiande GroupLimited (“Chiho-Tiande” or the “Company”, together with its subsidiaries, the “Group”, stock code: 976), the largest importer of Mixed Metal Scrap in the PRC, announced its audited interim results for the period under review.

Benefiting from continuing improvement in China’s market conditions, the Group recorded strong growth in revenue for the period under review as compared to 2009. Revenue increased by 261.8% to approximately HK$2.44 billion, exceeding total 2009 revenue by 4.5%. This increase was mainly due to a rise in sales volume as well as average selling prices of its recycled metal products and foundry products. Gross profit increased 10.9% to approximately HK$276.2 million with a gross profit margin of 11.3%. Without taking into account the write back of the Inventory Provision, the Group had turned both gross loss and net loss of HK$55.3 million and HK$16.3 million respectively in the first half of 2009 into gross profit of HK$276.2 million and net profit of HK$156.9 million for the period under review. Net profit decreased by 26.2% to approximately HK$156.9 million (after taking into account a one off charge for listing cost of HK$21.0 million), with a net profit margin of 6.4%, representing an increase of 3.2% over the forecasted consolidated profit of HK$152.0 million as stated in the Group’s listing prospectus. Basic earnings per share came in at HK$0.21. Excluding the write back of the Inventory Provision, basic earnings per share would have increased substantially compared to the same period for 2009. The board of directors does not recommend payment of any interim dividend for the six months ended 30 June 2010.

Commenting on these results, Mr. Fang Ankong, Executive Chairman and Chief Executive Officer of Chiho-Tiande said, “During the period under review, we recorded strong growth in revenue and satisfactory overall profitability. To capitalise on current favorable market trends, the Group continues to place strong emphasis on securing steady supplies of raw materials from proven sources of scrap metal via our well established overseas procurement network. We believe our current strategy will allow us to build on our solid foundation and to become leading player in the rapidly expanding scrap metal recycling business in the PRC.”

During the period under review, the Group’s sales related to the metal recycling business recorded an increase of 457.9% to approximately HK$2.12 billion, with foundry business sales increased by 444.4% to approximately HK$271.8 million. Sales from our wholesale business reduced by 80.1% to HK$48.6 million.  

The volatility of world metal prices is gradually easing and we see the re-establishment of a relatively stable pricing environment. Given this scenario, the Group managed to increase purchase volumes through its well established overseas procurement network. The Group sold over 230,000 tonnes of processed products among its three business segments combined. This represents an increase of 132.3% compared to just over 99,000 tonnes in the same period of 2009.

Besides strong growth in revenue, the Group is negotiating to expand its Ningbo processing plant’s annual capacity from the present 80,000 tonnes to 200,000 tonnes and final arrangement is expected to be finalised in the next few months.

Commenting on the future outlook, Mr. Fang concluded, “Encouraging signs indicate that the world economy is gradually recovering, and we’re also seeing increased support from the PRC Government to further develop the recycling industry. The metal recycling industry in the PRC will continue to grow and become an important source and an integral element in China’s metal resources supply chain for the foreseeable future. Based on this fundamental outlook, our Group is moving towards substantially increasing procurement and processing volumes over the coming months to cater for the rapidly increasing demand for scrap raw materials in the PRC market. We strongly believe in our ability to capitalise on this rapidly growing sector and achieve good returns for our shareholders in a sustainable and environmentally responsible manner.”

About Chiho-Tiande GroupLimited

Listed on the Main Board of The Stock Exchange of Hong Kong Limited on 12 July 2010, Chiho-Tiande is a mixed metal scrap recycler in China and the largest importer of mixed metal scrap in China in terms of total import volume and actual import volume. According to China Customs data, the Group was also the largest importer of copper-based scrap in China in 2009. Its business operations are broadly classified into three categories: metal recycling business, foundry business and wholesale business. The Group specialises in the recycling and processing of imported motor scrap. Its production plants are located at Taizhou, renowned as the “Capital for Metals Recycling in China” and Ningbo. The Group has also successfully established a strong international procurement network.

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