Exhibit 99.1
China Shengda Packaging Group Inc.
Teng Daliang CEO
Tel: +86-0571-82835778
E-mail:tdl@sdgroup.com
http://www.cnpti.com
FOR IMMEDIATE RELEASE
CORRECTION -- CHINA SHENGDA PACKAGING GROUP INC. ANNOUNCES
FIRST NINE MONTHS 2010 RESULTS
HANGZHOU, CHINA — November 8, 2010 — China Shengda Packaging Group Inc. (OTCBB: CPAK), formerly known as China Packaging Group Inc., a leading paper packaging solution provider in China, is issuing this press release to correct a press release issued earlier today, under the same headline to clarify that the financial highlights included in the previous press release related to the first nine months of the year rather than the third quarter, to correct the basic and basic and fully diluted net income per share for the current period and the same period a year ago, and to correct a typographical error in the previous press release in the amount of increase in revenues in the current period accounted for by increased sales volume.
First Nine Months 2010 Financial Highlights
- Revenues increased 31.5% year-over-year to $91.9 million
- Gross profit increased 38.9% year-over-year to $25.7 million
- Income before income tax expense and noncontrolling interest increased 84.3% year-over-year to $18.8 million
- Net income increased 61.5% year-over-year to $14.5 million
- Basic and fully diluted net income per share was $0.47 for the first nine months of 2010, compared with net income per share of $0.32 for the first nine months of 2009
Chairman Nengbin Fang commented, “I am very pleased to report strong results for the first nine months of 2010. The favorable economic conditions in the YRD, where most of our customers are located, in the first nine months of this year resulted in strong demand for our products. We recently acquired Suzhou Asian & American Paper Products Co., Ltd., a Suzhou-based paper manufacturing company. We intend to leverage the new subsidiary’s proximity to some of our major customers to better serve these customers and to expand into new markets. For the full year 2010, we anticipate revenues in the range of $122 to $126 million, or a year-over-year growth of 28.8% to 33.1%.”
First Nine Months 2010 Unaudited Financial Results
In the first nine months of 2010, revenues totaled $91.9 million versus $69.9 million in the first nine months of last year, as a result of higher selling prices, which accounted for a $16.3 million increase in revenues, and increased sales volume from strengthened demand for our products, including demand from our major customers in the food, beverage and cigarettes, home appliances and electronics sectors, brought about by the recovery of the economy, which accounted for $5.7 million of increase in our revenues.
Our Gross profit totaled $25.7 million, up 38.9% from $18.5 million in the first nine months of last year. Gross profit as a percentage of revenues was 28.0% in the first nine months of 2010, as compared to 26.5% in the first nine months of last year. The increase in gross profit was partially due to the addition of higher margin packaging products, including waterproof and extra heavy-duty packaging, to our product offering. The increase in gross profit margin was mainly the result of the increase in revenues with a proportionately smaller increase in the cost of goods sold.
Selling expenses decreased $1.9 million, or 37.6%, to $3.2 million in the first nine months of 2010, from $5.1 million in the first nine months of last year. Lower traveling and advertising expenses accounted for $0.7 million of the decrease. As a percentage of revenues, selling expenses in the first nine months of 2010 decreased to 3.5% from 7.3% from the first nine months of last year.
Freight generally accounts for approximately 65% of selling expenses. We engaged a logistics specialist in 2009 to evaluate how we may improve efficiency. As a result of the evaluation, we changed our delivery logistics, which reduced freight costs from $3.3 million in the first nine months of 2009 to $2.1 million in the first nine months of 2010.
Net income increased $5.5 million, or 61.5%, to $14.5 million in the first nine months of 2010 from $9.0 million in the first nine months of last year. The growth in our net income was delivered through a combination of higher revenues, higher gross profit, and lower costs due to cost control of freight cost and marketing expense.
Diluted earnings per share totaled $0.47 in the first three quarters versus $0.32 in the same period of last year. Weighted average diluted share count was 29.9 million in the first nine months of 2010.
Liquidity
Cash and cash equivalents was $14.9 million and restricted cash was $11.2 million, respectively, as of September 30, 2010 compared with $12.7 million and $4.4 million, respectively as of September 30, 2009.
During the first nine months of 2010, there was a net cash inflow of $2.2 million, compared to $0.3 million in the first nine months of 2009.
Fiscal 2010 Guidance
We expect that revenues for the fiscal full year of 2010 will be in the range of $122 to $126 million, compared with $94.7 million in 2009.
In October 2010, one of our wholly-owned subsidiaries, Zhejiang Great Shengda Packaging Co., Ltd. (“Great Shengda”) was qualified as a high-tech company, as a result of which Great Shengda will be entitled to a preferential tax rate of 15% for three years beginning in 2010 and the preferential tax rate will be applied retroactively from January 1, 2010. The preferential tax rate is subject to completion of registration with PRC Ministry of Science and Technology and approval by the local tax bureau. Great Shengda is in the process of registering its high-tech status with the competent authorities.
Subject to the above preferential tax rate, we expect to generate net income attributable to China Shengda Packaging Group Inc. common stockholders in the range of $20 million to $21 million for the full fiscal year of 2010, compared with $12.2 million in 2009. The guidance represents the Company’s current view, and is subject to change.
About China Shengda Packaging Group
China Shengda Packaging Group Inc. is a leading paper packaging company in China. It is principally engaged in the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons in a variety of sizes and strengths. It also manufactures corrugated paperboards, which are used for the production of our flexo-printed and color-printed cartons. The Company provides paper packaging solutions to a wide variety of industries, including food, beverage, cigarette, household appliance, consumer electronics, pharmaceuticals, chemicals, machinery and other consumer and industrial sectors in China. For more information, visit http://www.cnpti.com
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Safe Harbor Statement
This press release may contain forward-looking statements. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors include, but are not limited to, the Company's ability to develop and market new products, the ability to access capital for expansion, the ability to acquire other companies, changes from anticipated levels of sales, changes in national or regional economic and competitive conditions, changes in relationships with customers, changes in principal product profits 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 update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. This press release is based upon information available to the public, as well as other information from sources which management believes to be reliable, but it is not guaranteed by the Company to be accurate, nor does the Company purport it to be complete. Opinions expressed herein are those of management as of the date of publication and are subject to change without notice.
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