Sino Gas International Holdings, Inc. Reports Third Quarter 2010 Financial Results

For Nine Months Operating Income Increased 38.48% YOY

BEIJING, Nov. 15, 2010 /PRNewswire-Asia-FirstCall/ -- Sino Gas International Holdings, Inc. (OTC Bulletin Board: SGAS), ("Sino Gas" or the "Company"), announced financial results for the third quarter ended September 30, 2010.

Third Quarter 2010 Financial Highlights YOY

• Total revenue increased 15.86% to $8.10 million
• Connection Fees Revenues Increased 4.09% to $3.48 Million
• Gas Sales Increased 26.66% to 4.62 Million
• Gross Profit Increased 27.80% to $3.17 Million
• Operating Income Increased 20.68% to $1.86 Million

Nine Months of 2010 Financial Highlights YOY

• Total revenue increased 8.33% to $20.97 million
• Connection Fees Revenues Increased 10.84% to $8.31 Million
• Gas Sales Increased 6.75% to 12.66 Million
• Gross Profit Increased 36.36% to $7.20 Million
• Operating Income Increased 38.48% to $3.70 Million

Nine Months Ending September 30, 2010 Financial Results

Revenue

Revenue for the 9 months ending September 30, 2010 was $20.97 million vs. $19.36 million in the nine months of 2009 or an increase of 8.33%. The revenue from connection fees in the first nine months of 2010 was $8.31 million, an increase of 10.84% from the same period of 2009, representing 39.6% of the total revenue. The revenue from gas sales in the first nine months of 2010 was $12.66 million, an increase of 6.75% from $11.86 million in the first nine months of 2009, representing 60.4% of the total revenue. 23,572 new households were connected in the first nine months of 2010, up from 17,452 new households connected in the first nine months of 2009.

Gross Profit and Gross Margin

Gross profit for the first nine months of 2010 increased 36.36% to $7.20 million from $5.28 million in the first nine months of 2009. The increase in gross profit was driven by the increase of sales and improvement of gross margin from both connection fee revenue and gas sales during this period. Gross profit from connection fees is $6.31 million for the first nine months of 2010, accounting for 87.7% of total gross profit, compared to $4.82 million for the first nine months of 2009, or 91.3% of total gross profit. Gross profit for the first nine months of 2010 from gas sales was $0.89 million, accounting for 12.3% of total gross profit, compared to $0.46 million for the first nine months of 2009, or 8.7% of total gross profit in the same period.

Gross margin for the first nine months of 2010 was 34.35%, compared to 27.29% in the first nine months of 2009. Gross margin for connection fees and gas sales for the first nine months of 2010 were 76.02% and 7.02% respectively, which both improved from the same period of last year.

Operating Income and Net Income

Operating income for the first nine months of 2010 was $3.70 million, a significant increase of 38.48% compared to $2.67 million for the same period of 2009. However, the significant improvement of operating income was negated by the additions of non-cash flow non-operational amortization expense of convertible bonds. Net income for the nine months of 2010 was $0.68 million, compared with net income of $1.98 million for the same period of 2009. Excluding these non-cash and non-operational items of amortization expense of convertible bonds in the total of $1.36 million, adjusted net income in the nine months ended September 30, 2010 would have been $2.04 million.

Balance Sheet and Cash Flow

As of September 30, 2010, the Company had $3.71 million in cash and cash equivalents, total assets were $96.54 million and stockholders' equity was $65.54 million. The Company used $1.89 million of cash from operating activities in the first nine months of 2010. Cash used in investing activities was $8.03 million in the first nine months of 2010. Cash sourced from financing activities was $2.44 million in the first nine months of 2010. The Company has $2.99 million in short-term bank loans, $8.96 million in long-term bank loans, and $5.49 million convertible bonds as of September 30, 2010.

Outlook

Mr. Yu-Chuan Liu, Chairman and CEO of Sino Gas said, "We achieved record third quarter revenue in company history. The Company's improving operating results demonstrates the growth that we experience through the strong demand for natural gas and urbanization in China.  We will continue to expand our presence in small and medium-sized cities in China both through the growth of our network and in pursuing new business opportunities. "

Mr. Yugang Zhang, CFO of Sino Gas, added "We will continue to improve our company's operations. Meanwhile, we will actively ensure that the Sino Gas story is conveyed to the investor community by continuing our participation at major financial conferences and other investor relations activities."  

About Sino Gas International Holdings, Inc.

The Company, through its indirectly wholly-owned subsidiary, Beijing Zhong Ran Wei Ye Gas Co., Ltd. ("Beijing Gas"), and the subsidiaries of Beijing Gas, is a leading developer of natural gas distribution systems in small and medium size cities in China, as well as a distributor of natural gas to residential, commercial and industrial customers in China. The company owns and operates natural gas distribution systems in 35 small and medium size cities and serves approximately 167,750 residential and seven industrial customers. Facilities include approximately 1,040 kilometers of pipeline and delivery networks with a daily capacity of approximately 110,000 cubic meters of natural gas. The Company owns and operates natural gas distribution systems in Beijing, Hebei, Jilin, Jiangsu, Anhui and Yunnan Provinces. The Company's website is: http://www.sino-gas.com

Forward-Looking Safe Harbor Statement

Statements in this news release regarding future financial and operating results, potential applications of the Company's technology, opportunities for the Company, and any other statements about the future expectations, beliefs, goals, plans, or prospects expressed constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "will," "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements including: limited operating history, need for future capital and economic conditions generally. Additional information on potential factors that could affect results and other risks and uncertainties are detailed from time to time in the Company's periodic reports, including Forms 10-K, 10-Q, 8-K, and other forms filed with the Securities and Exchange Commission ("SEC"). These statements, and other forward-looking statements, are not guarantees of future performance and involve risks and uncertainties.