China Digital Communication Group Reports First Quarter 2009 Financial Results
Posted on: Tuesday, 12 May 2009, 16:02 CDT
NEW YORK and SHENZHEN, China, May 12 /PRNewswire-Asia-FirstCall/ -- China
Digital Communication Group (OTC Bulletin Board: CHID), a manufacturer of
battery components in China, announced today its financial results for the
three months ended March 31, 2009.
First Quarter Highlights
- Revenue was $2.6 million, an increase of 445% from $0.5 million in 2008
- Gross profit was $0.7 million, compared to $(51,000) in 2008
- Net income was $0.5 million, compared to $(0.2) million in 2008
- Basic and fully diluted earnings per share increased to $0.01 from
$(0.00) in 2008
First Quarter 2009 Results
"Compared to last year, we are quite pleased with China Digital's results
for the first quarter of 2009. The strong growth in our revenue and net income
was the result of the contribution of the new battery distribution business
which commenced in the third quarter of 2008 as well as sales increases among
our existing customers," said Mr. Fushun Li, China Digital's newly appointed
Chief Executive Officer. "We have added additional capacity in our battery
shell and cover segment, enabling CHID to serve China's expanding demand for
electronic components and 3C related products."
China Digital's net revenue in the first quarter of 2009 was $2.6 million,
an increase of 445% from $0.5 million in the first quarter of 2008. Net
revenue increased primary due to CHID's entrance into a new business segment
as a distributor of batteries during the third quarter of 2008. A contributing
factor was the increase of sales in the Company's existing battery shell and
cover business.
Sales for the new battery distribution segment were $1.8 million, or 67%
of the Company's net revenue in the first quarter of 2009. Sales of the
Company's existing battery shell and cover business segment were $0.9 million
in the first quarter of 2009, representing a 78% increase from sales of $0.5
million in the first quarter of 2008. This increase is primarily attributed to
the general increase in sales to our existing customers.
Gross profit in the first quarter of 2009 was $0.7 million, compared with
a gross loss of $(51,000) in the first quarter of 2008. Gross profit margin
was 27% in the first quarter of 2009. The improvement in gross profit margin
was primarily due to the Company's new battery distribution segment. Compared
to the existing battery shell and cover business, the battery distribution
segment generates higher profit due to the relative lower cost of sales.
Operating expenses in the first quarter of 2009 were $119,000, compared to
$139,000 in the first quarter of 2008. This decrease was primarily due to a
decrease in professional fees.
Income from operations in the first quarter of 2009 was $0.6 million,
compared with $(0.2) million in the first quarter of 2008. Operating margin
was 23% in the first quarter of 2009, compared to a loss from operations of
$(0.2) million in the first quarter of 2008.
Income taxes were $62,000 compared to $0 in the first quarter of 2008. The
Company's effective tax rate was 11% compared to 0%, due to the fact that
there was no income in the first quarter of 2008.
Net income was $0.5 million in the first quarter of 2009, compared to a
net loss of $(0.2) million in the first quarter of 2008. Basic and diluted
earnings per share were $0.01 for the first quarter of 2009, compared to
$(0.00) in the first quarter of 2008.
Financial Condition
As of March 31, 2009, China Digital had cash and cash equivalents of $10.2
million and working capital of $9.5 million. Loan payables totaled $2.2
million and shareholders' equity was $11.1 million. During the three months
ended March 31, 2009, net cash provided by operating activities was $3.2
million and was primarily from account receivables.
Recent Developments
On May 4, 2009, China Digital filed an information statement to inform its
shareholders of a pending "10 to 1" reverse split. The action was approved by
the Board of Directors of China Digital on April 30, 2009 and China Digital
anticipates an effective date of June 5, 2009.
On May 11, 2009, China Digital announced the appointment of its new CEO
and director, Mr. Fushun Li, who brings a wealth of experience as an industry
veteran of China's electronic manufacturing industry.
Mr. Li was formerly the founder and president of Shenzhen Kai Bi Te Tech.
Co., Ltd, an electronic components and 3C electronic products manufacturer
that reached revenues in excess of 1 billion RMB under his leadership. Mr.
Li's background spans more than 20 years in various executive roles at
equipment manufacturers and electronic companies in Shenzhen and Guangzhou.
Business Outlook
"Considering the global economic downturn, we believed that our
performance for the first quarter in 2009 demonstrates the strong growth
potential of our business model and the insatiable demand for batteries in our
consumer-electronic driven culture," said Mr. Li. "With the addition of our
new battery selling business, which complements our existing shell and cover
production, we remain confident that our growth will handsomely exceed 2008
performance for the remainder of 2009 and beyond."
About China Digital Communication Group:
China Digital Communication Group, through its wholly owned subsidiary,
Shenzhen E'Jenie Science and Technology Co., Ltd. (E'Jenie), is one of China's
leading manufacturers and developers of advanced telecommunications equipment.
E'Jenie sells advanced high-quality lithium-ion battery shell and cap products
to all major lithium-ion battery cell manufacturers in China. E'Jenie's
products are used to power mobile phones, MP3 players, laptops, digital
cameras, PDAs, camera recorders and other consumer electronic digital devices.
China Digital Communication Group is continuing its expansion across East Asia,
while seeking distribution partners and acquisitions in new global markets,
including the U.S.
For more information, please visit:
http://www.chinadigitalcommunication.com
Forward-looking statement:
Except for the historical information, the matters discussed in this news
release may contain forward-looking statements, including, but not limited to,
factors relating to future sales. These forward-looking statements may involve
a number of risks and uncertainties. Actual results may differ materially
based on a number of factors, including, but not limited to, uncertainties in
product demand, risks related to doing business in China, the impact of
competitive products and pricing, changing economic conditions around the
world, release and sales of new products and other risk factors detailed in
the Company's most recent annual report and other filings with the Securities
and Exchange Commission.
China Digital Communication Group and Subsidiaries
Selected Consolidated Statements of Operations
(in millions, except per share amounts)
(unaudited)
Three months ended
March 31,
2009 2008
Revenue $ 2.6 $ 0.5
Cost of revenue 1.9 0.5
Selling, general and admin expenses 0.1 0.1
Income from operations 0.6 (0.2)
Interest expense and other (0.03) (0.03)
Provision for income taxes (0.06) --
Net income(loss) $ 0.5 $ (0.2)
Basic and diluted earnings per
share $ 0.01 $ (0.00)
Basic weighted average shares 54.5 54.5
Diluted weighted average shares 54.5 54.5
NOTE: The above numbers may not total correctly due to rounding.
China Digital Communication Group and Subsidiaries
Selected Consolidated Balance Sheet Items
(in millions)
(unaudited)
March 31, December 31,
2009 2008
Cash and cash equivalents $ 10.2 $ 7.0
Accounts receivable, net 2.7 7.4
Inventories 0.3 0.8
Property, plant & equipment, net 0.8 0.9
Intangible assets, net 0.9 0.9
Total current liabilities 3.7 6.2
Total stockholders' equity $ 11.1 $ 10.6
NOTE: The above numbers may not total correctly due to rounding.
China Digital Communication Group and Subsidiaries
Selected Consolidated Cash Flow Items
(in millions)
(unaudited)
Three months ended
March 31,
2009 2008
Net cash provided (used) by operating $ $
activities 3.2 (0.0)
Net cash provided by financing
activities 0.0 (0.3)
Effective exchange rate changes (0.0) 0.1
Net change in cash and cash equivalents $ 3.2 $ (0.2)
NOTE: The above numbers may not total correctly due to rounding.
China Digital Communication Group And Subsidiaries
Selected Segment Information
(in millions)
Unaudited
Three months ended
March 31,
2009 2008
Revenues from unaffiliated
customers:
Battery shell and cover $ 0.9 $ 0.5
Battery 1.8 --
Consolidated $ 2.6 $ 0.5
Income (loss) from operation:
Battery shell and cover $ 0.1 $ (0.1)
Battery 0.6 --
Corporation (0.1) (0.1)
Consolidated $ 0.6 $ (0.2)
NOTE: The above numbers may not total correctly due to rounding.
For more information, please contact:
China Digital Communication Group
Ken Lin
Tel: +1-917-573-0302
Email: ken@chinadigitalcommunication.com
China America Financial Communications Group
Darren Minton
Tel: +1-212-823-0523
Email: chinadigital@cafcg.com
SOURCE China Digital Communication Group
Source: PR Newswire
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