SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013
First Quarter Financial Results
PINGDINGSHAN, China,
Nov. 14, 2012
/PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical
Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a
vertically-integrated coal and coke processor, announced today its
financial results for the fiscal 2013 first quarter ended
September 30, 2012.
Fiscal 2013 First Quarter vs. Fiscal 2012 First
Quarter
- Total revenue decreased by 20.7% to $17.6 million, as compared to $22.2 million.
- Gross margin decreased to 10.9%, as compared to 32.5%.
- Net income, including foreign currency transaction adjustment,
was $0.7 million or $0.03 per diluted share, as compared to net
income of $8.3 million or
$0.39 per diluted share.
Product
type
|
Fiscal 2013 First
Quarter
|
Fiscal 2012 First
Quarter
|
MT*
Sold
|
Revenue
(million)
|
% of Total
Revenue
|
Weighted Average
Price/MT*
|
MT*
Sold
|
Revenue
(million)
|
% of Total
Revenue
|
Weighted Average
Price/MT*
|
Coke
|
47,848
|
$ 9.2
|
53%
|
$ 193
|
42,272
|
$ 10.1
|
45%
|
$ 240
|
Washed
Coal
|
40,187
|
$ 7.1
|
40%
|
$ 175
|
44,725
|
$ 8.3
|
38%
|
$ 185
|
Raw
Coal
|
16,056
|
$ 0.9
|
5%
|
$ 58
|
39,360
|
$ 3.0
|
14%
|
$
77
|
Coal
Tar
|
1,433
|
$ 0.4
|
2%
|
$ 256
|
2,788
|
$ 0.7
|
3%
|
$ 252
|
*metric ton
Discussing fiscal 2013 first quarter financial results,
SinoCoking's Chairman and CEO, Mr. Jianhua
Lv, noted, "Sales volume of coke increased by 13.2%, as we
produced and sold coke powder especially suitable for the
non-ferrous metallurgical and special steel industries. Lower
demand for grade II coke resulted in lower revenues for coke. Sales
volume for raw and washed coal decreased from a year ago, due to
insufficient amounts of coal in stock for both categories in the
fiscal 2013 first quarter, as compared to the same period of
2012."
Mr. Lv continued, "As was the case in fiscal 2012, during the
fiscal 2013 first quarter we met our coal requirements largely by
purchasing raw coal from other provinces. Due to the ongoing mining
moratorium, coal supplies in Henan
Province remained limited as were production activities for
all producers other than state-owned enterprises. Operations at our
four coal mines remain halted as we continue to wait for clearance
to resume operations. Thus far, no private coal mine operators have
received clearance, and although we anticipate the mining
moratorium will end sometime in the first half of the 2013 calendar
year, there can be no assurance as to exactly when the mining
moratorium will end and as to when we will receive such
clearance."
He continued, "Our gross margin for the quarter declined due to
product mix as we purchased more coking coal in the open market, at
higher prices, for both coking and coal processing. We expect our
gross margin to remain depressed until the mining moratorium for
mid-size coal producers in Henan
Province is lifted."
Mr. Lv added, "Demand for coke remains soft as a result of the
weak demand for steel, due to tighter governmental control of real
estate and land development. As a reaction to the weak demand for
coke, we have slowed construction of our new state-of-the-art
coking plant, which is located on a 460,000 square meter site
adjacent to our current plant in Pingdingshan. We expect to ramp up
construction once the coke market shows signs of improvement. When
completed as designed, the plant is expected to have an estimated
coke-producing capacity of up to 900,000 metric tons per year, as
well as the ability to generate power and distill chemicals such as
crude benzol, sulfur and ammonium sulfate from the coking process.
The plant is also expected to produce purified coal gas, which we
plan to sell as a fuel source to local residents through the
state-owned gas grid, at a 20% lower price than liquid natural gas
currently used by local residents."
Mr. Sam Wu, SinoCoking's Chief
Financial Officer noted, "We continue to fund our business
activities from cash flow from operations and bank loans. As
required by the Henan government,
we are in process of upgrading safety-related systems at our coal
mines in order to be approved to resume our mining operations and
we are also in process of merging the operations of Hongchang mine,
Shunli mine and Shuangrui mine into a fully integrated mining
operation. In the first quarter of fiscal 2013, we invested
approximately $24.6 million in these
mine upgrading and consolidation projects. To date, we have
invested a total of approximately $27.8
million as follows:
- Mine upgrading: total estimated cost of approximately
$35.0 million; 70% or approximately
$24.5 million to be paid by
SinoCoking and the remainder by Henan Coal Seam Gas, our
joint-venture partner. To date, we have paid approximately
$16.9 million for these safety
upgrades which are expected to be completed in calendar 2013.
- Mine consolidation: total estimated cost of approximately
$32.0 million. To date, we have paid
approximately $10.9 million toward
such integration. We expect to complete such integration 4-6
months after we obtain clearance from local authorities to resume
our mining operations, which clearance we expect to receive in
calendar year 2013.
We have access to an aggregate of approximately RMB 360 million under a medium-term loan from
Bairui Trust. Additionally, we have applied for a RMB 270 million line of credit from Shanghai
Pudong Development Bank, which we expect to obtain before 2012
year-end, although there is no assurance that we will be able to
obtain such line of credit. We believe that cash on hand and our
credit lines are sufficient for our current needs for capital."
Mr. Lv. concluded, "We believe that SinoCoking is well
positioned to take advantage of growth opportunities once the coke
market recovers in 2013. Our business plan is to:
- Continue the modernization of our existing production
facilities; complete the construction of our new coking facility
and achieve greater energy efficiency while reducing environmental
impacts;
- Recapture more coking by-products for refinement into useful
industrial chemicals, and produce more high value-added chemical
products;
- Acquire other coal mines to source raw materials; and,
- Search for opportunities to establish long-term strategic
business relationships with quality mining companies to expand our
coal trading business.
Conference Call
Mr. Lv and Mr. Wu will host a conference call on Thursday, November 15, 2012 at 9:00 am ET / 10:00
pm China time to discuss
these results as well as recent corporate developments.
Interested parties may participate in the call by dialing: (201)
493-6744. Please call in 10 minutes before the conference is
scheduled to begin and ask for the SinoCoking call. After opening
remarks, there will be a question and answer period. Questions may
be asked during the live call, or alternatively, you may e-mail
questions in advance to lcati@equityny.com.
The conference call will also be broadcast live over the
Internet. To listen to the webcast, please go to
http://www.investorcalendar.com/conferences/event.asp?ID=170239 or
visit the Company's website www.sinocokingchina.com and then go to
Presentations/Events page where the conference call is posted.
Please go to the website at least 15 minutes early to register, and
download and install any necessary audio software. If you are
unable to listen live, the conference call will be archived and can
be accessed for approximately 90 days. We suggest listeners use
Microsoft Internet Explorer as their web browser.
About SinoCoking
SinoCoking and Coke Chemical Industries, Inc., a Florida corporation, is a
vertically-integrated coal and coke processor that uses coal from
both its own mines and that of third-party mines to produce basic
and value-added coal products for steel manufacturers, power
generators, and various industrial users. SinoCoking has been
producing metallurgical coke since 2002, and acts as a key supplier
to regional steel producers in central China. SinoCoking also produces and supplies
thermal coal to its customers in central China. SinoCoking currently owns its assets
and conducts its operations through its subsidiaries, Top Favour
Limited and Pingdingshan Hongyuan Energy Science and Technology
Development Co., Ltd., and its affiliated companies, Henan Province
Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking
Factory, Baofeng Hongchang Coal Co., Ltd., Baofeng Hongguang
Environment Protection Electricity Generating Co., Ltd., Zhonghong
Energy Investment Company, Henan Hongyuan Coal Seam Gas Engineering
Technology Co., Ltd., Baofeng Shuangri Coal Mining Co., Ltd., and
Baofeng Xingsheng Coal Mining Co., Ltd.
For further information about SinoCoking, please refer to our
periodic reports filed with the Securities and Exchange
Commission.
Forward Looking Statement
This press release contains forward-looking statements,
particularly as related to, among other things, the business plans
of the Company, statements relating to goals, plans and projections
regarding the Company's financial position and business strategy.
The words or phrases "plans", "would be," "will allow," "intends
to," "may result," "are expected to," "will continue,"
"anticipates," "expects," "estimate," "project," "indicate,"
"could," "potentially," "should," "believe," "think", "considers"
or similar expressions are intended to identify "forward-looking
statements." These forward-looking statements fall within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Act of 1934 and are subject to the safe
harbor created by these sections. Actual results could differ
materially from those projected in the forward-looking statements
as a result of a number of risks and uncertainties. Such
forward-looking statements are based on current expectations,
involve known and unknown risks, a reliance on third parties for
information, transactions or orders that may be cancelled, and
other factors that may cause our actual results, performance or
achievements, or developments in our industry, to differ materially
from the anticipated results, performance or achievements expressed
or implied by such forward-looking statements. Factors that could
cause actual results to differ materially from anticipated results
include risks and uncertainties related to the fluctuation of
local, regional, and global economic conditions, the performance of
management and our employees, our ability to obtain financing,
competition, general economic conditions and other factors that are
detailed in our periodic reports and on documents we file from time
to time with the Securities and Exchange Commission. Statements
made herein are as of the date of this press release and should not
be relied upon as of any subsequent date. The Company cautions
readers not to place undue reliance on such statements. The Company
does not undertake, and the Company specifically disclaims any
obligation, to update any forward-looking statements to reflect
occurrences, developments, unanticipated events or circumstances
after the date of such statement. Actual results may differ
materially from the Company's expectations and estimates. The
Company provides no assurances that any potential acquisitions will
actually be consummated, or if consummated that such acquisitions
will be on terms and conditions anticipated on the date of this
press release, and the Company makes no assurances with regard to
any results of any such acquisitions.
Contact:
SinoCoking
|
Investor Relations
Counsel:
|
Sam Wu, Chief Financial
Officer
|
The Equity Group
Inc.
|
+
86-375-2882-999
|
Lena Cati
|
sinocoking@sina.com
|
lcati@equityny.com
/ (212) 836-9611
|
www.sinocokingchina.com
|
www.theequitygroup.com
|
See Accompanying Tables
SINOCOKING COAL AND
COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
(UNAUDITED)
|
|
|
|
|
|
For the Three Months
Ended
September 30,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
REVENUE
|
$
|
17,562,194
|
$
|
22,151,334
|
|
|
|
|
|
|
|
COST OF
REVENUE
|
|
15,652,938
|
|
14,947,457
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
1,909,256
|
|
7,203,877
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Selling
|
|
43,581
|
|
81,543
|
|
General and
administrative
|
|
626,828
|
|
427,419
|
|
|
Total operating
expenses
|
|
670,409
|
|
508,962
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
1,238,847
|
|
6,694,915
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
Interest
income
|
|
222,640
|
|
558,551
|
|
Interest
expense
|
|
(1,021,604)
|
|
(415,559)
|
|
Other finance
expense
|
|
(72,244)
|
|
(35,666)
|
|
Other (expense) income,
net
|
|
-
|
|
(17,581)
|
|
Change in fair value of
warrants
|
|
673,530
|
|
3,019,722
|
|
|
Total other (expense)
income, net
|
|
(197,678)
|
|
3,109,467
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
1,041,169
|
|
9,804,382
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
381,256
|
|
1,495,669
|
|
|
|
|
|
|
|
NET INCOME
|
|
659,913
|
|
8,308,713
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(288,695)
|
|
1,188,744
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
$
|
371,218
|
$
|
9,497,457
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
|
|
|
|
|
|
Basic
|
|
21,121,372
|
|
21,090,948
|
|
Diluted
|
|
21,121,372
|
|
21,090,948
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
Basic
|
$
|
0.03
|
$
|
0.39
|
|
Diluted
|
$
|
0.03
|
$
|
0.39
|
|
|
|
|
|
|
|
SINOCOKING COAL AND
COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
|
ASSETS
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
|
|
|
2012
|
|
2012
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash
|
$
|
410,594
|
$
|
2,366,718
|
|
Restricted
cash
|
|
8,081,000
|
|
9,668,000
|
|
Accounts receivable,
trade, net
|
|
11,632,935
|
|
12,017,231
|
|
Notes receivable,
trade
|
|
6,388,164
|
|
14,176,800
|
|
Notes receivable, mine
acquisition
|
|
-
|
|
9,155,520
|
|
Other
receivables
|
|
635,932
|
|
1,412,008
|
|
Loans
receivable
|
|
8,933,037
|
|
9,849,937
|
|
Refundable
deposit
|
|
4,743,000
|
|
4,752,000
|
|
Inventories
|
|
3,543,090
|
|
2,382,444
|
|
Advances to
suppliers
|
|
7,344,232
|
|
12,267,806
|
|
Prepaid
expenses
|
|
391,870
|
|
633,313
|
|
|
Total current
assets
|
|
52,103,854
|
|
78,681,777
|
PLANT AND EQUIPMENT,
net
|
|
15,861,813
|
|
16,211,984
|
CONSTRUCTION IN
PROGRESS
|
|
39,304,970
|
|
39,379,553
|
OTHER ASSETS
|
|
|
|
|
|
Prepayments
|
|
60,635,515
|
|
36,071,853
|
|
Intangible assets,
net
|
|
31,558,360
|
|
31,635,487
|
|
Long-term
investments
|
|
2,820,378
|
|
2,825,730
|
|
Other assets
|
|
110,670
|
|
110,880
|
|
|
Total other
assets
|
|
95,124,923
|
|
70,643,950
|
|
|
|
Total assets
|
$
|
202,395,560
|
$
|
204,917,264
|
LIABILITIES AND
EQUITY
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Short term loans -
banks
|
$
|
26,244,600
|
$
|
26,294,400
|
|
Accounts payable,
trade
|
|
570
|
|
4,023
|
|
Notes payable
|
|
3,162,000
|
|
4,752,000
|
|
Other payables and
accrued liabilities
|
|
878,330
|
|
802,028
|
|
Other payables - related
parties
|
|
188,829
|
|
156,227
|
|
Acquisition
payable
|
|
4,584,900
|
|
4,593,600
|
|
Customer
deposits
|
|
138,195
|
|
138,457
|
|
Taxes payable
|
|
914,981
|
|
1,522,062
|
|
|
Total current
liabilities
|
|
36,112,405
|
|
38,262,797
|
LONG TERM
LIABILITIES
|
|
|
|
|
|
Long term
loans
|
|
36,363,000
|
|
36,432,000
|
|
Warrants
liability
|
|
43,118
|
|
716,648
|
|
|
Total long term
liabilities
|
|
36,406,118
|
|
37,148,648
|
|
|
|
Total
liabilities
|
|
72,518,523
|
|
75,411,445
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Common shares, $0.001
par value, 100,000,000 authorized,
|
|
|
|
|
|
|
21,121,372 issued and
outstanding as of
|
|
|
|
|
|
|
September 30, 2012 and
June 30, 2012
|
|
21,121
|
|
21,121
|
|
Additional paid-in
capital
|
|
3,592,053
|
|
3,592,053
|
|
Statutory
reserves
|
|
3,689,941
|
|
3,689,941
|
|
Retained
earnings
|
|
110,917,045
|
|
110,257,132
|
|
Accumulated other
comprehensive income
|
|
7,325,277
|
|
7,613,972
|
|
|
Total SinoCoking Coal
and Coke Chemicals Industries, Inc's equity
|
|
125,545,437
|
|
125,174,219
|
|
NONCONTROLLING
INTERESTS
|
|
4,331,600
|
|
4,331,600
|
|
|
|
Total equity
|
|
129,877,037
|
|
129,505,819
|
|
|
|
Total liabilities and
equity
|
$
|
202,395,560
|
$
|
204,917,264
|
|
|
|
|
|
|
|
|
|
SOURCE SinoCoking Coal and Coke Chemical Industries, Inc.