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Watch Chinese NEWN 7.83 here is part of a bullish article from yesterday:
"If NEWN can start making the rounds and generate research coverage and better institutional penetration, there could be more upside placing it more in line with HPJ at 19 times earnings. This would imply a share price of $23.56.
Given that the company has already begun attending investor conferences, such as the Rodman conference in Beijing, and has already hired an investor relations firm, I think eventual research coverage is likely. The key catalyst that will cause the stock to pop will be when the company puts out a press release stating that it has appointed its independent directors, which is necessary for the uplisting. Based on my discussions with management and its IR firm, the process of appointing these directors is already under way.
Currently NEWN shares trade for less than $8.00 and seem to show a significant amount of support at prices above $7.00, so the potential upside vs. downside profile of the stock currently looks very attractive. Last year the stock hit a 52-week high of $10.00, but I now view that high as largely irrelevant because it was based on a different share count and it took place prior to the two new acquisitions, which significantly enhance the company's earnings potential.
Recent comments by CEO Fushun Li also provide further comfort, "we have a clean capital structure, our balance sheet is very healthy, and we do not anticipate issuing additional equity in the near future. Finally, we have significant excess production capacity and can achieve our 2010 growth targets without incurring meaningful additional capital expenditures."
At the time of publication, Pearson was long NEWN.OB.
The author can be reached at comments@pearsoninvestment.com
tuna
Nice on both of them wick...missed the close but Happy Easter as we head out before the open and return Monday night! tuna
Thanks bb...SCEY may be a big winner over the next few months imho...tuna
Gapper GRRF 3.87 earnings tomorrow...tuna
Chinese CYXN .63 +.09 new HOD!!!
Also wick...like MILL, check news on SCEY .20 stock that just may become a flyer imho...got in this morning on this news:
Sun Cal Energy Engages Stepp Law Group
Press Release Source: Sun Cal Energy, Inc. On Wednesday March 31, 2010, 9:15 am EDT
SAN FRANCISCO, CA--(Marketwire - 03/31/10) - Sun Cal Energy Inc. (Pinksheets:SCEY - News), reports that it has engaged the Stepp Law Group of Newport Beach to assist in the process of completing the company's filings and regaining its OTC BB listing status.
"We are committed to becoming a fully reporting entity once again," states Company president George Drazenovic. "The company will be providing an update to its shareholders regarding the ongoing operations in the very near future."
The company reiterates the following press release regarding its Kern County property:
On July 22, 2009, Occidental Petroleum Corporation announced that it had made a significant discovery of oil and gas reserves in Kern County, California. At the time of the announcement, Occidental believed there were between 150 million and 250 million gross barrels of oil equivalent (BOE) reserves within the outlined area where it drilled six wells to delineate the discovery.
Previously, in April 2007, Sun Cal Energy announced that it had exclusive oil and gas rights for the Lokern Prospect owning a 45% working interest in 480 acres of prime land in the oil and gas rich Kern County region, the most prolific area in the San Joaquin Valley in Southern California. Surrounded by oil fields that produce greater than 500,000 barrels of oil/day and with Occidental controlling a large amount of mineral rights and 3D seismic data covering the Lokern Property vicinity, the Company believed that it was well positioned to take advantage of increased activity in the area over the next few years.
Most recently, in March 2010, Forbes Magazine published an article suggesting that Occidental's discovery "is shaping up to be the biggest onshore oil discovery the U.S. has seen in three decades and likely holds more than one billion barrels of oil (and natural gas equivalents) that will be easy and cheap to extract." The Article further states that "the reservoir is 20,000 feet underground and could stretch 50 miles."
By all indications Sun Cal's property is within 3 miles of the initial discovery well drilled by Occidental Petroleum, and therefore is reasonably projected that its structure and scope runs through the Sun Cal property.
George Drazenovic, President and Chief Executive Officer of Sun Cal Energy, Inc., states: "We are pleased to update our shareholders and announce the recent discovery of this oil field by Occidental. We intend to explore opportunities to finance and develop this high impact opportunity, and to provide our shareholders the opportunity to participate in one of North America's most significant oil and gas discoveries in a generation."
With the stabilization of oil prices, the weakness in natural gas prices, and most importantly, the recent discovery of a massive and nearby oil field by Occidental, Sun Cal Energy has chosen to shift its primary company focus to developing its Lokern Prospect in California.
This news release contains information that is "forward-looking" in that it describes events and conditions, which Sun Cal Energy Inc. ("SCEY") reasonably expects to occur in the future. Expectations for the future performance of the business of SCEY are dependent upon a number of factors, and there can be no assurance that SCEY will achieve the results as contemplated herein and there can be no assurance that SCEY will be able to conduct its operations or production from its properties will result from or continue as contemplated herein. Certain statements contained in this report using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond the Company's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. SCEY disclaims any obligation to update any forward-looking statement made herein.
Contact:
For further Information:Sun Cal Energy, Inc.http://www.suncaloil.com/Investor Relations: 415 738 8039
tuna
Hey bb, in SCEY .20 -.029 on this news today:
Sun Cal Energy Engages Stepp Law Group
Press Release Source: Sun Cal Energy, Inc. On Wednesday March 31, 2010, 9:15 am EDT
SAN FRANCISCO, CA--(Marketwire - 03/31/10) - Sun Cal Energy Inc. (Pinksheets:SCEY - News), reports that it has engaged the Stepp Law Group of Newport Beach to assist in the process of completing the company's filings and regaining its OTC BB listing status.
"We are committed to becoming a fully reporting entity once again," states Company president George Drazenovic. "The company will be providing an update to its shareholders regarding the ongoing operations in the very near future."
The company reiterates the following press release regarding its Kern County property:
On July 22, 2009, Occidental Petroleum Corporation announced that it had made a significant discovery of oil and gas reserves in Kern County, California. At the time of the announcement, Occidental believed there were between 150 million and 250 million gross barrels of oil equivalent (BOE) reserves within the outlined area where it drilled six wells to delineate the discovery.
Previously, in April 2007, Sun Cal Energy announced that it had exclusive oil and gas rights for the Lokern Prospect owning a 45% working interest in 480 acres of prime land in the oil and gas rich Kern County region, the most prolific area in the San Joaquin Valley in Southern California. Surrounded by oil fields that produce greater than 500,000 barrels of oil/day and with Occidental controlling a large amount of mineral rights and 3D seismic data covering the Lokern Property vicinity, the Company believed that it was well positioned to take advantage of increased activity in the area over the next few years.
Most recently, in March 2010, Forbes Magazine published an article suggesting that Occidental's discovery "is shaping up to be the biggest onshore oil discovery the U.S. has seen in three decades and likely holds more than one billion barrels of oil (and natural gas equivalents) that will be easy and cheap to extract." The Article further states that "the reservoir is 20,000 feet underground and could stretch 50 miles."
By all indications Sun Cal's property is within 3 miles of the initial discovery well drilled by Occidental Petroleum, and therefore is reasonably projected that its structure and scope runs through the Sun Cal property.
George Drazenovic, President and Chief Executive Officer of Sun Cal Energy, Inc., states: "We are pleased to update our shareholders and announce the recent discovery of this oil field by Occidental. We intend to explore opportunities to finance and develop this high impact opportunity, and to provide our shareholders the opportunity to participate in one of North America's most significant oil and gas discoveries in a generation."
With the stabilization of oil prices, the weakness in natural gas prices, and most importantly, the recent discovery of a massive and nearby oil field by Occidental, Sun Cal Energy has chosen to shift its primary company focus to developing its Lokern Prospect in California.
This news release contains information that is "forward-looking" in that it describes events and conditions, which Sun Cal Energy Inc. ("SCEY") reasonably expects to occur in the future. Expectations for the future performance of the business of SCEY are dependent upon a number of factors, and there can be no assurance that SCEY will achieve the results as contemplated herein and there can be no assurance that SCEY will be able to conduct its operations or production from its properties will result from or continue as contemplated herein. Certain statements contained in this report using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond the Company's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. SCEY disclaims any obligation to update any forward-looking statement made herein.
Contact:
For further Information:Sun Cal Energy, Inc.http://www.suncaloil.com/Investor Relations: 415 738 8039
tuna
Chinese CYXN .60 +.06 HOD reported .15 net income yesterday...for a PE of just 4!!
Just got in...thanks wick! GRRF 3.89 reports earnings tomorrow also btw...could be interesting. CYXN .60 +.06 HOD also with .15 earnings announced yesterday...tuna
Might watch Chinese GRRF 3.90 -.12 reports Thurs est. .05 vs -.31 per Yahoo stats:
•China GrenTech Schedules 2009 Fourth Quarter and Full Year Earnings Release on Wednesday, March 31, 2010
PR Newswire(Thu, Mar 11)
Added some...tuna
In Chinese GRRF 3.90 -.12 reports Thurs est. .05 vs -.31 per Yahoo stats:
•China GrenTech Schedules 2009 Fourth Quarter and Full Year Earnings Release on Wednesday, March 31, 2010
PR Newswire(Thu, Mar 11)
tuna
Added Chinese GRRF 3.90 -.12 reports Thurs est. .05 vs -.31 per Yahoo stats:
•China GrenTech Schedules 2009 Fourth Quarter and Full Year Earnings Release on Wednesday, March 31, 2010
PR Newswire(Thu, Mar 11)
tuna
Thanks wick...watch Chinese CYXN .63 +.09 reported .15 net income for '09 this afternoon...tuna
CYXN .63 +.09 new HOD...strong volume!
Chinese CYXN .62 +.08 new HOD on announcement of .15 net income for '09 bb! tuna
Form 10-K for CHINA YONGXIN PHARMACEUTICALS INC.
CYXN .60 +.06 as they're reporting .15 net income for '09 giving a PE of 4 here:
30-Mar-2010
Annual Report
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This report contains forward-looking statements. The words "anticipated," "believe," "expect," "plan," "intend," "seek," "estimate," "project," "could," "may," and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management's current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with government regulations, the ability to achieve further market penetration and additional customer, and various other matters, any of which are beyond our control. Should one or more of these risks and uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.
GENERAL OVERVIEW
Our Company is engaged in the wholesale distribution of pharmaceuticals and medical-related products, and the sale and distribution of pharmaceuticals, beauty products, herbal and nutritional supplements, and other health and medical-related products through retail operations in the People's Republic of China ("PRC" or "China"). The products we sell include Western and Chinese traditional medicines, pharmaceutical preparations, natural health products, health foods, cosmetics and medical equipment. Our PRC operations began retail operations in 2004, and in 2005, we gained franchise rights from one of the world's largest drug chains for China's Jilin Province. By the end of 2007, the Company had become one of the fastest growing pharmaceutical companies in China through our retail chain of drugstores as well as our wholesale distribution operations in Northeastern China. Our corporate headquarters are located in City of Industry, California, but the Company's distribution operations are based in Changchun City, Jilin Province, China, and our retail drugstores are located throughout Jilin Province in Northeastern China.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates. The preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements. We base our estimates on historical experience, actuarial valuations and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Some of those judgments can be subjective and complex and, consequently, actual results may differ from these estimates under different assumptions or conditions. While for any given estimate or assumption made by our management there may be other estimates or assumptions that are reasonable, we believe that, given the current facts and circumstances, it is unlikely that applying any such other reasonable estimate or assumption would materially impact the financial statements. The accounting principles we utilized in preparing our consolidated financial statements conform in all material respects to generally accepted accounting principles in the United States of America. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid the reader in fully understanding and evaluating this discussion and analysis:
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The functional currency of our operating subsidiary, Changchun Yongxin Dirui Medical Co., Ltd is Chinese Renminbi (CNY); however the accompanying financial statements have been translated and presented in United States Dollars (USD).
TRANSLATION ADJUSTMENT
As of December 31, 2009 and 2008, the accounts of Yongxin were maintained, and its financial statements were expressed, in CNY. Such financial statements were translated into USD in accordance with Statement of Financial Accounts Standards ("SFAS") No. 52, "Foreign Currency Translation," with the CNY as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders' equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130 (ASC 220), "Reporting Comprehensive Income" as a component of stockholders' equity.
NON-CONTROLLING INTEREST
The accompanying consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and in accordance with GAAP. The Company acquired 80% of Yongxin, and Yongxin Liu and Yongkui Liu own 11% and 9% of Yongxin, respectively. The 20% equity interest held by Yongxin Liu and Yongkui Liu represents non-controlling interest amounting to $5,687,633 as at December 31, 2009 compared to $4,078,654 as at December 31, 2008.
The Company owns a 90% ownership interest in Jinyongxin Drugstore. The remaining 10% interest in Jinyongxin Drugstore is owned by third parties.
ACCOUNTS RECEIVABLE
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of December 31, 2009, we made no allowance for doubtful accounts. As of December 31, 2008, we made allowance for doubtful debts of $112,452.
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INVENTORIES
Inventories are valued on a lower of weighted average cost or market basis. Inventory includes product cost, inbound freight, warehousing costs and vendor allowances not included as a reduction of advertising expense. The management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. Work in process inventories include the cost of raw materials and outsource processing fees.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144") (ASC 360), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business." The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS
144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
REVENUE RECOGNITION
The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin ("SAB") 104 (ASC 605). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company recognizes revenue net of an allowance for estimated returns, at the time the merchandise is sold or services performed. The allowance for sales returns is estimated based on the Company's historical experience. Sales taxes are presented on a net basis (excluded from revenues and costs). Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
INCOME TAXES
The Company utilizes SFAS No. 109 (ASC 740), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur. The Company does not have any significant deferred tax asset or liabilities in the PRC tax jurisdiction.
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STOCK BASED COMPENSATION
Effective January 1, 2006, the Company adopted Statement No. 123R (ASC 718), Share-Based Payment (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is being applied on the modified prospective basis. Prior to the adoption of SFAS 123R, the Company accounted for its stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and accordingly, recognized no compensation expense related to the stock-based plans. Under the modified prospective approach, SFAS 123R applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled.
STATEMENT OF CASH FLOWS
In accordance with Statement of Financial Accounting Standards No. 95 (ASC 230), "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.
SEGMENT REPORTING
Statement of Financial Accounting Standards No. 131 ("SFAS 131") (ASC 250), "Disclosure about Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company allocates its resources and assesses the performance of its sales activities based upon its products and services (see Note 20).
CONTINGENCIES
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2009, the Financial Accounting Standards Board ("FASB") issued guidance related to revenue recognition for multiple element deliverables which eliminates the requirement that all undelivered elements must have objective and reliable evidence of fair value before a company can recognize the portion of the consideration that is attributable to items that already have been delivered. Under the new guidance, the relative selling price method is required to be used in allocating consideration between deliverables and the residual value method will no longer be permitted. This guidance is effective prospectively for revenue arrangements entered into or materially modified in 2011 although early adoption is permitted. A company may elect, but will not be required, to adopt the amendments retrospectively for all prior periods. The Company is currently evaluating this guidance and has not yet determined the impact, if any, that it will have on the consolidated financial statements.
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In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP")" - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities.
In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, "Subsequent Events"), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company's consolidated financial statements.
In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, "Accounting for Transfers of Financial Assets"), which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.
In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.
In August 2009, the FASB issued Accounting Standards Update ("ASU") 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.
RESULTS OF OPERATIONS
Comparison of Years Ended December 31, 2009 and December 31, 2008.
The following table sets forth the results of our operations for the periods
indicated:
For the Years ended
December 31, December 31,
2009 2008
Net Revenue $ 47,589,280 $ 59,116,534
Cost of Revenue 31,271,463 47,226,275
Gross Profit 16,317,817 11,890,259
Selling Expenses 3,543,383 3,521,147
General & Administrative Expenses 3,575,059 2,500,366
Total Operating Expenses 7,118,442 6,021,513
Income from Operations 9,199,376 5,868,745
Other Income 278,846 690,516
Operating Income Before Tax and Non-Controlling Interest 9,349,545 6,400,113
Provision for Income Tax (2,594,483 ) (1,009,643 )
Net Income Before Non-Controlling Interest $ 6,724,111 $ 5,305,619
Non-Controlling Interest (1,599,122 ) (1,239,480 )
Net Income 5,124,989 4,066,139
Basic Earnings Per Share 0.15 0.13
Diluted Earnings Per Share 0.15 0.13
Basic Weighted Average Shares Outstanding 33,240,797 31,150,819
Diluted Weighted Average Shares Outstanding 35,070,051 31,150,819
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NET REVENUES. For the year ended December 31, 2009, our net revenues decreased approximately 19.5% from $59,116,534 in 2008 to $47,589,280 in 2009. The decrease was attributable to a decrease of sales from the wholesale sector of our business, which included sales to hospitals, medical facilities and other retailers which represented approximately 70% of our total net revenues. Sales volume from the wholesale sector of our business decreased due to the uncertainty of the direction of the National Medical Policy, as described in the recent development section of this Form 10-K. And as a result, we have reduced our focus on the wholesale sector of our business and we are shifting our focus to increase the retail sector of our business, which currently represents approximately 30% of our total net revenues. The overall policy for our drug retail business has not changed. The Company will readjust its operations and sales strategy accordingly once the direction of the National Medical Policy becomes clear. The revenues for our retail operations, increased from $10,865,100 in 2008 to 13,898,110 in 2009, or approximately 27.9%. The increase in our retail segment is attributable to the addition of seven new retail drugstores in 2009. These new retail stores are located in prime locations in the center of the city and each generates a high volume of sales. As of November 2009, we discontinued our ginseng and health products sector because we want to focus on the retail segment of our business.
COST OF SALES. Cost of sales to net sales percentage decreased from $47,226,275, or approximately 79.9% of net revenues for the year ended December 31, 2008, to $31,271,463, or approximately 65.7% of net sales for the year ended December 31, 2009. The cost of sales decreased by $15,954,812 or approximately 33.8%, and such decrease corresponded with the decrease in sales volume. However, we were able to reduce the cost of sales to net sales percentage from 79.9% in 2008 to 65.7% in 2009 due to a restructure of our product mix. We increased the proportion of products, brands and types of medicines which had lower actual costs and higher gross profit margins which resulted in a lower cost of sales for the Company. Our other operating costs, such as utilities, labor and transportation remained stable and only decreased in proportion to the decrease of our sales.
GROSS PROFIT. Gross profit increased approximately 37.2% from $11,890,259 for the year ended December 31, 2008 to $16,317,817 for the year ended December 31, 2009. This increase in gross profit was primarily due to the change of our product mix in which the proportion of products with higher profit margins increased, such as cosmetics and certain health and nutritional products. Management believes that the addition of such products will increase our overall gross profit margin for the next few years.
SELLING EXPENSES. Selling expenses, which consist of advertising and promotion expenses, freight charges and salaries, stayed approximately the same from $3,521,147 for the year ended December 31, 2008 to $3,543,383 for the same period in 2009. Even though we opened seven new stores in 2009, our selling expenses remained approximately unchanged because we controlled our selling expenses through certain cost-cutting efforts such as the reduction of utilities usage, cutback of office supplies and changes in the packaging of our supplies.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses were $3,575,059 for the year ended December 31, 2009, as compared to $2,500,366 for the year ended December 31, 2008, an increase of 43.0%. This increase was largely due to an increase in bad debt expense and increases in accrued litigation fees.
OTHER INCOME. Other income decreased 59.6% from $690,516 in 2008 to $278,846 in 2009. The Company received approximately $180,000 in government subsidies in 2008, which were not received in 2009. The decrease was also attributable to the change of our accounting method at the end of fiscal 2008. With the new accounting method in 2009, Yongxin Drugstore calculated its cost by the actual cost instead of the sales price so the cost was recorded at a lower price under other income.
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NET INCOME. Net income increased approximately 26.0% from a net income of $4,066,139 for the year ended December 31, 2008 to a net income of $5,124,989 for the year ended December 31, 2009. The increase was largely due to the increase in our gross profit due to the change of our product mix, in which the proportion of products with higher profit margins increased, which resulted in higher gross profit margins for the company.
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LIQUIDITY
Cash Flows
Net cash flow provided by operating activities was $4.3 million for the year ended December 31, 2009 and $5.9 million in operating activities for the year ended December 31, 2008. For the year ended December 31, 2009, the increase in cash flows provided by operating activities was primarily attributable to net income and increase in accrued expenses offset by increases in accounts receivable and other receivables. For the year ended December 31, 2008, the net cash flows provided by operating activities was attributable to a decrease in accounts receivable of $954,908, an increase in advances to suppliers of $53,084, an increase in notes receivable by $1.3 million, an increase in inventory by $1.1 million, a decrease in accounts payable by $2.2 million, an increase in advance from customers by $1.8 million, and an increase in taxes by $0.9 million.
The Company incurred cash outflows of $3.0 million from investing activities during the year ended December 31, 2009, as compared to cash outflows of $6.7 million for the same period in 2008. The significant decrease in cash outflows was mainly attributable to the purchase of fixed assets and increase in the amounts due from related parties. The cash outflows of $6.7 million in investing activities during the year ended December 31, 2008 was mainly attributable to remodeling and construction expenses. In conjunction with the 2008 Olympics, certain governmental policies were enacted in an effort to make the commercial areas of Beijing more environmentally friendly and improve the appearance and function of retail stores. We renovated our offices and retail drugstores to . . .
tuna
Yes...Chinese CYXN .57 +.03 on net income of .15 for '09 just announced:
Form 10-K for CHINA YONGXIN PHARMACEUTICALS INC.
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30-Mar-2010
Annual Report
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This report contains forward-looking statements. The words "anticipated," "believe," "expect," "plan," "intend," "seek," "estimate," "project," "could," "may," and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management's current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with government regulations, the ability to achieve further market penetration and additional customer, and various other matters, any of which are beyond our control. Should one or more of these risks and uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.
GENERAL OVERVIEW
Our Company is engaged in the wholesale distribution of pharmaceuticals and medical-related products, and the sale and distribution of pharmaceuticals, beauty products, herbal and nutritional supplements, and other health and medical-related products through retail operations in the People's Republic of China ("PRC" or "China"). The products we sell include Western and Chinese traditional medicines, pharmaceutical preparations, natural health products, health foods, cosmetics and medical equipment. Our PRC operations began retail operations in 2004, and in 2005, we gained franchise rights from one of the world's largest drug chains for China's Jilin Province. By the end of 2007, the Company had become one of the fastest growing pharmaceutical companies in China through our retail chain of drugstores as well as our wholesale distribution operations in Northeastern China. Our corporate headquarters are located in City of Industry, California, but the Company's distribution operations are based in Changchun City, Jilin Province, China, and our retail drugstores are located throughout Jilin Province in Northeastern China.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates. The preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements. We base our estimates on historical experience, actuarial valuations and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Some of those judgments can be subjective and complex and, consequently, actual results may differ from these estimates under different assumptions or conditions. While for any given estimate or assumption made by our management there may be other estimates or assumptions that are reasonable, we believe that, given the current facts and circumstances, it is unlikely that applying any such other reasonable estimate or assumption would materially impact the financial statements. The accounting principles we utilized in preparing our consolidated financial statements conform in all material respects to generally accepted accounting principles in the United States of America. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid the reader in fully understanding and evaluating this discussion and analysis:
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The functional currency of our operating subsidiary, Changchun Yongxin Dirui Medical Co., Ltd is Chinese Renminbi (CNY); however the accompanying financial statements have been translated and presented in United States Dollars (USD).
TRANSLATION ADJUSTMENT
As of December 31, 2009 and 2008, the accounts of Yongxin were maintained, and its financial statements were expressed, in CNY. Such financial statements were translated into USD in accordance with Statement of Financial Accounts Standards ("SFAS") No. 52, "Foreign Currency Translation," with the CNY as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders' equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130 (ASC 220), "Reporting Comprehensive Income" as a component of stockholders' equity.
NON-CONTROLLING INTEREST
The accompanying consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and in accordance with GAAP. The Company acquired 80% of Yongxin, and Yongxin Liu and Yongkui Liu own 11% and 9% of Yongxin, respectively. The 20% equity interest held by Yongxin Liu and Yongkui Liu represents non-controlling interest amounting to $5,687,633 as at December 31, 2009 compared to $4,078,654 as at December 31, 2008.
The Company owns a 90% ownership interest in Jinyongxin Drugstore. The remaining 10% interest in Jinyongxin Drugstore is owned by third parties.
ACCOUNTS RECEIVABLE
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of December 31, 2009, we made no allowance for doubtful accounts. As of December 31, 2008, we made allowance for doubtful debts of $112,452.
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INVENTORIES
Inventories are valued on a lower of weighted average cost or market basis. Inventory includes product cost, inbound freight, warehousing costs and vendor allowances not included as a reduction of advertising expense. The management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. Work in process inventories include the cost of raw materials and outsource processing fees.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144") (ASC 360), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business." The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS
144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
REVENUE RECOGNITION
The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin ("SAB") 104 (ASC 605). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company recognizes revenue net of an allowance for estimated returns, at the time the merchandise is sold or services performed. The allowance for sales returns is estimated based on the Company's historical experience. Sales taxes are presented on a net basis (excluded from revenues and costs). Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
INCOME TAXES
The Company utilizes SFAS No. 109 (ASC 740), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur. The Company does not have any significant deferred tax asset or liabilities in the PRC tax jurisdiction.
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STOCK BASED COMPENSATION
Effective January 1, 2006, the Company adopted Statement No. 123R (ASC 718), Share-Based Payment (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is being applied on the modified prospective basis. Prior to the adoption of SFAS 123R, the Company accounted for its stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and accordingly, recognized no compensation expense related to the stock-based plans. Under the modified prospective approach, SFAS 123R applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled.
STATEMENT OF CASH FLOWS
In accordance with Statement of Financial Accounting Standards No. 95 (ASC 230), "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.
SEGMENT REPORTING
Statement of Financial Accounting Standards No. 131 ("SFAS 131") (ASC 250), "Disclosure about Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company allocates its resources and assesses the performance of its sales activities based upon its products and services (see Note 20).
CONTINGENCIES
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2009, the Financial Accounting Standards Board ("FASB") issued guidance related to revenue recognition for multiple element deliverables which eliminates the requirement that all undelivered elements must have objective and reliable evidence of fair value before a company can recognize the portion of the consideration that is attributable to items that already have been delivered. Under the new guidance, the relative selling price method is required to be used in allocating consideration between deliverables and the residual value method will no longer be permitted. This guidance is effective prospectively for revenue arrangements entered into or materially modified in 2011 although early adoption is permitted. A company may elect, but will not be required, to adopt the amendments retrospectively for all prior periods. The Company is currently evaluating this guidance and has not yet determined the impact, if any, that it will have on the consolidated financial statements.
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In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP")" - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities.
In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, "Subsequent Events"), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company's consolidated financial statements.
In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, "Accounting for Transfers of Financial Assets"), which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.
In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.
In August 2009, the FASB issued Accounting Standards Update ("ASU") 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.
RESULTS OF OPERATIONS
Comparison of Years Ended December 31, 2009 and December 31, 2008.
The following table sets forth the results of our operations for the periods
indicated:
For the Years ended
December 31, December 31,
2009 2008
Net Revenue $ 47,589,280 $ 59,116,534
Cost of Revenue 31,271,463 47,226,275
Gross Profit 16,317,817 11,890,259
Selling Expenses 3,543,383 3,521,147
General & Administrative Expenses 3,575,059 2,500,366
Total Operating Expenses 7,118,442 6,021,513
Income from Operations 9,199,376 5,868,745
Other Income 278,846 690,516
Operating Income Before Tax and Non-Controlling Interest 9,349,545 6,400,113
Provision for Income Tax (2,594,483 ) (1,009,643 )
Net Income Before Non-Controlling Interest $ 6,724,111 $ 5,305,619
Non-Controlling Interest (1,599,122 ) (1,239,480 )
Net Income 5,124,989 4,066,139
Basic Earnings Per Share 0.15 0.13
Diluted Earnings Per Share 0.15 0.13
Basic Weighted Average Shares Outstanding 33,240,797 31,150,819
Diluted Weighted Average Shares Outstanding 35,070,051 31,150,819
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NET REVENUES. For the year ended December 31, 2009, our net revenues decreased approximately 19.5% from $59,116,534 in 2008 to $47,589,280 in 2009. The decrease was attributable to a decrease of sales from the wholesale sector of our business, which included sales to hospitals, medical facilities and other retailers which represented approximately 70% of our total net revenues. Sales volume from the wholesale sector of our business decreased due to the uncertainty of the direction of the National Medical Policy, as described in the recent development section of this Form 10-K. And as a result, we have reduced our focus on the wholesale sector of our business and we are shifting our focus to increase the retail sector of our business, which currently represents approximately 30% of our total net revenues. The overall policy for our drug retail business has not changed. The Company will readjust its operations and sales strategy accordingly once the direction of the National Medical Policy becomes clear. The revenues for our retail operations, increased from $10,865,100 in 2008 to 13,898,110 in 2009, or approximately 27.9%. The increase in our retail segment is attributable to the addition of seven new retail drugstores in 2009. These new retail stores are located in prime locations in the center of the city and each generates a high volume of sales. As of November 2009, we discontinued our ginseng and health products sector because we want to focus on the retail segment of our business.
COST OF SALES. Cost of sales to net sales percentage decreased from $47,226,275, or approximately 79.9% of net revenues for the year ended December 31, 2008, to $31,271,463, or approximately 65.7% of net sales for the year ended December 31, 2009. The cost of sales decreased by $15,954,812 or approximately 33.8%, and such decrease corresponded with the decrease in sales volume. However, we were able to reduce the cost of sales to net sales percentage from 79.9% in 2008 to 65.7% in 2009 due to a restructure of our product mix. We increased the proportion of products, brands and types of medicines which had lower actual costs and higher gross profit margins which resulted in a lower cost of sales for the Company. Our other operating costs, such as utilities, labor and transportation remained stable and only decreased in proportion to the decrease of our sales.
GROSS PROFIT. Gross profit increased approximately 37.2% from $11,890,259 for the year ended December 31, 2008 to $16,317,817 for the year ended December 31, 2009. This increase in gross profit was primarily due to the change of our product mix in which the proportion of products with higher profit margins increased, such as cosmetics and certain health and nutritional products. Management believes that the addition of such products will increase our overall gross profit margin for the next few years.
SELLING EXPENSES. Selling expenses, which consist of advertising and promotion expenses, freight charges and salaries, stayed approximately the same from $3,521,147 for the year ended December 31, 2008 to $3,543,383 for the same period in 2009. Even though we opened seven new stores in 2009, our selling expenses remained approximately unchanged because we controlled our selling expenses through certain cost-cutting efforts such as the reduction of utilities usage, cutback of office supplies and changes in the packaging of our supplies.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses were $3,575,059 for the year ended December 31, 2009, as compared to $2,500,366 for the year ended December 31, 2008, an increase of 43.0%. This increase was largely due to an increase in bad debt expense and increases in accrued litigation fees.
OTHER INCOME. Other income decreased 59.6% from $690,516 in 2008 to $278,846 in 2009. The Company received approximately $180,000 in government subsidies in 2008, which were not received in 2009. The decrease was also attributable to the change of our accounting method at the end of fiscal 2008. With the new accounting method in 2009, Yongxin Drugstore calculated its cost by the actual cost instead of the sales price so the cost was recorded at a lower price under other income.
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NET INCOME. Net income increased approximately 26.0% from a net income of $4,066,139 for the year ended December 31, 2008 to a net income of $5,124,989 for the year ended December 31, 2009. The increase was largely due to the increase in our gross profit due to the change of our product mix, in which the proportion of products with higher profit margins increased, which resulted in higher gross profit margins for the company.
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LIQUIDITY
Cash Flows
Net cash flow provided by operating activities was $4.3 million for the year ended December 31, 2009 and $5.9 million in operating activities for the year ended December 31, 2008. For the year ended December 31, 2009, the increase in cash flows provided by operating activities was primarily attributable to net income and increase in accrued expenses offset by increases in accounts receivable and other receivables. For the year ended December 31, 2008, the net cash flows provided by operating activities was attributable to a decrease in accounts receivable of $954,908, an increase in advances to suppliers of $53,084, an increase in notes receivable by $1.3 million, an increase in inventory by $1.1 million, a decrease in accounts payable by $2.2 million, an increase in advance from customers by $1.8 million, and an increase in taxes by $0.9 million.
The Company incurred cash outflows of $3.0 million from investing activities during the year ended December 31, 2009, as compared to cash outflows of $6.7 million for the same period in 2008. The significant decrease in cash outflows was mainly attributable to the purchase of fixed assets and increase in the amounts due from related parties. The cash outflows of $6.7 million in investing activities during the year ended December 31, 2008 was mainly attributable to remodeling and construction expenses. In conjunction with the 2008 Olympics, certain governmental policies were enacted in an effort to make the commercial areas of Beijing more environmentally friendly and improve the appearance and function of retail stores. We renovated our offices and retail drugstores to . . .
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Gapper ALN 3.72 +.26 w/guidance equating to a PE of about 5 for 2010 earnings growth of 23.6 to 31.9% in their earnings report:
American Lorain Corporation Reports Results for the Fourth Quarter and Full Year, 2009
Press Release Source: American Lorain Corporation On Monday March 29, 2010, 6:30 pm EDT
JUNAN COUNTY, China, March 29 /PRNewswire-Asia-FirstCall/ -- American Lorain Corporation (NYSE:ALN - News) ("American Lorain" or the "Company"), an international processed snack foods, convenience foods, and frozen foods company based in the Shandong Province, China, today announced its fourth quarter and full year financial results for the year ended December 31, 2009.
Fourth Quarter 2009 Highlights -- Revenue for the fourth quarter 2009 was $62.9 million, up 11.0% versus prior year. -- Operating income was $9.4 million, up 9.1% versus prior year. -- Net income was $6.3 million, a decrease of 1.5% versus prior year. -- EPS was $0.24 for the quarter ended December 31, 2009 Fiscal Year 2009 Highlights: -- Revenue was $146.8 million, up 10.9% from the year ended December 31, 2008; Company results fall in line with preannounced 2009 revenues of $146 million to $148 million. -- Operating income was $22.6 million, up 8.0% from the previous year. -- Net income was $14.4 million, a decrease of 2.0% versus prior year; Company results fall in line with preannounced 2009 net income of $14.4 million to $14.8 million. -- EPS was $0.55
"During 2009, we were able to innovate by developing and launching new products, expand our production capacity, grow our customer base and adopt new distribution and marketing strategies, which has laid a foundation for future growth opportunities. Despite a challenging year for food manufacturers in China and particularly those with export exposure, we were able to generate modest growth for the year while positioning the company to grow at a faster rate in 2010," concluded Chairman Si Chen.
Fourth Quarter 2009 Results
Revenues in the fourth quarter of 2008 reached $62.9, an increase of 11.0% over the same period prior year, with the growth driven by sales of Lorain(R)-branded convenient foods which accounted for 26.2% of total revenues versus 16.5% in the fourth quarter of 2008. Throughout the fourth quarter of 2009, the Company accelerated the number of new retail points added to its sales network, increasing the total number of new stores by 67% from approximately 2100 on September 30, 2009 to approximately 3,500 on December 31, 2009.
Gross profits for the quarter were $13.1 million, a decrease of 8.0% versus the same period in 2008. The decrease in gross profits was attributed to higher raw material costs and a decline in export sales and revenues generated by American Lorain's international distribution base to 42 countries. Gross margins were 22.4% compared to 23.5% in the fourth quarter of 2009 and 2008, respectively.
Operating income for the quarter increased 9.1% to $9.4 million versus $8.6 million the same period prior year, with operating margins of 15.5% and 15.8% for the fourth quarter of 2009 and 2008, respectively. Sales, marketing and general and administrative expenses for the fourth quarter of 2009 were $3.7 million, a decrease of 33.9% from the prior period.
Net income for the quarter was $6.3 million, a reduction of 1.5% versus the same period prior year. In 2009, American Lorain's blended tax rate was 21.6% for the year versus a blended tax rate of 16.1% the Company maintained through 2008. Earnings per share were $0.24 based on 26.3 million diluted shares versus $0.25 in the fourth quarter of 2008 based on 25.3 million diluted shares.
Fiscal Year 2009 Results
American Lorain met its preannounced revenue goal of $146.0 to $148.0 million for the 2009 year by reporting $146.8 million in net revenues, up 10.9% from $132.4 million for the year ended December 31, 2008. American Lorain's convenience food product line, which features ready-to-eat (RTE) and ready-to-cook (RTC) foods, was a focus segment for 2009 and yielded revenues of $34.6 million, an $8.9 million or 34.5% increase, year over year. Convenience food sales as a percentage of overall revenues increased to 23.6% for 2009 versus 19.4% in 2008. Chestnut-based snack foods and products remain the largest contributor of revenues for American Lorain as approximately 60.7% of American Lorain revenues are generated from the sales of its more than 50 varieties of chestnut-based products. Sales for the chestnut segment increased 7.3% to $89.1 million in 2009 from $83.0 million in 2008. American Lorain's frozen food segment contributed $23.0 million in sales for the year, a decrease of 2.4%. In 2009, American Lorain deployed a strategy to reduce its sales and marketing efforts on lower-margin frozen foods to focus more resources on higher margin chestnut and convenience food products.
American Lorain maintains a diverse network of customers throughout 26 provinces in China and 42 countries around the world. In 2009, 70.5% of the Company's sales were generated from its 36 sales offices in China who sell Lorain-branded products to more than 3,500 retail points in China. 29.5% of American Lorain's revenues are generated from its sales to 42 countries. Key markets in Asia including Japan and South Korea accounted for 79.7% of the Company's export sales. Secondary markets in Europe, the Middle East and North America accounted for the remaining 20.3% of export sales revenues.
Costs of goods sold were $114.1 million, an increase of 12.7% year over year. The increase in costs of goods sold is attributable to the overall increases in revenues during 2009 and higher raw material costs. Gross profits increased 5.0% to $32.7 million for the period ended December 31, 2009. Gross profit margins were 22.3% versus 23.5% in the corresponding period. Operating income totaled $22.6 million in 2009, an 8.0% increase from $20.9 million in the previous year. The Company's operating margin was 15.4% compared to 15.8% in the prior year.
Net income for the year ended December 31, 2009 was $14.4 million, a 2.0% decrease from $14.7 million during 2008. Net margins were 9.8% and 11.1% for 2009 and 2008, respectively. Earnings per share were $0.55 compared to $0.58 per diluted share for the 2009 and 2008 year ended December 31, 2008, respectively, and based on 26.3 million and 25.2 million diluted shares outstanding for reach respective year. As a result of tax law changes in China, the Company's income tax rate increased to a blended tax rate of 21.6% versus 16.1% in the same period, 2008.
"2009 was one of our most challenging years as we addressed a very uncertain global environment while implementing strategies that allow us to focus more resources on our core products and high-growth areas in our business," continued Si Chen, Chairman and CEO of American Lorain. "Our bean product line has received very favorable market acceptance during its launch as evidenced by increased month over month sales in 2009 and 2010. An advertising program featuring a well known movie and entertainment artist in Asia, Su Youpeng, has been very well received in market and we anticipate our various bean products will become a leader in our convenience food product segment. We continue to work with more local distributors and agents to help speed the delivery of our goods to new market places as we pursue meaningful 'Greenfield' opportunities. We are confident that both these initiatives will help us meet our guidance for the 2010 year and drive future growth," Chairman Si Chen concluded.
Financial Condition
As of December 31, 2009, the Company had $12.1 million in cash versus $2.8 million at the end of 2008. Working capital was $49.9 million, up from $23.9 million as of December 31, 2008. Accounts receivable were $23.0 million, compared to $25.3 million as of December 31, 2008, with corresponding DSO's in 2009 decreasing to 57 days versus 70 days the same period 2008. Current liabilities were $46.8 million compared to $39.7 million and shareholder's equity was $94.7 million, a 40.3% increase from $67.5 million as of December 31, 2008. The Company has $35.5 million in short term loans on December 31, 2009 with a weighted average interest rate of 7.0%, which is used for working capital requirements during the year.
2009 and Recent Highlights -- In October of 2009, the Company completed a private placement transaction which yielded $12 million in proceeds. The capital was earmarked for marketing and advertising initiatives for the chestnut and convenience foods product lines and working capital needs. -- In January of 2010, American Lorain announced shelf placements for its chestnut products to two marquee supermarket chains in China; Watson Group of 300 convenience stores and approximately 100 Jiadeli(R) supermarkets stores in China. -- On January 29, 2010 the Company filed an S-3 registration statement for $100.0 million for working capital and future expansion capital needs. -- In February of 2010, American Lorain announced it has surpassed more than 3,500 retail point locations in China and targeted 5,000 retail locations by the end of 2010 -- In March of 2010, American Lorain attended the Hostex Food Show in Japan where it launched several new products to this important export market for the Company.
2010 Guidance
American Lorain has provided 2010 guidance of $182.0 to $190.0 million in revenues or 24.1% - 29.5% organic growth for the year. The Company also provided net income guidance of $17.8 - $19.0 million in net income which will represent 23.6% - 31.9% growth year over year.
About American Lorain Corporation
American Lorain Corporation is a Nevada corporation that develops, manufactures and sells various food products. The Company's products include chestnut products, convenience food products and frozen food products. The Company currently sells over 230 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its four direct and indirect subsidiaries and one leased factory located in China. For further information about American Lorain Corporation, please visit the Company's website at http://www.americanlorain.com .
Forward-looking statements:
Statements contained herein that relate to the Company's future performance, including statements with respect to forecasted revenues, margins, cash generation and capital expenditures are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from those anticipated. Such statements are based on current expectations only, and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, particularly the current downturn in the worldwide economy; our ability to obtain adequate supplies of raw materials; our ability to manage our expansion strategy; changes in foreign currency exchange rates; government regulation; difficulties in new product development; changing consumer tastes in disparate markets worldwide and our ability to address those changes; our ability to attract and retain highly qualified personnel; and other factors affecting our operations that are set forth in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For more information, please contact: For the Company: American Lorain Corporation Alan Jin, CFO Tel: +86-539-731-7959 Email: alanjin@americanlorain.com Web: http://www.americanlorain.com Investor Relations: John Mattio, SVP HC International, New York Tel: +1-203-616-5144 Email: john.mattio@hcinternational.net Web: http://www.hcinternational.net
Recommend reading entire pr...tuna
Newest add is Chinese ALN 3.78 +.32 w/news and strong guidance of 23.6% to 31.9% net income growth for 2010 equaling a pe of about 5!!
American Lorain Corporation Reports Results for the Fourth Quarter and Full Year, 2009
Press Release Source: American Lorain Corporation On Monday March 29, 2010, 6:30 pm EDT
JUNAN COUNTY, China, March 29 /PRNewswire-Asia-FirstCall/ -- American Lorain Corporation (NYSE:ALN - News) ("American Lorain" or the "Company"), an international processed snack foods, convenience foods, and frozen foods company based in the Shandong Province, China, today announced its fourth quarter and full year financial results for the year ended December 31, 2009.
Fourth Quarter 2009 Highlights -- Revenue for the fourth quarter 2009 was $62.9 million, up 11.0% versus prior year. -- Operating income was $9.4 million, up 9.1% versus prior year. -- Net income was $6.3 million, a decrease of 1.5% versus prior year. -- EPS was $0.24 for the quarter ended December 31, 2009 Fiscal Year 2009 Highlights: -- Revenue was $146.8 million, up 10.9% from the year ended December 31, 2008; Company results fall in line with preannounced 2009 revenues of $146 million to $148 million. -- Operating income was $22.6 million, up 8.0% from the previous year. -- Net income was $14.4 million, a decrease of 2.0% versus prior year; Company results fall in line with preannounced 2009 net income of $14.4 million to $14.8 million. -- EPS was $0.55
"During 2009, we were able to innovate by developing and launching new products, expand our production capacity, grow our customer base and adopt new distribution and marketing strategies, which has laid a foundation for future growth opportunities. Despite a challenging year for food manufacturers in China and particularly those with export exposure, we were able to generate modest growth for the year while positioning the company to grow at a faster rate in 2010," concluded Chairman Si Chen.
Fourth Quarter 2009 Results
Revenues in the fourth quarter of 2008 reached $62.9, an increase of 11.0% over the same period prior year, with the growth driven by sales of Lorain(R)-branded convenient foods which accounted for 26.2% of total revenues versus 16.5% in the fourth quarter of 2008. Throughout the fourth quarter of 2009, the Company accelerated the number of new retail points added to its sales network, increasing the total number of new stores by 67% from approximately 2100 on September 30, 2009 to approximately 3,500 on December 31, 2009.
Gross profits for the quarter were $13.1 million, a decrease of 8.0% versus the same period in 2008. The decrease in gross profits was attributed to higher raw material costs and a decline in export sales and revenues generated by American Lorain's international distribution base to 42 countries. Gross margins were 22.4% compared to 23.5% in the fourth quarter of 2009 and 2008, respectively.
Operating income for the quarter increased 9.1% to $9.4 million versus $8.6 million the same period prior year, with operating margins of 15.5% and 15.8% for the fourth quarter of 2009 and 2008, respectively. Sales, marketing and general and administrative expenses for the fourth quarter of 2009 were $3.7 million, a decrease of 33.9% from the prior period.
Net income for the quarter was $6.3 million, a reduction of 1.5% versus the same period prior year. In 2009, American Lorain's blended tax rate was 21.6% for the year versus a blended tax rate of 16.1% the Company maintained through 2008. Earnings per share were $0.24 based on 26.3 million diluted shares versus $0.25 in the fourth quarter of 2008 based on 25.3 million diluted shares.
Fiscal Year 2009 Results
American Lorain met its preannounced revenue goal of $146.0 to $148.0 million for the 2009 year by reporting $146.8 million in net revenues, up 10.9% from $132.4 million for the year ended December 31, 2008. American Lorain's convenience food product line, which features ready-to-eat (RTE) and ready-to-cook (RTC) foods, was a focus segment for 2009 and yielded revenues of $34.6 million, an $8.9 million or 34.5% increase, year over year. Convenience food sales as a percentage of overall revenues increased to 23.6% for 2009 versus 19.4% in 2008. Chestnut-based snack foods and products remain the largest contributor of revenues for American Lorain as approximately 60.7% of American Lorain revenues are generated from the sales of its more than 50 varieties of chestnut-based products. Sales for the chestnut segment increased 7.3% to $89.1 million in 2009 from $83.0 million in 2008. American Lorain's frozen food segment contributed $23.0 million in sales for the year, a decrease of 2.4%. In 2009, American Lorain deployed a strategy to reduce its sales and marketing efforts on lower-margin frozen foods to focus more resources on higher margin chestnut and convenience food products.
American Lorain maintains a diverse network of customers throughout 26 provinces in China and 42 countries around the world. In 2009, 70.5% of the Company's sales were generated from its 36 sales offices in China who sell Lorain-branded products to more than 3,500 retail points in China. 29.5% of American Lorain's revenues are generated from its sales to 42 countries. Key markets in Asia including Japan and South Korea accounted for 79.7% of the Company's export sales. Secondary markets in Europe, the Middle East and North America accounted for the remaining 20.3% of export sales revenues.
Costs of goods sold were $114.1 million, an increase of 12.7% year over year. The increase in costs of goods sold is attributable to the overall increases in revenues during 2009 and higher raw material costs. Gross profits increased 5.0% to $32.7 million for the period ended December 31, 2009. Gross profit margins were 22.3% versus 23.5% in the corresponding period. Operating income totaled $22.6 million in 2009, an 8.0% increase from $20.9 million in the previous year. The Company's operating margin was 15.4% compared to 15.8% in the prior year.
Net income for the year ended December 31, 2009 was $14.4 million, a 2.0% decrease from $14.7 million during 2008. Net margins were 9.8% and 11.1% for 2009 and 2008, respectively. Earnings per share were $0.55 compared to $0.58 per diluted share for the 2009 and 2008 year ended December 31, 2008, respectively, and based on 26.3 million and 25.2 million diluted shares outstanding for reach respective year. As a result of tax law changes in China, the Company's income tax rate increased to a blended tax rate of 21.6% versus 16.1% in the same period, 2008.
"2009 was one of our most challenging years as we addressed a very uncertain global environment while implementing strategies that allow us to focus more resources on our core products and high-growth areas in our business," continued Si Chen, Chairman and CEO of American Lorain. "Our bean product line has received very favorable market acceptance during its launch as evidenced by increased month over month sales in 2009 and 2010. An advertising program featuring a well known movie and entertainment artist in Asia, Su Youpeng, has been very well received in market and we anticipate our various bean products will become a leader in our convenience food product segment. We continue to work with more local distributors and agents to help speed the delivery of our goods to new market places as we pursue meaningful 'Greenfield' opportunities. We are confident that both these initiatives will help us meet our guidance for the 2010 year and drive future growth," Chairman Si Chen concluded.
Financial Condition
As of December 31, 2009, the Company had $12.1 million in cash versus $2.8 million at the end of 2008. Working capital was $49.9 million, up from $23.9 million as of December 31, 2008. Accounts receivable were $23.0 million, compared to $25.3 million as of December 31, 2008, with corresponding DSO's in 2009 decreasing to 57 days versus 70 days the same period 2008. Current liabilities were $46.8 million compared to $39.7 million and shareholder's equity was $94.7 million, a 40.3% increase from $67.5 million as of December 31, 2008. The Company has $35.5 million in short term loans on December 31, 2009 with a weighted average interest rate of 7.0%, which is used for working capital requirements during the year.
2009 and Recent Highlights -- In October of 2009, the Company completed a private placement transaction which yielded $12 million in proceeds. The capital was earmarked for marketing and advertising initiatives for the chestnut and convenience foods product lines and working capital needs. -- In January of 2010, American Lorain announced shelf placements for its chestnut products to two marquee supermarket chains in China; Watson Group of 300 convenience stores and approximately 100 Jiadeli(R) supermarkets stores in China. -- On January 29, 2010 the Company filed an S-3 registration statement for $100.0 million for working capital and future expansion capital needs. -- In February of 2010, American Lorain announced it has surpassed more than 3,500 retail point locations in China and targeted 5,000 retail locations by the end of 2010 -- In March of 2010, American Lorain attended the Hostex Food Show in Japan where it launched several new products to this important export market for the Company.
2010 Guidance
American Lorain has provided 2010 guidance of $182.0 to $190.0 million in revenues or 24.1% - 29.5% organic growth for the year. The Company also provided net income guidance of $17.8 - $19.0 million in net income which will represent 23.6% - 31.9% growth year over year.
About American Lorain Corporation
American Lorain Corporation is a Nevada corporation that develops, manufactures and sells various food products. The Company's products include chestnut products, convenience food products and frozen food products. The Company currently sells over 230 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its four direct and indirect subsidiaries and one leased factory located in China. For further information about American Lorain Corporation, please visit the Company's website at http://www.americanlorain.com .
Forward-looking statements:
Statements contained herein that relate to the Company's future performance, including statements with respect to forecasted revenues, margins, cash generation and capital expenditures are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from those anticipated. Such statements are based on current expectations only, and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, particularly the current downturn in the worldwide economy; our ability to obtain adequate supplies of raw materials; our ability to manage our expansion strategy; changes in foreign currency exchange rates; government regulation; difficulties in new product development; changing consumer tastes in disparate markets worldwide and our ability to address those changes; our ability to attract and retain highly qualified personnel; and other factors affecting our operations that are set forth in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For more information, please contact: For the Company: American Lorain Corporation Alan Jin, CFO Tel: +86-539-731-7959 Email: alanjin@americanlorain.com Web: http://www.americanlorain.com Investor Relations: John Mattio, SVP HC International, New York Tel: +1-203-616-5144 Email: john.mattio@hcinternational.net Web: http://www.hcinternational.net
For those interested...see entire PR...tuna
You're welcome mm!! Yes JADA just hit .855 a new HOD a couple of minutes ago on strong volume again today! tuna
JADA .855 new HOD!!
Chinese CHGI 2.61 +.11 new HOD!!
Thanks WANG, also Chinese CREG 5.11 -.32 LOD may bottom today imho and with it's excellent earnings and revenue growth it seems way cheap here imho...tuna
Chinese CREG 5.11 -.32 LOD may bottom today possibly...strong earnings and revenue growth for this company...seems too cheap in here imho....tuna
Chinese CHGI 2.60 +.10 good start...tuna
Yes it does harry!! Loved TheStreet article on the company!!!
JADA .845 +.057 super volume!! Will we see .90's today??
JADA .84 +.052 up on big volume WANG!!! Started moving on strong volume yesterday on article in TheStreet...tuna
There goes JADA .83 +.042 on big volume new HOD!!!
JADA .80 +.012 new HOD on big volume...break .80 and run!!!
If JADA .798 +.01 breaks .80 it may really take off...nice volume to start here!!
Make that NEWN 7.48 +.33 now!
Chinese NEWN 7.35 +.20 nice start for this highly profitable company!! tuna
JADA .794 +.006 nice start!