BEIJING, May 21 /Xinhua-PRNewswire/ -- Asian Financial, Inc. ("Asian Financial", "Company"), a leading offset printing equipment provider in China, through its wholly-owned operating subsidiary, Duoyuan Digital Printing Technology Industry (China) Co., Ltd. ("Duoyuan"), reported financial results for the third quarter of fiscal 2008 ended March 31, 2008.
Third Quarter 2008 Highlights
-- Revenues totaled $16.0 million, up 66.1% from $9.6 million for the same
period prior year
-- Gross profit was $8.2 million, up 103.4% from $4.0 million for the same
period prior year
-- Gross margin was 51.1%, compared to 41.7% for the same period prior
year
-- Operating income was $5.3 million, up 140.8% from the same period prior
year
-- Net income was $4.4 million, or $0.18 per basic and diluted share, up
396.9% from the same period prior year
-- Net margin was 27.7%, compared to 9.3% for the same period prior year
Recent Operational Highlights
-- Introduced multi-color models such as DY452, DY456 and DY4104
-- Renovated and upgraded the factory in Hunan, which enhanced production
-- Evaluated and identified key technologies to enter the fast-growing
corrugated packaging equipment manufacturing industry
-- Launched a National Sales Agents Conference for its agents, in Beijing,
March 2008
"We achieved exceptional results for our third quarter with net income reaching triple digit growth compared to the same period prior year," said Mr. Wenhua Guo, Chairman and Chief Executive Officer of Asian Financial. "Despite the third quarter being a slow season for us in terms of sales, due to Chinese New Year, our sales increased significantly, reflecting the growing demand for our offset printing products, especially the multicolor printing models. Our extensive sales network has enabled our customers to buy printing equipment in the most convenient way."
Third Quarter 2008 Results
Revenues for the third quarter of fiscal 2008 totaled $16.0 million, up 66.1% from $9.6 million for the same period prior year. The increase in revenue was primarily attributed to increases in unit prices as well as an increase in units sold, especially multi-color printing machine items DY474, DYA452 and PZ4660, which represent over 50% of the Company’s total net revenues.
Gross profit for the third quarter of fiscal 2008 totaled $8.2 million, up 103.4% from $4.0 million for the same period prior year. Gross margin was 51.1% in the third quarter of fiscal 2008, compared to 41.7% for the same period prior year. The increase in gross margin was the result of higher prices coupled with increased efficiencies attained through higher productivity.
Operating expenses for the third quarter of fiscal 2008 totaled $2.9 million, up 58.6% from $1.8 million in the third quarter of 2007. Selling expenses have risen in proportion to and as a consequence of the increase in sales, because sales staffs are compensated based on performance. Operating expenses accounted for 18.2% of revenues in the third quarter of fiscal 2008, compared to 19.0% for the same period prior year.
Operating income totaled $5.3 million during the third quarter, up 140.8% from $2.2 million in the same period prior year. The increase resulted from higher revenues and lower cost of sales as a percentage of revenues.
There were no liquidated damages for the quarter nor does the Company expect to have any liquidated damages moving forward. The Company booked a total of $1,177,460 in liquidated damage expenses in the three months ended March 31, 2007. As of March 31, 2007, the Company had accrued $470,984 for the liquidated damages pursuant to the registration rights agreement and $706,476 pursuant to the securities purchases agreement. These amounts have been included in liquidated damage expenses on the income statement. This quarter, the Company reached a settlement with investors who agreed to waive all penalties due. Therefore, the Company reversed the accrual and recognized a gain of $941,968 which is included in liquidated damages net of settlement in the accompanying financial statements.
Net income totaled $4.4 million, up 396.9% from $0.9 million for the same period prior year. The increase was attributed partially to the improvement of operating profits as well as not having to pay any liquidated damages expenses compared to same period prior year. Earnings per basic and diluted share were $0.18 based on 25 million shares, compared to $0.04 based on 23.4 million shares for the same period prior year.
Nine Month Results
For the nine months ended March 31, 2008 revenues were $65.1 million, up 34.0% from $48.6 million for the same period prior year. Gross profit was $33.9 million, up 57.2% from $21.5 million for the same period last year. Gross margin was 52.0%, up from a gross margin of 44.3% in the year ago period. Operating income was $23.0 million, up 68.6% from $13.7 million for the same period prior year, and operating margin was 35.4%, compared to 28.1% for the same period prior year. Net income increased 87.2% to $20.4 million from $10.9 million for the same period prior year.
Financial Condition
As of March 31, 2008, cash and cash equivalents were $16.2 million, up from $7.8 million at the end of fiscal 2007. At the end of third quarter, the Company had working capital of $50.8 million, outstanding lines of credit of $14.0 million and total shareholders’ equity of $85.8 million. In the third quarter of 2008, the Company has incurred capital expenditure of $6.1 million.
Business Outlook
The Company has decided to expand the post-press segment and explore the feasibility of entering the corrugated packaging equipment manufacturing business. To this end, Duoyuan has identified key technologies to manufacture high quality corrugated packaging equipment that it believes will achieve cost savings and have higher efficiencies. The Company is in the final stages of purchasing the key technologies identified to operate in the corrugated packaging equipment manufacturing business and expects to reach an agreement on this matter in the second half of calendar year 2008. The Company intents to built a factory in Langfang, Hebei Province, China, to manufacture the corrugated packaging equipment.
"Our fourth quarter for fiscal 2008 is set to be very productive as sales ramp up from our traditionally slower third quarter, due to the Chinese New Year holidays. In addition, we plan to introduce three enhanced models of multicolor printing presses during the second half of calendar year 2008, these printing presses will have features such as improved design, quality, functionality and performance," said Mr. Wenhua Guo.
Guidance for Fiscal Year 2008
The Company is on track to achieve or exceed net income of $24 million or $0.89 in earnings per share, on a basic and diluted share basis, as set forth in the make-good target at the time of the $23.5 million private placement deal, October 2006.
About Asian Financial, Inc.
Asian Financial, Inc., through its wholly-owned subsidiaries, is engaged in the business of manufacturing commercial offset printing presses in the People’s Republic of China ("PRC"). The Company combines technical innovation and international quality standards to offer a broad range of printing equipment and solutions. 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 major offset printing equipment and solutions providers 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 filing of May 16, 2008.
-- FINANCIAL TABLES BELOW --
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
Three months ended Nine months ended
March 31, March 31,
2008 2007 2008 2007
REVENUES $16,022,248 $9,646,697 $65,106,232 $48,604,680
COST OF SALES 7,835,407 5,621,102 31,236,331 27,064,874
GROSS PROFIT 8,186,841 4,025,595 33,869,901 21,539,806
RESEARCH AND DEVELOPMENT 224,637 148,560 558,242 874,494
SELLING, GENERAL AND
ADMINISTRATIVE 2,683,625 1,685,057 10,286,042 7,005,399
INCOME FROM OPERATIONS 5,278,579 2,191,978 23,025,617 13,659,913
LIQUIDATED DAMAGES, net
of settlement (941,968) 1,177,460 (235,492) 1,177,460
(GAIN) FROM DERIVATIVE
INSTRUMENTS (88,284) -- (88,284) --
OTHER EXPENSE (INCOME),
net 991,610 (46,020) 598,685 289,365
INCOME BEFORE MINORITY
INTEREST AND PROVISION
FOR INCOME TAXES 5,317,221 1,060,538 22,750,708 12,193,088
MINORITY INTEREST 50,432 26,453 296,718 201,045
INCOME BEFORE PROVISION
FOR INCOME TAXES 5,266,789 1,034,085 22,453,990 11,992,043
PROVISION FOR INCOME
TAXES 821,501 139,434 2,024,946 1,078,912
NET INCOME 4,445,288 894,651 20,429,044 10,913,131
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation gain 3,266,563 564,752 6,253,801 1,256,006
COMPREHENSIVE INCOME $7,711,851 $1,459,403 $26,682,845 $12,169,137
BASIC AND DILUTED
WEIGHTED AVERAGE
NUMBER OF SHARES 25,000,050 23,364,686 25,000,050 24,042,626
BASIC AND DILUTED
EARNING PER SHARE $0.18 $0.04 $0.82 $0.45
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND JUNE 30, 2007
A S S E T S
March 31, June 30,
2008 2007
(UNAUDITED)
CURRENT ASSETS:
Cash $ 16,230,198 $ 7,816,361
Restricted cash -- 2,097,490
Accounts receivable, net of
allowance for doubtful
accounts of $785,113
and $498,648 as of March 31,
2008 and June 30, 2007,
respectively 29,231,178 21,170,423
Inventories 23,860,319 20,074,605
Other receivables 15,145 68,160
Other assets -- 40,331
Total current assets 69,336,840 51,267,370
PLANT AND EQUIPMENT, net 32,281,343 25,332,554
OTHER ASSETS:
Intangible assets, net 3,937,596 3,679,941
Advances on equipment purchases 1,299,700 --
Total other assets 5,237,296 3,679,941
Total assets $ 106,855,479 $ 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 $ 13,994,400 $ 12,887,000
Accounts payable 1,377,783 2,572,061
Accrued liabilities 1,176,437 1,107,591
Other payables 224,124 198,000
Other payables - related parties -- 369,564
Taxes payable 1,789,132 1,078,503
Liquidated damages payable -- 2,119,428
Total current liabilities 18,561,876 20,332,147
WARRANT LIABILITIES 1,359,652 --
MINORITY INTEREST 1,104,154 800,766
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;
25,000,050 shares issued and
outstanding 25,000 25,000
Additional paid-in capital 27,263,040 27,263,040
Statutory reserves 3,282,601 3,282,601
Retained earnings 46,745,185 26,316,141
Accumulated other comprehensive
income 8,513,971 2,260,170
Total shareholders’ equity 85,829,797 59,146,952
Total liabilities and
shareholders’ equity $ 106,855,479 $ 80,279,865
ASIAN FINANCIAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 20,429,044 $ 10,913,131
Adjustments to reconcile net
income to cash
provided by (used in)
operating activities:
Minority interest 296,718 201,045
Depreciation 1,615,845 518,434
Amortization 55,632 52,224
Bad debt expense 231,400 87,478
Gain on derivative
instruments (88,284) --
Liquidated damages penalty 706,476 471,712
Gain from settlement of
liquidated damages (941,968) --
Change in operating assets
and liabilities
Accounts receivable (6,159,997) (7,631,089)
Inventories (1,957,350) (1,236,128)
Other receivables 55,922 15,666
Other receivables - related
parties -- 549,900
Advances on equipment
purchases (1,234,533) 2,196,909
Other assets 41,601 (16,270)
Other non-current assets -- 223,631
Accounts payable (1,344,337) (12,282,037)
Customer deposits -- (19,150)
Other payables 8,653 (363,455)
Other payables - related
parties (381,199) (524,032)
Accrued liabilities (20,086) (281,922)
Taxes payable 586,967 (704,541)
Net cash provided by (used
in) operating
activities 11,900,504 (7,828,494)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment (4,244,118) (8,855,767)
Payments for construction in
progress (1,904,386) (1,208,413)
Net cash used in investing
activities (6,148,504) (10,064,180)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from private
placement -- 17,473,243
Proceeds from lines of
credit 13,091,820 --
Payments for lines of credit (13,091,820) --
Payments to settle
liquidated damages (436,000) --
Restricted cash 2,097,490 --
Net cash provided by
financing activities 1,661,490 17,473,243
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 1,000,347 40,107
INCREASE (DECREASE) IN CASH 8,413,837 (379,324)
CASH, beginning of period 7,816,361 3,739,711
CASH, end of period $ 16,230,198 $ 3,360,387
For more information, please contact:
Asian Financial, Inc.
Fiona Feng, CEO Assistant
Tel: +86-10-6021 2222
Email: fengyuming@duoyuan.com
CCG Elite
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgelite.com
