SHENZHEN, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- China Display Technologies, Inc. (OTC Bulletin Board: CDYT) (“China Display”, or “the Company”), a leading manufacturer of optoelectronic products, specializing in small- to mid-sized LED and CCFL backlight units for LCD displays in China, today reported record financial results for the first quarter of 2008.
First Quarter 2008 Highlights
-- Revenues increased 46.4% compared to the same period of 2007 to $6.7
million
-- Gross profits rose 49.7% from the first quarter of 2007 to $1.5
million, representing 22.3% of sales
-- Income from operations was up 54.8% versus the same period last
year to $1.1 million
-- Net income totaled $0.8 million, up 32.3% from the first quarter of
2007
-- Earnings per basic and diluted share were $0.07 and $0.04
respectively, compared to $0.05 in the first quarter of 2007
-- Announced a Share Exchange Agreement to improve the capital structure
"During the quarter we continued to see strength in our sales and net income growth driven by an increase in demand for our products from small-screen LCD module manufacturers. Our growth was also driven by our successful market expansion efforts in both foreign and domestic markets,” said Mr. Lawrence Chan, CEO of China Display Technologies. "We believe 2008 should be another strong year for us. We will continue our efforts to achieve greater market share and improve our product mix and target the large-sized LED BLU market."
First Quarter 2008 Results
Revenues for the first quarter of 2008 were $6.7 million, up 46.4% as compared to $4.6 million for the same period of 2007. The increase was primarily due to increased demand for BLU products from small screen liquid crystal display manufacturers and the Company’s successful market expansion efforts.
Cost of sales for the three months of 2008 was $5.2 million. Gross profit was up 49.7% to $1.5 million, an increase of $0.5 million, from $1.0 million for the first quarter of 2007, representing gross margins of 22.3% compared to 21.8% in the first quarter of 2007. Gross margins increased as a result of the Company’s improved operational management, increase in revenue and cost controls.
Total operating expenses for the first quarter of 2008 were $0.4 million, up 38.7% from the same period in 2007, which was primarily attributable to increased selling expenses. During the quarter, selling expenses increased to $0.2 million in an effort to expand the Company’s market share and promote new products. Research and development expenses rose 18.4% compared to the same period of 2007, which was a result of increased efforts to develop new projects. General and administrative expenses increased slightly.
Income from operations increased 54.8% to $1.1 million in the first quarter of 2008, representing operating margins of 15.8%, as compared to 14.9% in the same period of 2007.
Net interest expense for the first quarter of 2008 was $164,769 compared to $9,512 of net interest expense for the comparable period of 2007, as a result of a new short term bank loan in the first quarter of 2008.
In the first quarter of 2008, the Company recorded a $67,928 provision for income taxes as a result of the 50% tax holiday effective in 2007, 2008 and 2009 under Chinese tax law.
As a result of the foregoing, net income available to common shareholders for the first quarter of 2008 was $0.8 million or $0.07 per share basic, an increase of 32.3% from $0.6 million, or $0.05 per share basic for the comparable period of 2007. The earnings per share diluted were $0.04, down 20% from $0.05 per share diluted in the first quarter of 2007.
Financial Condition
As of March 31, 2008, China Display had $4.6 million in cash and cash equivalents, as well as $2.0 million restricted cash. Working capital ended March 31, 2008 was approximately $10.7 million, compared to $9.1 million as of December 31, 2007. Accounts receivable was $ 6.1 million, or 32.3% of current assets, compared to $5.3 million, or 29.8% of current assets at December 31, 2007. The Company had $5.2 million of short term bank loans, which were due in the second quarter of 2008 with interest rates ranging from 6.44% to 9.50%. Shareholder’s equity in the first quarter of 2008 stood at $14.3 million compared to $12.6 million as of December 31, 2007.
During the first quarter of 2008, cash flow provided by operations amounted $1.6 million compared to net cash used in operating activities of $0.7 million in the first quarter of 2007. Cash used in investing activities was $0.6 million, which was used to purchase property and equipment.
Business Outlook
China Display produces backlights for products using LED light source technology, which allows for a higher level of output than other types of panel displays. It has become the mainstream technology in today’s display market with demand for such technology increasing by 10% to 15% per year in recent years. The market is large and growing. In the Displaybank TFT-LCD shipment result report, shipments of large-size TFT-LCD panels, 10-inch and larger, jumped by 41% from 2006 to 393.47 million units in 2007, and shipment area also soared by 57.4% to 5,276 million square meters (Msqm). Revenues also reached $71.7 billion, up 35.7% from the previous year, and according to Stanley Jeong, IDC research manager, Global TFT-LCD Research, the revenue is projected to increase to $94 billion by 2010. Backlight units are one of the most critical components used in LCDs, and account for 20% to 30% of the overall cost of an LCD.
China Display focuses on small- to medium-size LED backlight unit manufacturing; mobile phone displays continue to represent the majority of shipments in the small- to medium-sized category. While this market remains very attractive and profitable, the Company is now developing the large-size back lighting unit, targeting the LCD-TV market which is considered to enjoy a relatively high profit margin.
"We continue to benefit from a rapidly growing market for backlight unit products, resulting from increased consumption of end products and expanded applications for LCDs on all kinds of machines and electronics,” said Mr. Lawrence Chan, CEO of China Display, “In addition, we have taken advantage of the favorable industry environment to improve our production facilities and to accelerate the pace of developing new products, such as the large sized backlight unit.”
About China Display Technologies, Inc.
China Display Technologies, Inc. through its wholly-owned subsidiary Suny Electronics (Shenzhen) Company Limited (“SUNY”) in China, designs, manufactures and markets small- to mid-sized Light Emitting Diode (LED) and Cold Cathode Fluorescent Lamp (CCFL) backlights for various types of Liquid Crystal Displays (LCDs). Its products have applications in electronic consumer products, such as mobile phones, PDAs, GPS systems, portable DVD/VCD players, MP3s and MP4s, medical equipment and household appliances with displays. SUNY was organized in November 2004 and started operations in 2005. It has experienced rapid growth and became a publicly-traded company, listed on the OTC market, through a reverse merger in September 2007. The Company has 800 employees, with manufacturing facilities and management located in Shenzhen, China.
Safe Harbor Statement
This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward looking statements are often identified by the use of forward-looking terminology such as "believes, expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
--Financial Tables Follow--
CHINA DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
ASSETS 2008 2007
Current Assets
Cash and cash equivalents $ 4,570,098 $ 2,949,356
Restricted cash 1,971,561 2,039,314
Trade receivables, net of allowance for
doubtful accounts 6,085,985 5,279,282
Inventories, net 2,361,508 1,692,934
Advances to suppliers 3,719,590 5,498,257
Prepaid expenses and other receivables 98,708 259,170
Total Current Assets 18,807,450 17,718,313
Property and Equipment, net 2,890,731 2,441,264
Other assets 632,869 1,059,222
Total Assets $ 22,331,050$ 21,218,799
LIABILITIES
Current Liabilities
Accounts Payables and accrued liabilities $ 2,119,392 $ 2,132,499
Short term bank loans 5,231,616 5,600,896
Various taxes payable 252,453 383,397
Wages payable 106,162 103,944
Corporate taxes payable 334,313 432,532
Amount due to director 31,081
Total Current Liabilities 8,075,017 8,653,268
Due to related party-Chen Guoxin --
Total Liabilities 8,075,017 8,653,268
--
Commitments and Contingencies --
Stockholders’ Equity
Series A convertible preferred stock, $.001
par value; 20,000,000 shares
authorized; 3,703,704 shares issued and
outstanding;
liquidation preference $4,000,000 6,961 3,704
Common stock. $.001 par value; 100,000,000
shares authorized;
11,600,000 shares issued and outstanding 11,943 11,600
Additional paid-in capital 6,405,309 6,083,501
Accumulated other comprehensive income 1,230,120 692,625
Statutory reserves 198,550 198,550
Retained earnings 6,403,150 5,575,551
Total Stockholders’ Equity 14,256,033 12,565,531
Total Liabilities and Stockholders’ Equity $ 22,331,050$ 21,218,799
CHINA DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period Ended
March 31,
2008 2007
Revenues $ 6,723,693 $ 4,592,390
Cost of Sales 5,222,193 3,589,555
Gross Profit 1,501,500 1,002,835
Operating Expenses:
Selling Expenses 158,831 63,469
Research and development 125,793 106,288
General and administrative 155,978 147,886
Total Expenses 440,602 317,643
Income from Operations 1,060,898 685,192
Other Income (Expenses):
Other (602) 538
Interest Income 2,303 56
Interest Expense (167,072) (9,568)
Total Other Income (Expenses) (165,371) (8,974)
Income Before Income Taxes 895,527 676,218
50,716
Provision for Income Taxes 67,928
Net Income 827,599 625,502
Net Income available to common shareholders $ 827,599 $ 625,502
Net earnings per share of common stock, basic$ 0.07 $ 0.05
Weighted average number of shares
outstanding, basic 11,751,228 11,376,000
Net earnings per share of common stock,
diluted $ 0.04 $ 0.05
Weighted average number of shares
outstanding, diluted 22,781,724 11,376,000
CHINA DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period Ended
March 31,
2008 2007
Cash flows from operating activities
Net income $ 827,599 $ 625,502
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation 141,356 99,366
Changes in operating assets and liabilities:
Decrease (Increase) in assets:
Accounts receivable, net (806,703) (905,305)
Advances to suppliers 1,778,667
Inventories, net (668,573) (207,979)
Prepaid expenses and other receivables 160,462 (40,548)
Other assets 426,353 --
Increase (Decrease) in liabilities:
Accounts payables and accrued liabilities (13,107) (208,413)
(124,401)
Various tax payable (130,944)
Wage payable 2,218 (109)
Corporate tax payable (98,219) 50,916
Net cash provided by (used in) operating
activities 1,619,109 (710,971)
Cash flows from investing activities
Purchase of property and equipment (590,823) (22,170)
Net cash used in investing activities (590,823) (22,170)
Cash flows from financing activities
Increase in restricted cash 67,753 --
Proceeds from loans payable 638,083
Repayment to Short term loan (369,280) --
Net Proceeds from warrant exercise 325,407 --
Amount due to director 31,081 --
Repayment of related party loans 110,504
Net cash provided by (used in) financing
activities 54,961 748,587
Effect of exchange rate changes on cash 537,495 18,541
Net increase (decrease) in cash 1,620,742 33,987
Cash, beginning of period 2,949,356 134,991
Cash, end of period $ 4,570,098 $ 168,978
Supplemental disclosure information:
Interest expense paid $ 167,072 $ 9,568
Income taxes paid $ 185,656 $ --
For more information, please contact:
Company Contact:
Mr. Jason Wong
Executive Vice President
China Display Technologies, Inc.
Tel: +852-9257-8928
Email: jason@suny.hk
Investor Relations Contact:
Mr. Crocker Coulson
President
CCG Elite Investor Relations
Tel: +1-646-213-1915 (NY office)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgelite.com
