BEIJING, Feb. 15 /Xinhua-PRNewswire/ -- Asian Financial, Inc. (“Asian Financial”, “Company”), a leading provider of offset printing equipment and solutions in China through its wholly-owned operating subsidiary, Duoyuan Digital Printing Technology Industry (China) Co., Ltd. (“Duoyuan”), today reported financial results for the second quarter of fiscal 2008 ended on December 31, 2007.
Second Quarter Fiscal 2008 Highlights
-- Total revenues were $26.4 million, a 23.4% increase over second quarter
in fiscal 2007
-- Gross profit was $14.2 million, up 46.4% over the same period last year
-- Gross margin was 53.9%, up 840 basis points over the same quarter in
fiscal 2007
-- Operating income was $9.4 million, a 38.2% increase over the same
period last year
-- Net income was $8.4 million, or $0.34 per basic and diluted share, up
44.8% over the same period last year
-- Net margin was 31.9%, compared to 27.3% over the same quarter in fiscal
2007
-- Sales of new 104 cm width large format presses reached $3.3 million
“Our second quarter 2008 revenues were robust. The record gross margin experienced during the quarter was a direct result of the increased sales of our technologically advanced large-format multicolor presses,” commented Mr. Wenhua Guo, Chairman and CEO of Asian Financial.
Second Quarter 2008 Results
Revenues for the second quarter of fiscal 2008 were $26.4 million, up 23.4% from $21.4 million in the second quarter of fiscal 2007. The increase in revenue was driven by growth in sales of large-format multicolor offset presses which was mostly driven by strong demand from China’s printing industry.
Gross profit for the second quarter of fiscal 2008 was $14.2 million, up 46.4% from $9.7 million in the same period a year ago. Gross margin was 53.9% in the second quarter of fiscal 2008, compared to 45.3% in the same quarter last year. The improvement in gross margin reflects the increased contribution of large-format multicolor presses to revenues, as well as continued increases in worker productivity, efficiency improvements to production lines and equipment, and more discounts received from suppliers due to closer cooperation.
Operating expenses were $4.8 million, up 65.5% from $2.9 million in the second quarter of 2007. Operating expenses accounted for 18.2% of revenues in the second quarter of fiscal 2008, compared to 13.8% in the same quarter last year. The increase in operating expenses as a percentage of revenues was primarily due to the increase in one-time annual sales rebates to distributors as a result of significant increase in revenues.
Operating income was $9.4 million in the second quarter of fiscal 2008, up 38.2% from $6.8 million in the same period a year ago. Net income was $8.4 million, up 44.8% from $5.8 million in the second quarter of fiscal 2007. Earnings per basic and diluted share were $0.34, compared to $0.25 in the same quarter last year.
Six Month Results
For the six months ended December 31, 2007, net revenues were $49.1 million, up 26.0% from $39 million for the same period prior year. Gross profit was $25.7 million, up 9.1% from $17.5 million for the same period prior year. Gross margin was 52.3%, up from gross margin of 45.0% in the year ago period. Operating income was $17.7 million, up 51.9% from $11.7 million for the same period prior year, and operating margin was 36.2%, compared to an operating margin of 30.0% in the prior year. Net income increased 51.3% to $15.2 million from $10.0 million in the same period the prior year.
Financial Condition
As of December 31, 2007, cash and cash equivalents were $17.7 million, up from $7.8 million at the end of fiscal 2007. At the end of second quarter of fiscal year 2008, the Company had working capital of $44.1 million, an outstanding line of credit of $13.4 million and total shareholders’ equity of $77.3 million. In the second quarter of 2008, the Company incurred capital expenditure of $5 million related to equipment purchases and expansion and upgrade of production facilities.
Business Outlook
“For the remainder of fiscal 2008, we will continue to expand our operations to meet the strong demand for printing equipment in China. Our long-term goals are to strengthen market share in China for each of the business segments we operated in and also expand our products into related areas, while maintaining our cost advantages over our international competitors,” added Mr. Wenhua Guo.
Guidance for Fiscal Year 2008
The Company is on track to achieve its guidance of $24 million in net income and $0.89 in EPS, on a basic and diluted share basis, for fiscal year 2008.
About Asian Financial, Inc.
Asian Financial, Inc., through its wholly-owned subsidiaries, is engaged in the business of manufacturing and marketing commercial offset printing presses and related solutions in the People’s Republic of China (“PRC”). The Company combines technical innovation with PRC cost advantages to offer a broad range of offset printing equipment cheaper relative to its foreign competitors. Asian Financial, Inc. has manufacturing and R&D facilities in Langfang, Hebei Province and Shaoyang, Hunan Province in addition to a distribution and service network in approximately 100 cities in China. Headquartered in Beijing, the Company is one of the largest non-government owned offset printing equipment and solutions provider in China.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. Generally, the words “believes”, “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the Company’s expectations regarding its working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such statements are subject to certain risks and uncertainties, including the matters set forth in its Annual Report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements. In addition, the forward-looking statements in this press release involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to differ materially from those expressed in or implied by the forward-looking statements contained herein. Please refer to risk factors that are mentioned in the Company’s Form 10-Q fillings of February 14, 2008.
--FINANCIAL TABLES BELOW--
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)
Three months ended Six months ended
December 31 December 31
2007 2006 2007 2006
REVENUES $26,438,413 $21,421,801 $49,083,984 $38,957,983
COST OF SALES 12,190,669 11,675,082 23,400,924 21,443,772
GROSS PROFIT 14,247,744 9,746,719 25,683,060 17,514,211
RESEARCH AND
DEVELOPMENT 170,148 544,868 333,605 725,934
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 4,629,150 2,405,034 7,602,417 5,320,342
INCOME FROM
OPERATIONS 9,448,446 6,796,817 17,747,038 11,467,935
LIQUIDATED DAMAGE
EXPENSES -- -- 706,476 --
OTHER EXPENSE, net 264,528 335,385 392,925 335,385
INCOME BEFORE
MINORITY INTEREST
AND PROVISION FOR
INCOME TAXES 9,183,918 6,461,432 16,647,637 11,132,550
MINORITY INTEREST 152,744 102,724 246,286 174,592
INCOME BEFORE
PROVISION FOR
INCOME TAXES 9,031,174 6,358,708 16,401,351 10,957,958
PROVISION FOR INCOME
TAXES 587,796 519,461 1,203,445 939,478
NET INCOME 8,443,378 5,839,247 15,197,906 10,018,480
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation gain 2,079,488 81,329 2,987,238 691,254
COMPREHENSIVE INCOME $10,522,866 $5,920,576 $18,185,144 $10,709,734
BASIC AND DILUTED
WEIGHTED AVERAGE
NUMBER OF SHARES 25,000,050 23,364,686 25,000,050 20,715,115
BASIC AND DILUTED
EARNING PER SHARE $0.34 $0.25 $0.61 $0.48
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
A S S E T S
December 31, June 30,
2007 2007
CURRENT ASSETS:
Cash $17,661,328 $7,816,361
Restricted cash -- 2,097,490
Accounts receivable, net of
allowance of $519,883 and
$498,648 as of December
31, 2007 and June 30,
2007, respectively 24,131,001 21,170,423
Inventories 22,870,730 20,074,605
Other receivables 26,453 68,160
Other assets -- 40,331
Total Current Assets 64,689,512 51,267,370
PLANT AND EQUIPMENT, net 26,566,820 25,332,554
OTHER ASSETS:
Intangible assets, net 3,814,073 3,679,941
Advances on equipment purchases 3,920,931 --
Total other assets 7,735,004 3,679,941
Total Assets $98,991,336 $80,279,865
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Lines of credit $13,435,800 $12,887,000
Accounts payable 1,829,007 2,572,061
Accrued liabilities 1,084,329 1,107,591
Other payables 196,808 198,000
Other payables - related parties -- 369,564
Taxes payable 1,229,120 1,078,503
Liquidated damages payable 2,825,904 2,119,428
Total Current Liabilities 20,600,968 20,332,147
MINORITY INTEREST 1,058,272 800,766
Total Liabilities 21,659,240 21,132,913
SHAREHOLDERS' EQUITY:
Preferred stock; $0.001 par value;
1,000,000 shares authorized;
no shares issued and outstanding
as of December 31, 2007 and
June 30, 2007 -- --
Common stock; $0.001 par value;
100,000,000 shares authorized;
25,000,050 shares issued and
outstanding at December 31,
2007 and June 30, 2007 25,000 25,000
Additional paid-in capital 27,263,040 27,263,040
Statutory reserves 3,282,601 3,282,601
Retained earnings 41,514,047 26,316,141
Accumulated other comprehensive
income 5,247,408 2,260,170
Total Shareholders' Equity 77,332,096 59,146,952
Total Liabilities and
Shareholders' Equity $98,991,336 $80,279,865
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 AND 2006
(UNAUDITED)
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $15,197,906 $10,018,480
Adjustments to reconcile net income
to cash provided by (used in) operating
activities:
Minority interest 246,286 174,592
Depreciation 1,042,717 343,370
Amortization 36,527 34,589
Liquidated damage penalties 706,476 --
Change in operating assets and
liabilities
Accounts receivable (2,006,309) (4,357,135)
Inventories (1,891,537) 2,183,572
Other receivables 43,468 (567,745)
Other receivables - related
parties -- (2,481,626)
Advances on inventory purchases -- 2,112,148
Other assets 40,972 (31,807)
Accounts payable (830,761) (7,583,306)
Customer deposits -- (19,026)
Other payables (9,378) (254,042)
Other payables - related
parties (375,438) (518,568)
Accrued liabilities (66,345) (483,619)
Taxes payable 102,007 223,682
Net cash provided by (used in)
operating activities 12,236,591 (1,206,441)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,122) (1,193,320)
Prepayment for equipment (3,846,398) --
Payments for construction in
progress (1,193,079) --
Net cash used in investing
activities (5,040,599) (1,193,320)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit 13,091,820 --
Payments for lines of credit (13,091,820) --
Proceeds from private placement -- 17,473,244
Restricted cash 2,097,490 --
Net cash provided by financing
activities 2,097,490 17,473,244
EFFECT OF EXCHANGE RATE CHANGES ON
CASH 551,485 100,330
INCREASE IN CASH 9,844,967 15,173,813
CASH, beginning of period 7,816,361 3,739,711
CASH, end of period $17,661,328 $18,913,524
For more information, please contact:
Asian Financial, Inc.
Fiona Feng, Assistant to CEO
Tel: +86-10-6021-2222
Email: fengyuming@duoyuan.com
CCG Elite
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
