Exhibit 99.1
For Immediate Release
Contact: | |
Sinoenergy Corporation | CCG Elite Investor Relations Inc. |
Ms. Laby Wu, CFO | Mr. Crocker Coulson, President |
Phone: +86-10-8492-8149 | Phone: +1-646-213-1915 (New York) |
Email: labywu@gmail.com | Email: crocker.coulson@ccgir.com |
Sinoenergy Corporation Announces
First Quarter 2007 Results
Qingdao, China, May 21 , 2007--Sinoenergy Corporation (OTC Bulletin Board: SNEN), a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment and a designer, developer and operator of CNG filling stations in China, today announced its financial results for the first quarter ended March 31, 2007.
First Quarter 2007 Highlights
· | Revenues increased 5% from the first quarter of 2006 to a record quarterly revenues of $2.6 million |
· | Gross profit was $1.0 million, compared to $1.1 million in the first quarter of 2006 |
· | Operating income was $413,000 million, a decrease of 42% from $714,000 in the first quarter of 2006 |
· | Net income increased to $350,000, or $0.02 per fully diluted share, as a result of a tax holiday in 2007 |
First Quarter 2007 Results
Net revenue was $2.6 million for the quarter ended March 31, 2007, up 5% from $2.5 million in the first quarter of 2006. The modest growth in year over year revenues was due to a restructuring of the Company's non-standard pressure container manufacturing subsidiary, Yuhan, to focus on design, manufacture and installation of high value-added components that are closely related with storage and transportation of compressed natural gas. As a result, revenue from this segment declined from $1.17 million in the first quarter of 2006, to $783,000 in the first quarter of 2007. The decrease in non-standard pressure container business was offset by increased revenue from CNG station facilities and construction segment, which increased about 38% in the first quarter of 2007 from the first quarter of 2006. In addition, Sinoenergy did not provide technical services for CNG station design and construction for other operators in the first quarter of 2007, as the Company is now focused on its own network of CNG filling stations.
Gross profit for the quarter was $1.0 million, a modest decrease from $1.1 million in the first quarter of 2006. Gross margin was 39.4% in the 2007 quarter, down from 44% in the same period last year. This decline was attributable to the reduction in revenues from CNG filling station design and construction services, which enjoys a higher gross margin than sales of CNG equipment. In addition, during the first quarter of 2007, the Company purchased raw materials for its CNG equipment business that in the past had been provided by its customers, which also contributed to lower margins.
Operating expenses in the March 2007 quarter were $622,000, up 59% from $390,000 in the first quarter of 2006. This increase was primarily due to general and administrative expenses relating to our new CNG station operating segment, which did not generate any revenue in the first quarter of 2007, and higher professional fees resulting from our status as a public company in the United States.
Operating income was $413,000, or 15.7% of revenue, a decrease from $714,000, or 28.6% of revenue, in the first quarter of 2006 due to the factors stated above.
Net income was $350,000, or $0.02 per share (basic and diluted), compared to a net income of $336,000, or $0.02 per share (basic and diluted), in the first quarter of 2006.
“As of today, we have 16 out of a planned initial 30 CNG filling stations under construction and expect to have our first stations in operation by August of 2007 in Wuhan and Pingdingshan,” said Mr. Bo Huang, CEO of Sinoenergy Corporation. “We are also very pleased to note that the company recently signed an intention agreement with Sinopec to obtain additional 200 million cubic meters of natural gas annual supply, which will generate $60 million net revenue with $10 million net income from natural gas process and whole sale business. And the 200 million cubic meters of natural gas supply can be used downstream by 70-80 CNG substations either for substations operated by Sinoenergy or substations owned by third parties by the year 2009.”
Financial Condition
At March 31, 2006, Sinoenergy had approximately $2.5 million in cash and working capital was about $ 6.1 million. The Company utilized cash of $4.0 million for its operations during the first quarter of 2007, primarily due to a $5.2 million of receivables and $4.4 million advance payment to suppliers for CNG station equipment purchased by the Company and its subsidiaries to build the CNG filling stations. The Company funded the negative cash flow from operations from the sale of common stock upon exercise of warrants issued in our June 2006 private placement. During the first quarter of 2007, Sinoenergy received $5.8 million from the exercise of warrants and from April 1, 2007 through May 16, 2007, the Company received an additional $5.5 million, for a total of $11.3 million in net proceeds from the exercise of warrants. The net proceeds strengthen Sinoenergy’s balance sheet and provides the Company with the necessary funds to finance the build out of 30 CNG stations during 2007.
Total liabilities, including short term bank loans and operating payables, stood at $12.8 million. Stockholders’ equity totaled $ 22.3 million at March 31, 2007 compared to $16.0 million at the end of 2006.
Significant Subsequent Events
On April 9, 2007, the Company granted options to purchase 1,118,000 shares of common stock to 36 employees, including senior officers and key staff members.
On April 30, 2007, we received a $2,585,000 short-term loan from Bank of Communication Qingdao 1st Branch (Qingdao Communication Bank) to fund our CNG filing station business. The loan bears the standard interest rate of China People Bank, which was 6.39% at March 31, 2007, and will be adjusted accordingly.
On May 16, 2007, Sinoenergy signed intention agreement with Sinopec to secure the supply of 200 million cubic meter of natural gas per year to Hubei Gather Energy Gas Co., Ltd, a 55% owned Sinoenergy subsidiary, to supply CNG vehicle using for 20 years once the Sichuan-shanghai gas pipelines starts operations. The construction of Sichuan-Shanghai natural gas pipeline is expected to be completed at the end of 2008 and a final agreement between Sinoenergy and Sinopec is expected to be signed then.
In the first quarter of 2007, the Company started the construction of 16 CNG filing stations in Wuhan and Pingdingshan City and expects to start to build an additional 14 CNG filing stations within the next two months in Hunan, Anhui, Zhejiang and Henan provinces to provide services in the central and eastern China regions.
Business Outlook
The Company believes the demand for natural gas over the next several years will experience strong growth, driven by expanded CNG distribution pipelines serving central and eastern China, Chinese government support for CNG as a clean-burning, domestically produced energy source for vehicles, and the strong economic advantage of using CNG to power taxis and buses. Sinoenergy is strategically positioned in five of China’s fastest growing provinces and plans to rapidly expand its network of owned and operated CNG fillings stations.
For the full year 2007, the Company continues to expect to achieve revenues of $30-32 million and operating income of $9-10 million.
“We continue to be very excited by the growth opportunities presented by the CNG vehicle market in China. With the proceeds from the exercise of our warrants that we have received to date, anticipated bank financing, and cash from operations, we believe we have the financial resources to execute our planned construction of 30 CNG filling stations in 2007. Based on our current construction timeline, we expect to begin seeing revenues during the third quarter of 2007 with a meaningful contribution in the fourth quarter,” remarked Mr. Deng Tianzhou, chairman of Sinoenergy Corporation.
“We are also very pleased with the development of our CNG vehicle conversion kit business, and would expect to ship 5,000 kits in the second quarter out of a targeted 15,000 kits of 2007. And we also expect to see strong sales of our CNG truck trailers, CNG deposit systems, and improved shipments of our non standard pressure containers. Based on these factors, we would expect net revenue for the second quarter to be about $6 million to $7 million with net income of $1.5 million to $ 2 million.”
Conference Call
The Company will host a conference call at 10:00 a.m. Eastern Time on Monday, May 21, 2007 to discuss results for the first quarter result. Joining Mr. Tianzhou Deng, Chairman, will be Mr. Bo Huang, CEO and Ms. Laby Wu, CFO.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 481-7939. International callers should dial (617) 847-8707. The passcode for the call is 491 575 72.
If you are unable to participate in the call at this time, a replay will be available on Monday, May 21 at 12:00 am EDT, through Monday, May 28 at 12:00 am EDT. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference passcode is 106 683 52.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://phx.corporate-ir.net/playerlink.zhtml?c=205975&s=wm&e=1561577. Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a 90 day replay will be available shortly after the call by accessing the same link.
About Sinoenergy:
Sinoenergy is a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment as well as a designer, developer and operator of CNG stations in China. In addition to its CNG related products, the Company also manufactures a wide variety of pressure containers for use in different industries, including the design and manufacture of various types of pressure containers in the petroleum and chemical industries, the metallurgy and electricity generation industries and the food and brewery industries.
Forward-Looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward- looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statements reflect our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
—FINANCIAL TABLES FOLLOW—
Sinoenergy Corporation and Subsidiaries | |
Consolidated Balance Sheets | |
(In thousands of United States dollars) |
March 31, 2007 | December 31, 2006 | ||||||
ASSETS | Unaudited | Audited | |||||
CURRENT ASSETS | |||||||
Cash | 2,493 | 588 | |||||
Accounts receivable(net) | |||||||
-Related party | 646 | 594 | |||||
-Third party | 2,457 | 3,777 | |||||
Other receivables | |||||||
-Related party | 6,470 | 1,220 | |||||
-Third party | 1,308 | 1,176 | |||||
Deposits and prepayments-Third party | 4,760 | 3,187 | |||||
Deferred expenses | - | 4 | |||||
Inventories | 829 | 937 | |||||
TOTAL CURRENT ASSETS | 18,963 | 11,483 | |||||
LONG TERM ASSETS | |||||||
Long term investment | 390 | - | |||||
Property, plant and equipment (net) | 3,629 | 3,556 | |||||
Intangible assets | 12,044 | 12,114 | |||||
Goodwill | 676 | 676 | |||||
Long term deferred tax asset | 4 | 4 | |||||
TOTAL ASSETS | 35,706 | 27,833 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Short term bank loan | 3,879 | 3,160 | |||||
Accounts payable | |||||||
- Related party | 452 | 452 | |||||
- Third party | 370 | 211 | |||||
Other payables | |||||||
- Related party | 4,878 | 4,073 | |||||
- Third party | 1,137 | 2,359 | |||||
Accrued expenses | 238 | 176 | |||||
Warranty accrual | 46 | 40 | |||||
Advances from customers | 1,823 | 701 | |||||
Income taxes payable | 7 | 7 | |||||
TOTAL CURRENT LIABILITIES | 12,830 | 11,179 | |||||
Minority interests | 619 | 614 |
STOCKHOLDERS’ EQUITY | |||||||
Common stock-$.001 Par Value; | 21 | 15 | |||||
Issued and Outstanding-21,386,115 shares at March 31, 2007, 14,636,472 shares at December 31, 2006 | |||||||
Series A convertible preferred stock-$0.001 Par Value - 5,357,765 shares at March 31, 2007, 5,692,307 shares at December 31, 2006 | 5 | 6 | |||||
Additional paid-in capital | 15,777 | 9,935 | |||||
Capital surplus | 20 | 20 | |||||
Statutory surplus reserve fund | 1,140 | 1,140 | |||||
Retained earnings | 4,926 | 4,576 | |||||
Accumulated other comprehensive income | 368 | 348 | |||||
Total stockholders’ equity | 22,257 | 16,040 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 35,706 | 27,833 |
Sinoenergy Corporation and Subsidiaries | |||||||
Consolidated Statements of Operations (Unaudited) | |||||||
(In thousands of United States dollars except per-share information) | |||||||
Three Months Ended March 31, | |||||||
2007 | 2006 (Restated) | ||||||
NET REVENUE | 2,626 | 2,500 | |||||
COST OF REVENUE | -1,591 | -1,396 | |||||
GROSS PROFIT | 1,035 | 1,104 | |||||
OPERATING EXPENSES | |||||||
Selling expenses | 40 | 64 | |||||
General and administrative expenses | 582 | 326 | |||||
TOTAL OPERATING EXPENSES | 622 | 390 | |||||
INCOME(LOSS) FROM OPERATIONS | 413 | 714 | |||||
OTHER INCOME(EXPENSES) | |||||||
Other non-operating income | 1 | 2 | |||||
Interest expense | -55 | -42 | |||||
Other expenses | -4 | -3 | |||||
OTHER INCOME (LOSS) NET | -58 | -43 | |||||
INCOME (LOSS) BEFORE INCOME TAXES | 355 | 671 | |||||
Income tax | - | 313 | |||||
INCOME BEFORE MINORITY INTEREST | 355 | 358 | |||||
Minority interest | -5 | -22 | |||||
NET INCOME | 350 | 336 | |||||
Other comprehensive income | |||||||
Foreign currency translation adjustments | 20 | - | |||||
COMPREHENSIVE INCOME | 370 | 336 | |||||
Earnings Per Share -Basic | 0.02 | 0.02 | |||||
Weighted Average Shares Outstanding- Basic | 17,561 | 14,216 | |||||
Earnings Per Share-Diluted | 0.02 | 0.02 | |||||
Weighted Average Shares Outstanding- Diluted | 23,155 | 14,216 |
Sinoenergy Corporation and Subsidiaries | |||||||
Consolidated Statements of Cash Flows (Unaudited) | |||||||
(In thousands of United States dollars) | |||||||
For the Three Months ended March 31, | |||||||
2007 | 2006 (restate) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | 350 | 336 | |||||
Cost of stock option granted | 10 | - | |||||
Minority interest | 5 | 22 | |||||
Depreciation | 100 | 73 | |||||
Amortization of intangible assets | 70 | 74 | |||||
Provision for doubtful debts | 125 | - | |||||
Changes in operating assets and liabilities: | |||||||
Decrease/(Increase) in accounts receivable | 1,275 | -1,781 | |||||
(Increase) in other receivables, deposits and prepayments | -7,081 | -150 | |||||
Decrease in inventories | 108 | -223 | |||||
Increase in accounts payable | 159 | 881 | |||||
Increase in accrued expenses | 68 | 5 | |||||
(Increase)/decrease in deferred expenses | - | 2 | |||||
(Decrease)/increase in advances from customers | 1,121 | -334 | |||||
(Decrease)/Increase in other payables | -288 | 446 | |||||
(Decrease)/increase in income tax payable | - | 492 | |||||
Net cash provided by operating activities | -3,978 | -157 | |||||
CASH FLOWS FROM INVESTING ACTIVITES | |||||||
Payment for purchase of property, plant and equipment | -173 | -65 | |||||
Payment for purchase of land use right | - | - | |||||
Other investment payment | -517 | ||||||
Net cash used in investing activities | -690 | -65 | |||||
CASH FLOWS FROM FINANCING ACTIVITES | |||||||
Cash received from bank loan | 718 | - | |||||
Cash received from warrants exercise | 5,836 | - | |||||
Net cash provided in financing activities | 6,554 | - | |||||
Effect of changes in exchange rate | 19 | - | |||||
Net increase in cash | 1,905 | -222 | |||||
Cash at beginning of the year | 588 | 334 | |||||
Cash at end of the year | 2,493 | 112 | |||||
Supplementary Cash flow disclosure: | |||||||
Interest Paid | 55 | 42 | |||||
Tax Paid | - | - |
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