omniture

China Sun Group High-Tech Co. Announces Fiscal 2011 Q2 Results

2011-01-14 04:02 1032

Q2 revenue grew 25.0% to $12.6 million
Q2 Non-GAAP adjusted net income rose 35.0% to $2.7 million

DALIAN, China, Jan. 14, 2011 /PRNewswire-Asia/ -- China Sun Group High-Tech Co. (OTC Bulletin Board: CSGH) ("China Sun Group" or the "Company"), a vertically integrated supplier of raw materials for rechargeable Lithium–ion (Li-ion) batteries in China, today reported fiscal 2011 Q2 financial results.

Fiscal Q2 Highlights

  • Q2 revenue was $12.6 million, increasing 25.0% year-over-year.
  • Q2 gross profit was $4.1 million increasing 34.3% year-over-year.
  • Q2 net income was $0.9 million, or $0.02 per diluted share.
  • Q2 non-GAAP net income, excluding share-based consultancy fees, was $2.7 million, or $0.05 per diluted share, increasing 35.0% year-over-year.

"China Sun Group's Q2 performance was strongly driven by an increase in customer demand for our products, primarily our new higher margin product, lithium iron phosphate," commented China Sun Group's Chief Executive Officer, Mr. Guosheng Fu. "During the quarter, we signed a contract to supply 470 tons of lithium iron phosphate (LIP) to Henan Huanyu Sai Er New Energy Technology Co., Ltd. during calendar 2011.  We believe that we will continue to see significant opportunity for our new LIP product in the quarters ahead given the rapid development of China's electric vehicle industry, and we are confident that we have the right strategy and operating systems in place to meet the growing demand for LIP."

Fiscal Q2 Results

For the three months ended November 30, 2010, total revenue was $12.6 million, an increase of 25.0% year over year.  The increase in revenue was primarily attributable to increased customer demand resulting in an increase in sales volume.


 

 

Q2 tons sold

 

2010

 

2009

 

 

Cobaltosic oxide

 

297

 

274

 

 

Lithium iron phosphate

 

180

 

37

 

 

 

 

 

 

 




 

 

 

Six months ended November 30, 2010 tons sold

 

Six Months ended November 30, 2009

 

 

Cobaltosic oxide

 

585

 

507

 

 

Lithium iron phosphate

 

313

 

37

 

 

 

 

 

 

 


Gross profit in Q2 was $4.1 million, an increase of 34.3% year-over-year. The increase in gross profit was primarily due to increased sales of LIP as well as an increase in overall sales volume.

Sales and marketing expenses in Q2 were $37,447, an increase of 25.5% year-over-year.  The increase was mainly due to an increase in sales.

General and administrative expenses in Q2 were $2.2 million, an increase of 694.1% year-over-year. The increase was primarily attributable to the payment of share-based consultancy fees of $1.8 million incurred during the quarter in connection with the issuance of 2,050,000 shares of common stock to certain consultants for advisory and professional services at the fair value of $0.87 per share.

Income from operations in Q2 was $1.8 million, a decrease of 33.1% year-over-year. This decrease resulted primarily from the payment of share-based consultancy fees of $1.8 million incurred during the quarter. Excluding share-based consultancy fees, income from operations was $3.6 million, an increase of 33.0% year-over-year.

Net income in Q2 was $0.9 million, or $0.02 per diluted share, compared with net income of $2.0 million, or $0.04 per diluted share for the corresponding period in 2009. Non-GAAP net income excluding share-based consultancy fees was $2.7 million ($0.05 per diluted share) an increase of 35.0% year-over-year.

Six Months of Fiscal Year 2011 Results

For the six months ended November 30, 2010, total revenue was $24.4 million, an increase of 25.6% year-over-year. The increase in revenue is mainly attributable to contributions from the Company's LIP product, introduced in September 2009. Gross profit for the six months ended November 30, 2010 was $7.8 million, up 27.7% from $6.1 million for the six months ending November 30, 2009. The increase in gross profit was primarily due to increased sales of our higher profit margin LIP product, driven by strong customer demand. Net income for the six months ended November 30, 2010 was $3.4 million, a decrease of 17.4% as compared to the net income of $4.1 million for the corresponding period a year ago. The decrease was primarily attributable to the payment of share-based consultancy fees of $1.8 million during the six month period ended November 30, 2010. Excluding the share-based consultancy fees, non-GAAP adjusted net income for the six months ended November 30, 2010 was $5.2 million, or $0.10 per diluted share, an increase of 26.3%.

Financial Condition

As of November 30, 2010, cash and cash equivalents were $19.8 million, up 9.9% from $18.0 million on May 31, 2010.  Accounts receivable were $5.4 million at the end of the quarter, compared to $2.8 million at the end of May 2010. The increase in cash and accounts receivable of approximately $2.5 million was primarily due to increased sales to customers. The Company had working capital of $23.9 million and a current ratio of 12.8. Stockholders' equity totaled $46.7 million, up from $40.5 million on May 31, 2010.

Net cash provided by operations was $1.4 million for the six months ended November 30, 2010, compared with net cash provided by operations of $4.8 million for the same period in 2009.

Business Outlook

China Sun had strong growth in the second quarter, primarily as a result of the new LIP supply agreement.  China Sun expects to add two additional LIP production lines by the end of May 30, 2011, which will increase the Company's LIP production capacity. The Company reiterates its previous guidance of 2011 fiscal year revenues in the range of $56 million to $58 million, and non-GAAP adjusted net income to be in the range between $10 million and $11 million, excluding the cost of share-based consultancy fees.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures that exclude the cost of share-based consultancy fees consisting of common stock issued to certain consultants for advisory and professional services. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of this item in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

About China Sun Group High-Tech Co.

China Sun Group High-Tech Co. ("China Sun Group") produces anode materials used in lithium ion batteries. Through its wholly-owned operating subsidiary, Dalian Xinyang High-Tech Development Co. Ltd ("DLX"), the Company primarily produces cobaltosic oxide and lithium cobalt oxide. According to the China Battery Industry Association, DLX has the second largest cobalt series production capacity in the People's Republic of China. Through its research and development division, DLX owns a proprietary series of nanometer technologies that supply state-of-the-art components for advanced lithium ion batteries. Leveraging its state-of-the-art technology, high-quality product line and scalable production capacity, the Company has recently diversified into the manufacture of LIP and plans to forward integrate to manufacture of power Li-ion batteries.  For more information, visit http://www.china-sun.cn.

Safe Harbor Statement

The statements contained herein that are not historical facts are considered "forward-looking statements." Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, statements regarding the Company's expected growth in sales of LIP due to China's expanding new energy automobile industry are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, the effect of political, economic, and market conditions and geopolitical events; legislative and regulatory changes that affect our business; the availability of funds and working capital; the actions and initiatives of current and potential competitors; investor sentiment; and our reputation. We do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by any forward-looking statements. The factors discussed herein are expressed from time to time in our filings with the Securities and Exchange Commission available at http://www.sec.gov.


Company Contact:

 

Investor Relations Contact:

 

 

Mr. Guosheng Fu, Chief Executive Officer

 

Mr. Mark Collinson, Partner

 

 

China Sun Group High-Tech Co.

 

CCG Investor Relations

 

 

Tel: 86 411 8288 9800/8289 2736 (China)

 

Tel: 310-954-1343

 

 

Email: ir@china-sun.cn

 

Email: mark.collinson@ccgir.com

 

 

Website: www.china-sun.cn

 

Website: www.ccgirasia.com

 

 

 

 


FINANCIAL TABLES FOLLOW

CHINA SUN GROUP HIGH-TECH CO.

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars ("US$"), except for number of shares)

(Unaudited)


 

 

 

 

Three months ended November 30,

 

 

Six months ended November 30,

 

 

 

 

2010

 

 

2009

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues, net

 

 

$

 

12,639,828

 

 

$

 

10,110,020

 

 

$

 

24,393,287

 

 

$

 

19,423,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (inclusive of depreciation and amortization)

 

 

 

8,568,216

 

 

 

7,078,731

 

 

 

16,614,672

 

 

 

13,333,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

4,071,612

 

 

 

3,031,289

 

 

 

7,778,615

 

 

 

6,090,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

 

37,447

 

 

 

29,844

 

 

 

68,773

 

 

 

53,138

 

 

Research and development

 

 

 

32,514

 

 

 

25,598

 

 

 

53,447

 

 

 

51,173

 

 

General and administrative

 

 

 

2,195,429

 

 

 

276,478

 

 

 

2,595,814

 

 

 

518,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

 

2,265,390

 

 

 

331,920

 

 

 

2,718,034

 

 

 

622,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

 

 

1,806,222

 

 

 

2,699,369

 

 

 

5,060,581

 

 

 

5,467,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

44,432

 

 

 

-

 

 

 

44,432

 

 

 

-

 

 

Interest income

 

 

 

13,212

 

 

 

8,756

 

 

 

23,851

 

 

 

16,814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 

1,863,866

 

 

 

2,708,125

 

 

 

5,128,864

 

 

 

5,484,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

(923,867)

 

 

 

(690,442)

 

 

 

(1,758,130)

 

 

 

(1,403,380)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

$

 

939,999

 

 

$

 

2,017,683

 

 

$

 

3,370,734

 

 

$

 

4,081,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Foreign currency translation gain (loss)

 

 

 

944,317

 

 

 

64,313

 

 

 

1,051,560

 

 

 

(10,960)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

 

$

 

1,884,316

 

 

$

 

2,081,996

 

 

$

 

4,422,294

 

 

$

 

4,070,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share – Basic and diluted

 

 

$

 

0.02

 

 

$

 

0.04

 

 

$

 

0.06

 

 

$

 

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common stock outstanding – Basic and diluted

 

 

 

55,017,415

 

 

 

53,422,971

 

 

 

54,220,193

 

 

 

53,422,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



CHINA SUN GROUP HIGH-TECH CO.

GAAP CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF NOVEMBER 30, 2010 AND MAY 31, 2010

(Currency expressed in United States Dollars ("US$"), except for number of shares)


 

 

 

 

November 30, 2010

 

 

May 31, 2010

 

 

 

 

(Unaudited)

 

 

(Audited)

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

 

19,797,412

 

 

$

 

18,017,266

 

 

Accounts receivable, trade

 

 

 

5,428,311

 

 

 

2,793,038

 

 

Inventories

 

 

 

420,938

 

 

 

1,218,336

 

 

Deposits and prepayments

 

 

 

330,765

 

 

 

3,049

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

 

25,977,426

 

 

 

22,031,689

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

Technical know-how, net

 

 

 

2,445,764

 

 

 

2,475,298

 

 

Property, plant and equipment, net

 

 

 

20,292,073

 

 

 

20,567,954

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

 

48,715,263

 

 

$

 

45,074,941

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable, trade

 

 

$

 

412,207

 

 

$

 

2,127,244

 

 

Income tax payable

 

 

 

612,670

 

 

 

1,488,619

 

 

Other payables and accrued liabilities

 

 

 

1,009,703

 

 

 

984,189

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

2,034,580

 

 

 

4,600,052

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.001 par value; 20,000,000 shares authorized; none of shares issued and outstanding, respectively

 

 

 

-

 

 

 

-

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 55,472,971 shares and 53,422,971 shares issued and outstanding, respectively

 

 

 

55,473

 

 

 

53,423

 

 

Additional paid-in capital

 

 

 

11,366,654

 

 

 

9,585,204

 

 

Accumulated other comprehensive income

 

 

 

4,094,904

 

 

 

3,043,344

 

 

Statutory reserve

 

 

 

2,277,365

 

 

 

2,277,365

 

 

Retained earnings

 

 

 

28,886,287

 

 

 

25,515,553

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

 

46,680,683

 

 

 

40,474,889

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

$

 

48,715,263

 

 

$

 

45,074,941

 

 

 

 

 

 

 

 

 

 

 



CHINA SUN GROUP HIGH-TECH CO.

GAAP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars ("US$"))

(Unaudited)


 

 

 

 

Six months ended November 30,

 

 

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

 

$

 

3,370,734

 

 

$

 

4,081,026

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

 

810,149

 

 

 

573,949

 

 

Amortization of technical know-how

 

 

 

87,876

 

 

 

43,375

 

 

Shares issued for services, non-cash

 

 

 

1,783,500

 

 

 

-

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, trade

 

 

 

(2,537,625)

 

 

 

(86,566)

 

 

Inventories

 

 

 

816,781

 

 

 

1,264,253

 

 

Value-added tax receivable

 

 

 

-

 

 

 

417,912

 

 

Deposits and prepayments

 

 

 

(323,736)

 

 

 

(239,780)

 

 

Accounts payable, trade

 

 

 

(1,745,030)

 

 

 

(845,986)

 

 

Income tax payable

 

 

 

(900,803)

 

 

 

(55,746)

 

 

Other payables and accrued liabilities

 

 

 

5,717

 

 

 

(376,042)

 

 

Net cash provided by operating activities

 

 

 

1,367,563

 

 

 

4,776,395

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of plant and equipment

 

 

 

(49,852)

 

 

 

(1,297,941)

 

 

Addition of construction in progress

 

 

 

-

 

 

 

(1,024,621)

 

 

Net cash used in investing activities

 

 

 

(49,852)

 

 

 

(2,322,562)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

462,435

 

 

 

(1,815)

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

 

1,780,146

 

 

 

2,452,018

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

 

18,017,266

 

 

 

9,209,953

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

 

$

 

19,797,412

 

 

$

 

11,661,971

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid for income taxes

 

 

$

 

2,658,933

 

 

$

 

1,459,125

 

 

Cash paid for interest

 

 

$

 

-

 

 

$

 

-

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

Transfer from construction in progress to property, plant and equipment

 

 

$

 

-

 

 

$

 

2,560,385

 

 

 

 

 

 

 

 

 

 

 
Source: China Sun Group High-Tech Co.
Related Stocks:
OTC:CSGH
collection