ZHAOYUAN CITY, China--(CSGJ) ("China Shuangji" or the "Company"), a leading producer of high-quality Portland cement in Shandong and Hainan Provinces in the People’s Republic of China (PRC), today announced its financial results for the first quarter ended March 31, 2010.)--China Shuangji Cement, Ltd. (OTCBB:
“We are very confident about our prospects in 2010 based on strong demand from China’s construction industry and significant growth in infrastructure projects that we are observing”
First Quarter 2010 Highlights
Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd., commented, “We experienced a rise in sales in the first quarter of 2010 primarily due to increased production from our new facility in Longkou and continued strong demand for our high-grade bulk cement. This drove a 13% increase in gross profit as China’s economy expanded rapidly in the first quarter, resulting in strong demand for new buildings and infrastructure that we see continuing for the remainder of 2010 and beyond. During the quarter, we continued to move forward with our strategic plans. To reinforce our stature as a U.S.-listed public company, we strengthened our compliance and corporate governance by hiring Sichenzia Ross Friedman Ference LLP as our legal counsel, and engaging Bernstein & Pinchuk LLP as our independent registered public accountant. Both firms have strong reputations and extensive experience working with Chinese domiciled, U.S.-listed companies, and will assist us in making our planned transition to a senior exchange.”
First Quarter 2010 Results
Net revenue for the three months ended March 31, 2010, rose 4.1% to approximately $12.0 million from approximately $11.5 million a year ago. In the first quarter, cement sales increased by 9,955 metric tons, or 3.3%, to 314,231 metric tons from 304,276 metric tons in the same period last year. The increase in revenue was primarily due to production from the new Longkou Cement plant that was acquired in April 2009, which has an upgraded capacity of 500,000 metric tons.
Cost of sales for the three months ended March 31, 2010, increased $257,121, or 2.6%, to approximately $10.1 million from approximately $9.8 million for the same period a year ago. The increase was primarily due to the increase in sales. Cost of sales as a percentage of total net revenue decreased by 1.21% from 85.75% in the three months ended March 31, 2009, to 84.54% for the three months ended March 31, 2010.
Gross profit for the three months ended March 31, 2010, increased by $212,445, or 13.0%, to approximately $1.8 million from approximately $1.6 million for the same period a year ago. The increase was primarily due to the increase in sales. Gross margin increased to 15.5% from 14.2% in the same period last year.
Operating expenses increased for the three months ended March 31, 2010, by $233,203 to $643,095 from $409,892 for the same period a year ago. The increase was primarily due to issuances of stock and warrants as consideration for certain consulting and professional services.
Operating income for the three months ended March 31, 2010, decreased by $20,758, or 1.7%, to approximately $1.21 million from approximately $1.23 million for the same period a year ago. The decrease was primarily due to an increase in General and Administrative Expenses which was not offset by the increase in sales.
During the fiscal 2010 first quarter, the Company reported other expense of $30,745, compared to other income of $384,754 for the same period of 2009. The decrease was primarily due to a gain from sale of property occurring in 2009 and not in 2010.
Net income for the three months ended March 31, 2010, was $790,993, or $0.03 per diluted share, compared to $1.2 million, or $0.04 per diluted share, a year ago, a decrease of $415,356 primarily due to an increase in General and Administrative Expenses and a gain from sale of property occurring in 2009 and not in 2010.
As of March 31, 2010, China Shuangji Cement had $27,165 in cash and cash equivalents; approximately $11.7 million in working capital, up 9.3% from working capital of approximately $10.7 million at December 31, 2009; and approximately $1.2 million in bank loans. Shareholders’ equity at March 31, 2010, was approximately $27.1 million, a 3.7% increase, compared to approximately $26.1 million recorded at the end of 2009.
The Company generated $236,886 in net cash flow from operating activities in the first quarter of 2010, versus $984,263 in the corresponding period of 2009. The decrease was primarily due to the decrease in net income.
“We are very confident about our prospects in 2010 based on strong demand from China’s construction industry and significant growth in infrastructure projects that we are observing,” said Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. “This is supported by a surging economy and the government’s $586 billion stimulus program, which calls for substantial investments in cement-intensive projects for years to come.” Added Mr. Song, “We have moved past a challenging economic period and are now on a course for sustained improvement in 2010, supported by the rebound in China’s economy and its prospects for significant future growth. Once our new Zhaoyuan Cement Production Facility becomes fully operational, which we expect to occur this year, we will be able to increase our production capacity by 1,000,000 metric tons to an estimated 2,500,000 metric tons. We believe this, combined with consolidation in our industry and the growth of China’s cement market, will drive significant increases in sales and profits for many years to come.”
About China Shuangji Cement, Ltd.
China Shuangji Cement, Ltd. (OTCBB:CSGJ), through its affiliates and controlled entities, is a leading producer of high-quality Portland cement in Shandong and Hainan Provinces. Its processed cement products are primarily purchased by contractors for the construction of buildings, roads, and other infrastructure projects. The Company currently produces approximately 1,500,000 tons of Portland cement annually from two facilities in Hainan and one facility in Shandong and it expects its output will increase by 1,000,000 tons to a total of 2,500,000 tons once the new Zhaoyuan (Shandong Province) plant and upgrades are completed. http://www.shuangjicement.com.
Safe Harbor Statement
The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development and market conditions. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act. In addition, please refer to the Risk Factor section of our 2009 Form 10-K filed with the Securities and Exchange Commission on April 15, 2010, and detailed in other reports filed with the Securities and Exchange Commission from time to time.
CHINA SHUANGJI CEMENT, LTD.
CONSOLIDATED STATEMENTS OF INCOME AND
|Three months ended March 31,|
|Cost of Sales||10,103,152||9,846,031|
|General and administrative expenses||576,624||351,319|
|Income From Operations||1,205,148||1,225,906|
|Other Income ( Expense)|
|Gain from sale of property||-||423,276|
|Operating Income Before Income Tax Expense And Noncontrolling Interest||1,174,403||1,610,660|
|Income Tax Expense||383,410||404,311|
|Less: Net income attributable to Noncontrolling Interest||(28,861||)||-|
|Net Income attributable to stockholders||762,132||1,206,349|
|Foreign Currency Translation Gain||4,199||29,507|
|Foreign Currency Translation Gain attributable to Noncontrolling Interest||190||-|
|Earning per share|
|Weighted average number of shares outstanding|
|Statement of Consolidated Comprehensive Income|
|Foreign Currency Translation Gain||4,389||29,507|
|Less: Comprehensive income attributable to noncontrolling interest||(29,051||)||-|
|Comprehensive income attributable to stockholders||$||766,331||$||1,235,856|
CHINA SHUANGJI CEMENT, LTD.
CONSOLIDATED BALANCE SHEETS
|March 31, 2010||December 31, 2009|
|Cash and cash equivalents||$||27,165||$||47,513|
|Accounts receivable, net||3,750,653||3,382,114|
|Other receivable, net||1,080,689||1,186,481|
|Total Current Assets||20,250,078||19,243,013|
|Plant, property and equipment, Net||16,277,022||16,261,527|
|Construction In Progress||2,959,046||2,958,570|
|Land use right, Net||168,532||169,502|
|LIABILITIES AND EQUITY|
|Short-term bank loans||1,227,750||1,227,553|
|Total Current Liabilities||8,589,285||8,575,174|
|Long term payable||2,047,951||2,047,622|
Preferred Stock, $.0001 par value, 100,000,000 shares authorized, Zero shares issued and outstanding as of March 31, 2010, and December 31, 2009
Common stock, $.0001 par value, 100,000,000 shares authorized, 28,157,246 and 27,839,346 shares issued and outstanding as of March 31, 2010, and December 31, 2009
|Additional paid-in capital||17,829,459||17,617,355|
|Appropriated retained earnings||9,418,306||9,418,306|
|Unappropriated retained earnings||(406,828||)||(1,168,960||)|
|Accumulated other comprehensive income||283,490||279,291|
|Total Stockholders' Equity||27,127,243||26,148,776|
CHINA SHUANGJI CEMENT, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Three months ended March 31,|
|CASH FLOWS FROM OPERATING ACTIVITIES|
Adjustments to reconcile net income to net cash provided by operating activities:
|Warrants issuance for consulting service||33,765||-|
|Stock issuance for consulting service||178,371||-|
|Gain from sale of property||-||(423,276||)|
|Change in operating assets and liabilities|
|Net cash provided by operating activities||236,886||984,263|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Purchase of property & equipment||(257,460||)||(292,117||)|
|Net cash used in investing activities||(257,460||)||(292,117||)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Net cash used in financing activities||-||(730,292||)|
|NET DECREASE IN CASH AND CASH EQUIVALENTS||(20,574||)||(38,146||)|
|EFFECT OF EXCHANGE RATE FLUCTUATION ON CASH AND CASH EQUIVALENTS||226||53|
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR||47,513||60,954|
|CASH AND CASH EQUIVALENTS, END OF YEAR||$||27,165||$||22,861|
|Cash paid during the year for:|
|Income tax payments||$||129,465||$||116,622|