CHND.OB Raises Guidance and Reports Stellar Earnings
Wednesday, August 8th, 2007Well my plan as i stated yesterday was to only hold 1/2 of this position through earnings to limit risk as CHND stated the conference call wouldn’t be until after the close, so i was assuming a PR about their result wouldn’t be issued until after the close as well. Though they released a PR this morning at 7:30am reporting an awesome quarter and upgraded their 2007 guidance from revenues of $120m to $150m on net income that may exceed $8.5m compared to the initial $6m. I’m very pleased with the results here and along with a “can’t really get any better” stock chart with volume and bullish earnings to confirm this breakout suggesting further momentum going forward. CHND currently has the highest eps growth rate in its industry and i’ll continue holding this as a full position.
China Direct Posts Record Financial Results and Raises Financial Guidance for 2007
Wednesday August 8, 7:30 am ET
* 2nd Quarter Revenues Reach $40.45 Million
* 2nd Quarter Diluted Earnings per Share Reaches $0.15
* Total Assets Increase to $37.27 Million
* Shareholder Equity Increases to $12.53 Million
BOCA RATON, Fla., Aug. 8 /PRNewswire-FirstCall/ — China Direct, Inc. (OTC Bulletin Board: CHND - News), a company maintaining active, majority stakes in a diversified portfolio of Chinese companies as well as offering consulting services for both private and publicly traded Chinese entities, announced today the Company’s financial results for the second quarter of 2007 ended June 30, 2007.Financial HighlightsRevenues for the second quarter ended June 30, 2007 increased to $40,452,970 as compared to revenues of $180,417 in the second quarter ended June 30, 2006. The increase in revenues was primarily attributable to the three Chinese entities acquired since October 2006, Chang Magnesium, Lang Chemical and CDI Wanda, as well as a strong performance from our consulting division.
Gross profit for the second quarter of 2007 was $3,710,589 as compared to $46,883 in the second quarter ended June 30, 2006. Total operating expenses for the second quarter of 2007 increased to $847,417 compared to $509,200 in the second quarter of 2006. The increase in operating expenses in the second quarter of 2007 was primarily attributable to increased staffing associated with the financial management and integration of our expanded operations in China. The company also experienced increases in travel expenses, professional consulting fees, professional insurance premiums, as well as non- cash option charges for employees, management, and professional advisors.
Net income for the second quarter of 2007 increased to $2,267,742 or $0.16 per basic share, as compared to a loss of $(362,697) or a loss of $(0.04) per basic share for the second quarter of 2006. On a fully diluted basis, earnings per share for the second quarter of 2007 were $0.15 per share as compared to a loss of $(0.04) per share for the second quarter of 2006.
For the first six months, revenues increased to $71,391,910 as compared to revenues of $386,832 during the first six months of 2006.
Gross profit for the six months ended June 30, 2007 was $7,182,515 as compared to $238,038 for the six months ended June 30, 2006. Total operating expenses for the second quarter of 2007 increased to $1,684,926 as compared to $853,340 for the six months ended June 30, 2006.
Net income for the six months ended June 30, 2007 increased to $4,138,611 or $0.31 per basic share as compared to a loss of $(180,268) or a loss of $(0.02) per basic share for the six months of 2006. On a fully diluted basis, the earnings per share for the six months of 2007 were $0.27 per share as compared to a loss of $(0.02) per share for the six months of 2006.
Balance Sheet
As of June 30, 2007, total assets were $37,263,534, an increase of 78.8% from $20,835,405 as of December 31, 2006. As of June 30, 2007, shareholder equity reached $12,526,930, an increase of 113.6% from $5,864,324 as of December 31, 2006. As of June 30, 2007, cash and cash equivalents were $8,132,795 and working capital was approximately $14.45 million, compared to cash and cash equivalents of $3,030,335 and working capital of approximately $6.8 million as of December 31, 2006, respectively.
2007 Financial Guidance
As a result of stronger than expected performance in the first six months in 2007 and its current outlook for the remainder of the year, management anticipates that annual sales will now exceed $150 million as opposed to its previous 2007 estimate of $120 million. This new guidance for 2007 does not take into consideration any potential acquisitions that the company may be contemplating nor does it include any revenues from the new magnesium facilities currently under construction. Management also now believes that net income will exceed $8.25 million in 2007 as opposed to its previous guidance of net income of $6 million. Management evaluates its outlook on a quarterly basis and will communicate any changes in its business outlook following the third quarter results.
Dr. James Wang, CEO and Chairman of China Direct, stated “We are very pleased with the financial performance of our four divisions during the first six months of 2007. We anticipate that this strong performance will carry over into the second half of the year. Management is diligently working to improve profit margins across all of our divisions by focusing on controlling operational expenses and building new manufacturing facilities to increase production in response to demand. Based on our strong cash flow and the recent warrant exercise in which we received $4.2 million, the company is in a strong financial and operational position to pursue new acquisition opportunities. We are confident that our strong balance sheet will enable management to effectively deploy capital throughout our divisions to increase capacity and marketing capabilities as we head into the second half of 2007 and beyond into 2008. We look forward to building on this positive momentum as we strive to achieve continued growth in both our top and bottom line performance.”
