KUNMING, China, Aug. 16, 2011 /PRNewswire-Asia-FirstCall/ --
China Shenghuo Pharmaceutical Holdings, Inc. (NYSE Alternext US:
KUN) ("China Shenghuo" or the "Company"), today reported unaudited
financial results for the second quarter ended June 30, 2011.
Second Quarter 2011 Highlights
- Total revenue increased to $10.9
million for the second quarter of 2011, representing 58%
year-over-year growth.
- Gross margin for the second quarter of 2011 increased to
$6.9 million, as compared to
approximately $4.4 million for the
same period of 2010.
- Net cash provided by operating activities increased to
$2.84 million for the six months
ended June 30, 2011 from $1.46 million for the same period of 2010.
- Net income (loss) attributable to shareholders increased to
$104,325 for the second quarter of
2011, as compared to net loss of $31,192 for the same period of 2010.
Second Quarter 2011 Results
Sales: Sales for the three months ended
June 30, 2011 was approximately
$10.9 million, an increase of
approximately $4.0 million, or 58%,
from approximately $6.9 million for
the three months ended June 30, 2010.
The increase in sales was primarily due to the Company’s main
product Xuesaitong’s sales increasing in Tianjin City and Yunnan Province as Xuesaitong was listed on
the PIC list of Tianjin City since
the second quarter in 2010 and the Company strengthened sales
promotion in Yunnan Province.
Cost of goods sold: Our cost of sales for the
three months ended June 30, 2011 was
approximately $4.0 million, an
increase of $1.5 million, or 61%,
from approximately $2.5 million for
the three months ended June 30, 2010.
The increase in cost of sales was due to the increase of the sales
volume and the purchase price of Sanqi which is the main raw
material of our main product Xuesaitong. Although we have started
to grow Sanqi, we will not be able to harvest until 2014 because it
has a three year growth cycle. In addition, the Zhonghuang Hotel
began trial operation since January
2011 which has contributed $0.6
million to the increase of cost of sales.
Gross profit: Our gross profit for the three
months ended June 30, 2011 was
approximately $6.9 million as
compared with approximately $4.4
million for the three months ended June 30, 2010, an increase of $2.5 million, or 57%. Gross profit as a
percentage of revenues was approximately 63% for the three months
ended June 30, 2011, a decrease of 1%
from 64% for the three months ended June 30,
2010. The slightly decrease in gross profit percentage was
primarily due to the increase of cost of sales set forth above.
Selling expense: Selling expenses were
approximately $4.9 million for the
three months ended June 30, 2011, an
increase of $1.9 million, or 67%,
from approximately $3.0 million for
the three months ended June 30, 2010.
The primary reason for the increase in selling expenses was due to
increase of sales commission to sales representative in line with
the sales increment.
General and administrative expense: General and
administrative expenses were approximately $1.2 million for the three months ended
June 30, 2011, an increase of
$0.3 million, or 36%, from
approximately $0.9 million for the
three months ended June 30, 2010. The
increase was primarily due to the increase of the management’s
traveling and conference expenses for expanding our sales channel.
In addition, Zhonghuang Hotel began trial operation since
January 2011 which has contributed
$78,100 to the increase of general
and administrative expense.
Research and development expense: Research and
development expense for the three months ended June 30, 2011 was $144,849, as compared to $175,538 for the three months ended June 30, 2010, a decrease of approximately
$30,689. The decrease was primarily
due to the expenditures in the second quarter of 2010 for outside
experts for trial test for Dencichine amounted to $98,240.
Other expenses: Other expenses were $439,357 for the three months ended June 30, 2011, which consisted of interest
expense and non-operating expense, offset by subsidy income,
interest income and non-operating income, an increase of
$119,508, or 37%, from $319,849 for the three months ended June 30, 2010. The increase was mainly due to
more interest expenses occurred as compared the same period in
2010.
Income tax expense: Income tax expense was
$12,183 for the three months ended
June 30, 2011 as compared to income
tax expense of $52,615 for the three
months ended June 30, 2010. The tax
expense was mainly from medicine segment for the Company and the
deferred assets benefit from provisions for inventory.
Net income (loss) attributable
to shareholders: Net income increased to $104,325 for the three months ended June 30, 2011 as compared to the net loss of
$31,192 for the three months ended
June 30, 2010. Offset by the increase
in raw material price and the expenses related to the trial
operation of Shenghuo Plaza, the increase in net income was
primarily due to less operating expenses increment as compared to
the sales amount.
About China Shenghuo
Founded in 1995, China Shenghuo is primarily engaged in the
research, development, manufacture, and marketing of Sanchi-based
medicinal and pharmaceutical, nutritional supplement and cosmetic
products. Through its subsidiary, Kunming Shenghuo Pharmaceutical
(Group) Co., Ltd., it owns thirty SFDA (State Food and Drug
Administration) approved medicines, including the flagship product
Xuesaitong Soft Capsules, which is currently being listed in the
2010 Provincial Insurance Catalogue of sixteen provinces around
China. At present, China Shenghuo
incorporates a sales network of agencies and representatives
throughout China, which markets
Sanchi-based traditional Chinese medicine to hospitals and drug
stores as prescription and OTC drugs primarily for the treatment of
cardiovascular, cerebrovascular and peptic ulcer disease. The
Company also exports medicinal products to Asian countries such as
Indonesia, Singapore, Japan, Malaysia, and Thailand and to European countries such as the
United Kingdom, Tajikistan, Russia and Kyrgyzstan.
With the substantial completion of Shenghuo Plaza at the end of
2010, China Shenghuo entered into a new business - the hotel and
hospitality business. Two floors of Shenghuo Plaza are designed to
be utilized as 12 Ways Chinese Herbal Beauty Demonstration Center.
The balance of Shenghuo Plaza is used as a business hotel -
Zhonghuang Hotel, restaurant and banquet facilities and an
entertainment venue.
China Shenghuo is also expanding into the businesses of wellness
tourism. For more information, please visit
http://www.shenghuo.com.cn.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements," as defined in the United
States Private Securities Litigation Reform Act of 1995,
that involve a number of risks and uncertainties. There can be no
assurance that such statements will prove to be accurate, and the
actual results and future events could differ materially from
management's current expectations. Such factors include, but are
not limited to, risks of litigation and governmental or other
regulatory proceedings arising out of or related to any of the
matters described in recent press releases, including arising out
of the restatement of the Company's financial statements; the
Company's ability to refinance or repay loans received; the
Company's uncertain business condition; the Company's continuing
ability to satisfy any requirements which may be prescribed by the
Exchange for continued listing on the Exchange; risks arising from
potential weaknesses or deficiencies in the Company's internal
controls over financial reporting; the Company's reliance on one
supplier for Sanchi; the possible effect of adverse publicity on
the Company's business, including possible contract cancellation;
the Company's ability to develop and market new products; the
Company's ability to establish and maintain a strong brand; the
Company's continued ability to obtain and maintain all
certificates, permits and licenses required to open and operate
retail specialty counters to offer its cosmetic products and
conduct business in China;
protection of the Company's intellectual property rights; market
acceptance of the Company's products; changes in the laws of
the People's Republic of China
that affect the Company's operations; cost to the Company of
complying with current and future governmental regulations; the
impact of any changes in governmental regulations on the Company's
operations; general economic conditions; and other factors detailed
from time to time in the Company's filings with the United States
Securities and Exchange Commission and other regulatory
authorities. 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.
|
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Company Contact:
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China Shenghuo Pharmaceutical
Holdings, Inc.
|
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Ms. Hongling Fei
|
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Director of Securities
Department
|
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+86-871-7282698
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|
|
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Investor Relations
Contact:
|
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The Trout Group
|
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Mark Xu
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+86-15821996861
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|
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CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE
SHEETS
(Amounts in
USD)
|
|
|
|
|
June 30,
|
December
31,
|
|
|
2011
|
|
|
2010
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,347,393
|
|
$
|
1,669,387
|
|
Accounts and notes
receivable, net
|
|
|
15,885,445
|
|
|
11,531,027
|
|
Other receivables,
net
|
|
|
4,329,926
|
|
|
4,111,315
|
|
Advances to
suppliers
|
|
|
538,593
|
|
|
580,168
|
|
Inventories
|
|
|
2,655,397
|
|
|
2,599,351
|
|
Due from
related parties
|
|
|
268,275
|
|
|
190,614
|
|
Current deferred tax
assets
|
|
|
1,098,492
|
|
|
833,568
|
|
Other current
assets
|
|
|
215,568
|
|
|
208,111
|
|
Total current
assets
|
|
|
26,339,089
|
|
|
21,723,541
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
21,801,751
|
|
|
21,069,139
|
|
Other non-current
assets
|
|
|
2,466,924
|
|
|
2,554,193
|
|
Total assets
|
|
$
|
50,607,764
|
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(CONT'D)
(Amounts in
USD)
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
Liabilities and
equity:
|
|
|
(Unaudited)
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
9,303,869
|
|
$
|
8,964,404
|
|
Other payables and
accrued expenses
|
|
|
10,955,786
|
|
|
9,699,857
|
|
Sales
representative deposits
|
|
|
5,221,051
|
|
|
4,936,429
|
|
Due
to related parties
|
|
|
-
|
|
|
79,864
|
|
Short-term
borrowings
|
|
|
5,912,806
|
|
|
5,289,178
|
|
Advances from
customers
|
|
|
4,258,431
|
|
|
1,158,649
|
|
Taxes payable
and other current
liabilities
|
|
|
1,172,635
|
|
|
881,506
|
|
Current portion of
long-term borrowings
|
|
|
11,496,384
|
|
|
6,039,833
|
|
Total current
liabilities
|
|
|
48,320,962
|
|
|
37,049,720
|
|
Long-term
borrowings
|
|
|
-
|
|
|
6,251,227
|
|
Total liabilities
|
|
|
48,320,962
|
|
|
43,300,947
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common
stock, $0.0001 par value, 100,000,000 shares authorized
and 19,679,400 shares issued and
outstanding, both
periods
|
|
|
1,968
|
|
|
1,968
|
|
Additional paid-in
capital
|
|
|
6,193,927
|
|
|
6,193,927
|
|
Appropriated
retained earnings
|
|
|
147,023
|
|
|
147,023
|
|
Accumulated
deficit
|
|
|
(5,736,741)
|
|
|
(5,940,439)
|
|
Accumulated other
comprehensive income
|
|
|
1,691,178
|
|
|
1,638,109
|
|
Total stockholder's
equity
|
|
|
2,297,355
|
|
|
2,040,588
|
|
Non-controlling
interest
|
|
|
(10,553)
|
|
|
5,338
|
|
Total equity
|
|
|
2,286,802
|
|
|
2,045,926
|
|
Total Liabilities and
equity
|
|
$
|
50,607,764
|
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE INCOME
(LOSS)
(UNAUDITED)
(Amounts in
USD, except shares)
|
|
|
Three months ended June
30,
|
|
Six months ended June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
10,896,460
|
|
$
|
6,882,007
|
|
$
|
20,338,086
|
|
$
|
14,789,009
|
|
Cost of goods
sold
|
|
4,007,216
|
|
|
2,488,623
|
|
|
7,812,908
|
|
|
4,564,976
|
|
Gross
profit
|
|
6,889,244
|
|
|
4,393,384
|
|
|
12,525,178
|
|
|
10,224,033
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
4,946,005
|
|
|
2,968,103
|
|
|
9,022,435
|
|
|
8,019,817
|
|
General and administrative
expenses
|
|
1,241,460
|
|
|
915,189
|
|
|
2,271,675
|
|
|
1,599,448
|
|
Research and development
expense
|
|
144,849
|
|
|
175,538
|
|
|
266,574
|
|
|
256,389
|
|
|
|
6,332,314
|
|
|
4,058,830
|
|
|
11,560,684
|
|
|
9,875,654
|
|
Income from
operations
|
|
556,930
|
|
|
334,554
|
|
|
964,494
|
|
|
348,379
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
Subsidy income
|
|
147,144
|
|
|
7,964
|
|
|
154,742
|
|
|
161,562
|
|
Interest and other
expense
|
|
(586,501)
|
|
|
(327,813)
|
|
|
(900,982)
|
|
|
(524,415)
|
|
|
|
(439,357)
|
|
|
(319,849)
|
|
|
(746,240)
|
|
|
(362,853)
|
|
Income
(loss) before income tax
|
|
117,573
|
|
|
14,705
|
|
|
218,254
|
|
|
(14,474)
|
|
Income tax
expense
|
|
(12,183)
|
|
|
(52,615)
|
|
|
(27,163)
|
|
|
(22,631)
|
|
Net income
(loss)
|
|
105,390
|
|
|
(37,910)
|
|
|
191,091
|
|
|
(37,105)
|
|
Net gain (loss)
attributable non-controlling interests
|
|
1,065
|
|
|
(6,718)
|
|
|
(12,607)
|
|
|
(8,268)
|
|
Net income
(loss) attributable to stockholders
|
$
|
104,325
|
|
$
|
(31,192)
|
|
$
|
203,698
|
|
$
|
(28,837)
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
105,390
|
|
|
(37,910)
|
|
|
191,091
|
|
|
(37,105)
|
|
Foreign currency
translation adjustment
|
|
29,991
|
|
|
4,583
|
|
|
49,785
|
|
|
4,914
|
|
Comprehensive income
(loss):
|
$
|
135,381
|
|
$
|
(33,327)
|
|
$
|
240,876
|
|
$
|
(32,191)
|
|
Comprehensive income (loss)
attributable to non-controlling interests
|
|
939
|
|
|
(4,986)
|
|
|
(15,891)
|
|
|
(7,173)
|
|
Comprehensive income (loss)
attributable to stockholders
|
$
|
134,442
|
|
$
|
(28,341)
|
|
$
|
256,767
|
|
$
|
(25,018)
|
|
Basic and
diluted earnings
(loss) per share
|
$
|
0.01
|
|
$
|
(0.00)
|
|
$
|
0.01
|
|
$
|
(0.00)
|
|
Weighted-average number of
shares outstanding-basic and diluted
|
|
19,679,400
|
|
|
19,679,400
|
|
|
19,679,400
|
|
|
19,679,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in
USD)
|
|
|
|
Six months
ended June 30,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
$
|
2,845,831
|
|
$
|
1,461,492
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
Purchase of long-lived
assets
|
|
(2,627,767)
|
|
|
(4,196,635)
|
|
Proceeds from disposal of
property
|
|
170
|
|
|
212,373
|
|
Net cash used in investing
activities
|
|
(2,627,597)
|
|
|
(3,984,262)
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
Proceeds from
borrowings
|
|
10,934,766
|
|
|
21,382,467
|
|
Payments on
borrowings
|
|
(11,486,507)
|
|
|
(19,510,878)
|
|
Net cash
(used
in) provided by
financing
activities
|
|
(551,741)
|
|
|
1,871,589
|
|
|
|
|
|
|
|
|
Effect of foreign
currency fluctuation on cash and cash
equivalents
equivalents
equivalents
|
|
11,513
|
|
|
2,729
|
|
Net decrease in cash and cash
equivalents
|
|
(321,994)
|
|
|
(648,452)
|
|
Cash and cash equivalents at
beginning of period
|
|
1,669,387
|
|
|
1,986,540
|
|
Cash and cash equivalents at end
of period
|
$
|
1,347,393
|
|
$
|
1,338,088
|
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
Cash paid for
interest
|
$
|
735,008
|
|
$
|
331,511
|
|
Cash paid for income
taxes
|
$
|
70,616
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Shenghuo Pharmaceutical Holdings, Inc.