BEIJING, China, May 22 /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 released financial results for the quarter ended March 31, 2007.
Third Quarter Results
Revenue for the third quarter of fiscal 2007 increased 35.0% to $9.6
million from $7.1 million in the third quarter of fiscal 2006. The increase in
revenue was driven by continued growth in sales of multicolor offset presses,
driven by strong demand. Sequentially, revenue was down 55.0% from $21.4
million in the three months ended December 31, 2006 due to seasonality in the
company's business. The January-March quarter is traditionally the seasonally
slowest quarter of the year, as business activities stopped or slowed during
the Chinese New Year period.
Gross profit for the third quarter of fiscal 2007 was $4.0 million, up
19.4% from $3.4 million in the same period a year ago. Gross margin was 41.7%
in the third quarter of fiscal 2007, compared to 47.2% in the same quarter
last year. The decline in gross margin was primarily due to higher labor costs
associated with an increase in the number of skilled workers needed to
manufacture and sell large-format printing presses.
Selling, general and administrative ("SG&A") expenses were $1.8 million,
down 20.6% from $2.3 million in the third quarter of 2006. SG&A expenses in
the prior year period include costs related to the build out of the company's
multicolor press distribution network which was completed in fiscal 2006.
Operating income was $2.2 million in the third quarter of fiscal 2007, up
from $1.1 million in the same period a year ago. Net income was $0.9 million,
down 44.4% from $1.6 million in the third quarter of fiscal 2006. Net income
in the current quarter includes $1.2 million in pre-tax liquidated damage
expenses associated with the delay in filing the registration statement for
the shares issued in its November 2, 2006 private placement, as well as
penalties associated with the failure to settle the outstanding balance of
related party transactions. Earnings per basic and diluted share were $0.02,
compared to $0.03 in the same quarter last year.
"Despite a slow quarter due to the long Chinese New Year holiday, we still
saw strong year-over-year growth in our top line, driven by strong demand in
the large-format multicolor offset press market," commented Mr. Wenhua Guo,
Chief Executive Officer of Asian Financial. "We are currently shifting our
product line away from small format single-color presses to higher-margin,
technologically advanced large format multicolor presses. Although our
profitability in the third quarter was impacted by expenses associated with
our private placement financing effort, we believe our strategies will
ultimately improve our competitive position and allow us to take advantage of
the rapid growth in China's printing industry."
Nine Months Results
Revenues for the first nine months of fiscal 2007 were $48.6 million, up
65.3% from $29.4 million in the first nine months of fiscal 2006. Gross
profit for the same period was $21.5 million, up 53.1% from $14.1 million in
the first nine months of fiscal 2006. Gross margin was 44.3%, compared to
47.9% in the first nine months of fiscal 2006. Operating income for the first
nine months of fiscal 2007 was $13.7 million, up 44.5% from $9.5 million in
the same period last year. Net income was $10.9 million in the first nine
months of fiscal 2007, up 13.8% from net income of $9.6 million in the
comparable period a year ago. Earnings per basic and diluted share were
$0.19, compared to $0.19 in the same period last year.
Financial Condition
As of March 31, 2007, the Company had $3.4 million in cash and cash
equivalents, total liabilities of $15.0 million and working capital of $30.8
million. Shareholders' equity stood at $55.7 million compared to $22.1 million
as of June 30, 2006.
Business Outlook
Demand for commercial printing equipment in China has risen at an average
rate of 24% per annum from 2001 to 2005, driven by strong growth in all forms
of printed media. The total output value of Chinese printing services was
$39.0 billion in 2005, and industry estimates call for this figure to nearly
double to $62.0 billion by 2010.
"In the coming months, we will continue to invest in R&D to further
enhance our product lines and upgrade our production capabilities. We have
very clear strategies to develop each of our main businesses including large-
format offset presses and digital printing. Our long-term goals are to expand
market share in each of our business segments and improve our product mix
while maintaining our cost advantages over international competitors," Mr. Guo
said. "We look forward to continued strong growth in our top and bottom
lines."
About Asian Financial, Inc.
Asian Financial, Inc., through its wholly-owned subsidiaries, is engaged
in the business of manufacturing and marketing commercial offset printers 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 at price discount as compared to Western models.
Asian Financial, Inc. has manufacturing and R&D facilities in Langfang in
Hebei Province and Shaoyang in Hunan Province and has a distribution and
service network in approximately 100 cities in China. Headquartered in
Beijing, the Company is the largest non-government owned major offset printing
equipment and printing 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. The forward-looking statements such as the Company's continual
investment in R&D to further enhance its product range and in upgrading and
expanding its production line so that it can maintain its competitive
advantages through improved efficiency and higher product precision are based
upon management's beliefs, assumptions and expectations of the Company's
future operations and economic performance, taking into account the
information currently available. These statements are not statements of
historical fact. Forward-looking statements involve risks and uncertainties
that may cause actual results, performance or financial condition to be
materially different from the expectations of future results, performance or
financial condition expressed or implied in any forward-looking statements.
Such risks include, but are not limited to, competition in the offset printing
market, declines in demand for the Company's products, rising raw materials
costs, changes to management or key personnel, risks associated with
conducting business in China, the Company's ability to expand into markets
outside of China and other risks detailed in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. 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.
- Financial Tables Follow -
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2007 AND 2006
(UNAUDITED)
Three months ended Nine months ended
March 31, March 31,
2007 2006 2007 2006
Revenues $ 9,646,697 $ 7,144,395 $ 48,604,680 $ 29,406,399
Cost Of Sales 5,621,102 3,772,596 27,064,874 15,334,268
Gross Profit 4,025,595 3,371,799 21,539,806 14,072,131
Selling, General
And Administrative
Expenses 1,833,617 2,309,900 7,879,893 4,621,589
Income From
Operations 2,191,978 1,061,899 13,659,913 9,450,542
Liquidated Damage
Expense 1,177,460 1,177,460
Other Income
(Expense), Net 46,020 669,635 (289,365) 388,573
Income Before
Minority Interest
And Provision For
Income
Taxes 1,060,538 1,731,534 12,193,088 9,839,115
Minority Interest 26,453 18,241 201,045 148,815
Income Before
Provision For
Income Taxes 1,034,085 1,713,293 11,992,043 9,690,300
Provision For
Income Taxes 139,434 104,417 1,078,912 104,417
Net Income 894,651 1,608,876 10,913,131 9,585,883
Other Comprehensive
Income Foreign Currency
Translation
Gain (Loss) 564,752 110,810 1,256,006 364,233
Comprehensive
Income $ 1,459,403 $ 1,719,686 $ 12,169,137 $ 9,950,116
Basic & Diluted
Weighted
Average Number Of
Shares 57,668,602 50,600,462 57,668,602 50,600,462
Basic & Diluted
Earning Per
Share $ 0.02 $ 0.03 $ 0.19 $ 0.19
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2007 AND JUNE 30, 2006
A S S E T S
March 31, June 30,
2007 2006
(Unaudited)
CURRENT ASSETS:
Cash $ 3,360,387 $ 3,739,711
Restricted cash 4,000,000 -
Accounts receivable, net of allowance
of $165,211 and $159,725 19,289,830 11,231,897
Inventories 18,559,546 16,727,833
Other receivables 123,434 130,914
Other receivables-related parties 363,934 892,552
Other assets 12,591 -
Advances on inventory purchases 24,125 2,183,483
45,733,847 34,906,390
PLANT AND EQUIPMENT, net 22,049,140 12,065,863
OTHER ASSETS:
Intangible assets, net 3,641,677 3,572,106
Other non-current assets - -
3,641,677 3,572,106
$ 71,424,664 $ 50,544,359
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 $ 12,691,000 $ 12,269,600
Accounts payable 1,097,810 13,137,939
Accrued liabilities 493,794 752,666
Other payables 168,448 522,167
Other payables - related parties 291,155 796,753
Customer deposits - 18,830
Taxes payable (236,814) 463,805
Liquidated damages payable 471,712 -
14,977,105 27,961,760
MINORITY INTEREST 749,826 527,246
COMMITMENTS AND CONTINGENT LIABILITIES - -
SHAREHOLDERS' EQUITY:
Preferred stock; $0.001 par value;
1,000,000 shares authorized;
No shares issued and outstanding
Common stock; $0.001 par value;
100,000,000 shares authorized;
67,047,481 and 50,600,462
shares issued and outstanding at
March 31, 2007 and June 30, 2006 67,047 50,600
Additional paid-in capital 27,416,097 5,959,301
Statutory reserves 3,079,744 3,079,744
Retained earnings 23,452,982 12,539,851
Accumulated other comprehensive income 1,681,863 425,857
55,697,733 22,055,353
$ 71,424,664 $ 50,544,359
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2007 AND 2006
(UNAUDITED)
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,913,131 $ 9,585,883
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Minority interest 201,045 148,815
Depreciation 518,434 461,397
Amortization 52,224 50,735
Bad debt expense 87,478 -
(Increase) decrease in assets:
Restricted cash - -
Accounts receivable (7,631,089) (6,300,758)
Inventories (1,236,128) 3,697,358
Other receivables 15,666
Other receivables - related
parties 549,900 (1,193,952)
Advances on inventory purchases 2,196,909 (9,395)
Other assets (16,270) (12,351)
Other non-current assets 223,631 -
Increase (decrease) in liabilities:
Accounts payable (12,282,037) (1,751,311)
Customer deposits (19,150) -
Other payables (363,455) 128,770
Other payables - related parties (524,032) -
Accrued liabilities (281,922) 96,668
Taxes payable (704,541) 328,406
Liquidated damages payable 471,712 -
Net cash (used in) provided
by operating activities (7,828,494) 5,230,265
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (8,855,767) -
Purchase of land use right - -
Payments for construction in
progress (1,208,413) (1,578,107)
Payments on business acquisition - -
Net cash used in investing
activities (10,064,180) (1,578,107)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital insertion 0 -
Proceeds from private placement 17,473,243 -
Payment of other payable - related
parties - (1,556,672)
Net cash provided by (used
in) investing activities 17,473,243 (1,556,672)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH 40,107 41,838
INCREASE IN CASH (379,324) 2,137,324
CASH, beginning of period 3,739,711 294,434
CASH, end of period $ 3,360,387 $ 2,431,758
Contact Information:
CCG Elite
Crocker Coulson, President
Elaine Ketchmere, VP Financial Writing
Tel: +1-310-231-8600
Email:crocker.coulson@ccgir.com
elaine.ketchmere@ccgir.com
Asian Financial, Inc.
Fiona Feng, CEO Assistant
Tel: +86-10-6021-2047
Email: fionaicey@vip.sina.com