NEW YORK, May 16, 2013 /PRNewswire/ -- China
Industrial Steel, Inc. (the "Company") today announced its earnings
for the three months ended March 31,
2013. The Company, whose shares trade in the U.S. OTC
market under the stock symbol "CDNN", filed its Form 10-Q with the
Securities and Exchange Commission on May
15, 2013.
Commenting on the results, Liu Shenghong, Chief Executive
Officer and Chairman of the Company stated, "I am pleased to report
China Industrial Steel's financial results for the first quarter of
2013. Company revenues were up as a result of the rebound in
China's demand for steel, and we
remain profitable despite the industry wide decline in selling
prices resulting from inventory stockpiles over the past year."
Chairman Liu went on to say, "Demand for our steel plate and
wire increased during the quarter reflecting China's continued economic growth and the
government's investment in infrastructure projects, such as roads,
railways and bridges. We anticipate market prices will return to
prior levels as steel manufacturers work through their backlog to
supply these large scale projects and the forecast growth in other
steel dependent industries, including the automotive and
construction sectors."
Financial Discussion
China Industrial Steel reported revenue of $188,363,697 for the three months ended
March 31, 2013 an increase of
$11,335,049, or 6% compared to
$177,028,648 in the same period of
2012. The increase in sales was mainly due to the increase in sales
of steel plates and steel wires, offset by the decrease in sales of
steel billets and the decrease in unit sales price in the three
months ended March 31, 2013. The
average unit sales price was $501 per
ton, a decrease of $70, or 12%,
compared to $571 per ton in the
comparable period of 2012.
Revenue from steel plates was $94,496,510 in the three months ended
March 31, 2013, an increase of
$30,199,775, or 47% compared to
$64,296,735 in the three months ended
March 31, 2012. The increase in the sales of steel plates
resulted from the rebound of steel market in the first quarter of
2013 which was somewhat offset by a decline in the selling price as
compared to the same period in 2012.
In January of this year the Company commenced production on a
new 600,000 ton steel wire production line. In the three months
ended March 31, 2013, revenue from
steel wires was $90,938,130, an
increase of $27,991,309, or 44%,
compared to $62,946,821 for the first
three months of 2012. The Company did not sell any steel
billet during the first quarter of 2013 and the sale of byproducts
remained relatively flat as compared to the same period in
2012.
The following table illustrates the breakdown of the Company's
revenue for the year ended March 31,
2013 and 2012.
|
|
2013
|
|
2012
|
Products
|
|
Revenue
|
|
Quantity
(Ton)
|
|
Revenue
|
|
Quantity
(Ton)
|
Steel
plates
|
|
$
|
94,496,510
|
|
|
190,230
|
|
$
|
64,296,735
|
|
|
113,822
|
Steel
wires
|
|
|
90,938,130
|
|
|
185,788
|
|
|
62,946,821
|
|
|
110,635
|
Steel
billets
|
|
|
-
|
|
|
-
|
|
|
47,067,680
|
|
|
85,602
|
Byproducts
|
|
|
2,929,057
|
|
|
-
|
|
|
2,717,412
|
|
|
-
|
Products
Total
|
|
$
|
188,363,697
|
|
|
376,018
|
|
$
|
177,028,648
|
|
|
310,059
|
The Company reported net income of $1,353,839 in the three months ended March 31, 2013, a decrease of $3,352,205, or 71%, compared to the net income of
$4,706,044 for the same period of
2012. The decrease in net income is primarily the result of the
decrease in steel product prices (12%) being sharper than the
decrease in the prices of raw materials (10%).
CHINA
INDUSTRIAL STEEL INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS (IN US
DOLLARS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,622,083
|
|
$
|
1,710,887
|
|
Bank notes
receivable
|
|
|
1,835,514
|
|
|
979,111
|
|
Accounts
receivables, net
|
|
|
15,758,620
|
|
|
9,639,396
|
|
Inventories, net
|
|
|
18,767,325
|
|
|
11,585,277
|
|
Advances
to suppliers, net
|
|
|
479,990
|
|
|
2,372,693
|
|
VAT
recoverable
|
|
|
31,222,127
|
|
|
32,208,807
|
|
Advances
to related parties
|
|
|
138,465,397
|
|
|
183,797,203
|
|
Other
current assets
|
|
|
5,597,242
|
|
|
3,884,342
|
|
Total Current
Assets
|
|
|
214,748,298
|
|
|
246,177,716
|
|
|
|
|
|
|
|
|
Machinery and Equipment, Net
|
|
|
101,873,890
|
|
|
101,450,993
|
Machinery and Equipment - acquired from related
parties, Net
|
|
|
82,772,390
|
|
|
85,471,360
|
|
Total
Machinery and Equipment, Net
|
|
|
184,646,280
|
|
|
186,922,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets:
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
5,796,360
|
|
|
5,778,360
|
|
Land use
rights and buildings under capital leases
|
|
|
4,829,669
|
|
|
4,985,732
|
|
Total Other
Assets
|
|
|
10,626,029
|
|
|
10,764,092
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
410,020,607
|
|
$
|
443,864,161
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
64,811,203
|
|
$
|
92,228,161
|
|
Accounts
payable - related parties
|
|
|
2,536,796
|
|
|
1,833,558
|
|
Accrued
liabilities
|
|
|
3,209,088
|
|
|
3,123,315
|
|
Taxes
payables
|
|
|
872,968
|
|
|
2,427
|
|
Bank loans
payable
|
|
|
27,661,518
|
|
|
26,034,722
|
|
Bank notes
payable
|
|
|
5,313,330
|
|
|
5,296,830
|
|
Equipment
loan payable - related parties - current
|
|
|
2,893,906
|
|
|
2,884,919
|
|
Current
obligations under capital leases - related parties
- current
|
|
|
663,216
|
|
|
648,893
|
|
Short term
loan payable - related party
|
|
|
805,050
|
|
|
802,550
|
|
Customer
financing
|
|
|
31,718,970
|
|
|
31,620,470
|
|
Advances
from customers
|
|
|
65,608,300
|
|
|
77,275,327
|
|
Total Current
Liabilities
|
|
|
206,094,345
|
|
|
241,751,172
|
|
|
|
|
|
|
|
|
Long
Term Liabilities:
|
|
|
|
|
|
|
|
Equipment
loan payables - related parties - non current
|
|
|
1,091,341
|
|
|
1,087,952
|
|
Obligation
under capital leases - related parties - non
current
|
|
|
5,512,068
|
|
|
5,669,438
|
|
Total Long Term
Liabilities
|
|
|
6,603,409
|
|
|
6,757,390
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
212,697,754
|
|
|
248,508,562
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock, $0.0001 par value, 10,000,000
shares
authorized, none issued and outstanding
|
|
|
-
|
|
|
-
|
|
Blank
Check Preferred Stock, $0.0001 par value, 10,000,000
shares authorized, none issued and outstanding
|
|
|
-
|
|
|
-
|
|
Common
stock, $0.0001 par value, 980,000,000 authorized,
73,620,391 and 73,620,391 issued and outstanding at March 31,
2013 and December 31, 2012, respectively
|
|
|
7,362
|
|
|
7,362
|
|
Paid-in
capital
|
|
|
16,417,235
|
|
|
16,417,235
|
|
Statutory
reserves
|
|
|
6,530,869
|
|
|
6,530,869
|
|
Retained
earnings
|
|
|
157,478,346
|
|
|
156,124,507
|
|
Accumulated other comprehensive
income
|
|
|
16,889,041
|
|
|
16,275,626
|
|
Total
Stockholders' Equity
|
|
|
197,322,853
|
|
|
195,355,599
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
410,020,607
|
|
$
|
443,864,161
|
CHINA
INDUSTRIAL STEEL INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (IN US DOLLARS)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
Revenues
|
|
|
|
|
|
|
Sales to
customers
|
$
|
178,171,390
|
|
$
|
172,444,448
|
|
Sales to
related parties
|
|
10,192,307
|
|
|
4,584,200
|
|
Total Revenues
|
|
188,363,697
|
|
|
177,028,648
|
|
|
|
|
|
|
|
Cost of
Revenue
|
|
|
|
|
|
|
Cost of
Revenue - non-related parties
|
|
75,010,369
|
|
|
49,889,474
|
|
Cost of
Revenue - related parties
|
|
108,478,792
|
|
|
118,315,091
|
|
Total Cost of Revenue
|
|
183,489,161
|
|
|
168,204,565
|
|
|
|
|
|
|
|
Gross
Profit
|
|
4,874,536
|
|
|
8,824,083
|
|
|
|
|
|
|
|
Selling
and General and Administrative Expenses
|
|
|
|
|
|
|
Selling
and General and Administrative Expenses - non-related
parties
|
|
969,701
|
|
|
1,065,079
|
|
Selling
and General and Administrative Expenses - related
parties
|
|
260,674
|
|
|
177,083
|
|
Total
Selling and General and Administrative Expenses
|
|
1,230,375
|
|
|
1,242,162
|
|
|
|
|
|
|
|
Income
From Operations
|
|
3,644,161
|
|
|
7,581,921
|
|
|
|
|
|
|
|
Other
Income (Expenses)
|
|
|
|
|
|
|
Interest
income
|
|
3,783
|
|
|
52,489
|
|
Interest
expense
|
|
(1,390,082)
|
|
|
(944,908)
|
|
Interest
expense - related parties
|
|
(169,858)
|
|
|
(963,068)
|
|
Total Other Income
(Expenses)
|
|
(1,556,157)
|
|
|
(1,855,487)
|
|
|
|
|
|
|
|
Income
from operation before income tax
|
|
2,088,004
|
|
|
5,726,434
|
Provision
for income tax
|
|
734,165
|
|
|
1,020,390
|
Net
Income
|
|
1,353,839
|
|
|
4,706,044
|
|
|
|
|
|
|
|
|
Earnings
Per Share - Basic and Diluted
|
$
|
0.02
|
|
$
|
0.06
|
|
Weighted
Average Shares Outstanding - Basic and Diluted
|
|
73,620,391
|
|
|
73,542,058
|
|
|
|
|
|
|
|
Other
Comprehensive Income:
|
|
|
|
|
|
|
Foreign
currency translation gain
|
|
613,415
|
|
|
(120,054)
|
Comprehensive Income
|
$
|
1,967,254
|
|
$
|
4,585,990
|
About China Industrial Steel, Inc.
China Industrial Steel, Inc., ("CIS" or the "Company") through
its wholly owned subsidiary, Handan Hongri Metallurgy Co., Ltd.,
produces and sells steel plate and steel bar for domestic and
export customers. The Company currently operates three
production lines from its headquarters on approximately 1,000 acres
in Handan City in the Hebei Province, China, where steel production is a significant
component of the regional economy.
Forward-looking statements:
The above news release contains forward-looking statements. The
statements contained in this document that are not statements of
historical fact, including but not limited to, statements
identified by the use of terms such as "anticipate," "appear,"
"believe," "could," "estimate," "expect," "hope," "indicate,"
"intend," "likely," "may," "might," "plan," "potential," "project,"
"seek," "should," "will," "would," and other variations or negative
expressions of these terms, including statements related to
expected market trends and the Company's performance, are all
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve a number of
risks and uncertainties. These statements are based on assumptions
that management believes are reasonable based on currently
available information, and include statements regarding the intent,
belief or current expectations of the Company and its management.
Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performances, and are
subject to a wide range of external factors, uncertainties,
business risks, and other risks identified in filings made by the
company with the Securities and Exchange Commission. Actual results
may differ materially from those indicated by such forward-looking
statements. The Company expressly disclaims any obligation or
undertaking to update or revise any forward-looking statement
contained herein to reflect any change in the company's
expectations with regard thereto or any change in events,
conditions or circumstances upon which any statement is based.
Company contact:
Delong Zhou, CFO
China Industrial Steel, Inc.
Phone: (917) 825-2997
Email: ir@chinaindustrialsteel.com
Frank Pena - Director
Phone: (732) 292-0322
SOURCE China Industrial Steel, Inc.