Hong Kong Highpower Technology, Inc. (NYSE Amex: HPJ), a leading
developer, manufacturer and marketer of nickel-metal hydride
(Ni-MH) and lithium-ion (Li-ion) rechargeable batteries and related
products, today announced financial results for the third quarter
ended September 30, 2009.
Business Highlights
-- Earned net income of $0.18 per diluted share for third quarter 2009,
an 800% increase year-over-year, and 157% increase sequentially;
-- Generated gross margins of 25% on net sales of $21.1 million for third
quarter 2009, an 8% points increase year-over-year, and 5% points
improvement sequentially;
-- Gross profit up 49% year-over-year and 70% sequentially;
-- Debt-to-capital ratio remained healthy consistent with prior quarter;
-- Inventory reduced 36% from the year-ago quarter greatly decreasing
inventory carry exposure.
"Our business trends in the third quarter clearly show that the
ill effects of the global recession on our business are fading,"
said George Pan, Chairman and Chief Executive Officer of Hong Kong
Highpower Technology. "We produced a substantial increase in both
our net sales and gross profit over the second quarter, which
demonstrates that we are poised to capture even greater
rechargeable battery market share as the economy continues to
strengthen due to our ongoing customer relationships and strong
financial position.
"Recently, we also announced a significant new contract with
Siemens Gigaset Communications to supply rechargeable batteries for
cordless phones sold in Europe under the Gigaset brand. This
contract represents a significant new ODM relationship for the
Company.
"The Company's lithium-ion battery products division, which was
launched in 2008, continues to grow. At the end of the third
quarter, average monthly production reached over 800,000 pieces,
which is still well ahead of our initial expectations.
"As we head into the fourth quarter, we believe 2009 will be a
much stronger year for us in terms of profitability and overall
financial performance," said Mr. Pan. "Our net income through the
first nine months is already double of where it stood for the
comparable time frame in 2008. This strong financial performance is
mainly the result of the fading effects of global economic
recession on Hong Kong Highpower Technology's business and better
raw material cost management."
Third Quarter 2009 Financial Results
Net sales for the third quarter ended September 30, 2009
increased 2.8% to $21.1 million, compared to $20.5 million for the
third quarter ended September 30, 2008. On a sequential basis,
third quarter net sales increased by 36.3% compared to $15.4
million for the second quarter of 2009. The year-over-year increase
was largely due to an increase in the number of battery units sold
and was partially offset by a decrease in the average selling price
of our battery units.
Gross profit for the third quarter ended September 30, 2009
increased 48.7% to $5.2 million, compared to $3.5 million for the
third quarter ended September 30, 2008. On a sequential basis,
third quarter gross profit increased 69.9%, compared to $3.1
million for the second quarter 2009. Gross margin was 24.8% for the
third quarter ended September 30, 2009, compared to 17% for the
third quarter ended September 30, 2008, and 19.9% for the second
quarter 2009. The increase in our gross profit is primarily due to
a decrease in the average per unit cost of goods sold during the
three months ended September 30, 2009 as compared to same period in
2008.
Selling and distribution costs were $767,200 or 3.6% for the
third quarter ended September 30, 2009, compared to $800,000 or
3.9% for the comparable period in 2008 and $580,000 or 3.8% for the
second quarter 2009.
General and administrative expenses, including stock-based
compensation, were $1.5 million or 7% of net sales for the third
quarter ended September 30, 2009, compared to $1.9 million, or 9.4%
of net sales for the third quarter 2008, and $1.0 million or 6.8%
of net sales for the second quarter 2009.
During the three months ended September 30, 2009, the exchange
rate of the Renminbi ("RMB") to the U.S. Dollar ("USD") only
decreased approximately 0.03% from the level at the end of June 30,
2009. There were no obvious effects that resulted from the foreign
current exchange rate.
The Company recorded a provision for income taxes of $529,200
for the third quarter ended September 30, 2009, compared with
provisions for income taxes of $35,700 for the third quarter 2008
and $229,000 for the second quarter 2009.
Net income for the third quarter of 2009 was $2.4 million, or
$0.18 per diluted share, based on 13.6 million weighted average
shares outstanding. This compares with third quarter 2008 net
income of $289,400, or $0.02 per diluted share, based on 13.6
million weighted average shares outstanding, and second quarter
2009 net income of $969,000, or $0.07 per diluted share, based on
13.8 million weighted average shares outstanding.
Balance Sheet
At September 30, 2009, Hong Kong Highpower Technology had cash
and cash equivalents and restricted cash totaling $11.7 million,
total assets of $52 million, working capital of $6.5 million and
stockholders' equity of $20.5 million. Bank credit facilities
totaled $23.2 million at September 30, 2009, of which $16.7 million
was available as unused credit.
Conference Call and Webcast
Management of Hong Kong Highpower Technology will host a
conference call today, Thursday, November 12, 2009 at 8:00 a.m.
Pacific time/11:00 a.m. Eastern time to discuss third quarter 2009
financial results and answer questions.
Individuals interested in participating in the conference call
may do so by dialing 800-891-5765 from the U.S., or 702-696-4830
from outside the U.S. Those interested in listening to the
conference call live via the Internet may do so by visiting the
Investor Relations section of the Company's Web site at
www.haopengbattery.com or www.InvestorCalendar.com.
A telephone replay will be available for 48 hours following the
conclusion of the call by dialing 800-642-1687 from the U.S., or
706-645-9291 from outside the U.S., and entering reservation code
40001543. A webcast replay will be available for one year.
About Hong Kong Highpower Technology, Inc.
Hong Kong Highpower Technology develops, manufactures and
markets rechargeable nickel metal hydride (Ni-MH) and lithium-ion
(Li-ion) batteries and related products for use in a variety of
electronic devices. The majority of Hong Kong Highpower
Technology's products are distributed worldwide to markets in the
United States, Europe, China, Hong Kong, Southeast Asia and Taiwan.
For more information, visit www.haopengbattery.com.
To be added to the Company's email distribution for future news
releases, please send your request to HPJ@finprofiles.com. Company
news can also be found at
http://ir.haopengbattery.com/en/introduce028.html.
Media and Investor Inquiries:
Henry H. Ngan
Chief Financial Officer
+1-917-887-0614
ir@highpowerbatteries.net
Financial Profiles, Inc.
Tricia Ross
(310) 277-4711
HPJ@finprofiles.com
Forward-Looking Statement
This press release contains "forward-looking statements" within
the meaning of the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995 that are not historical
facts. These statements can be identified by the use of
forward-looking terminology such as "believe," "expect," "may,"
"will," "should," "project," "plan," "seek," "intend," or
"anticipate" or the negative thereof or comparable terminology, and
include discussions of strategy, and statements about industry
trends and the Company's future performance, operations and
products. Such statements involve known and unknown risks,
uncertainties and other factors that could cause the Company's
actual results to differ materially from the results expressed or
implied by such statements. For a discussion of these and other
risks and uncertainties see "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's public filings with the SEC. Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. The
Company has no obligation to update the forward-looking information
contained in this press release.
- financial tables to follow -
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in US Dollars)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
$ $ $ $
Net sales 21,056,149 20,473,472 47,811,438 57,326,510
Cost of sales (15,835,110) (16,961,664) (37,120,495) (47,731,537)
----------- ----------- ----------- -----------
Gross profit 5,221,039 3,511,808 10,690,943 9,594,973
Depreciation (50,120) (49,792) (169,309) (130,448)
Selling and
distribution costs (767,194) (799,666) (1,879,001) (1,761,386)
General and
administrative costs,
including stock-based
compensation (1,464,392) (1,915,367) (3,613,654) (4,256,468)
Loss on exchange rate
difference (6,813) (159,310) (62,402) (994,985)
----------- ----------- ----------- -----------
Income from operations 2,932,520 587,673 4,966,577 2,451,686
Change in fair value of
currency forwards (7,483) - (117,106) 29,102
Change in fair value of
warrants - (204,750) - (276,000)
Other income 289,843 101,179 378,432 325,833
Interest expenses (199,125) (159,063) (279,622) (559,830)
Other expenses (52,878) - (223,963) -
----------- ----------- ----------- -----------
Income before taxes 2,962,877 325,039 4,724,318 1,970,791
Income taxes (529,201) (35,683) (919,020) (266,861)
----------- ----------- ----------- -----------
Net income for the
period 2,433,676 289,356 3,805,298 1,703,930
Other comprehensive
income
- Foreign currency
translation gain (99,446) 109,161 392,618 857,900
----------- ----------- ----------- -----------
Comprehensive income 2,334,230 398,517 4,197,916 2,561,830
=========== =========== =========== ===========
Earnings per share of
common stock
- Basic 0.18 0.02 0.28 0.13
=========== =========== =========== ===========
- Diluted 0.18 0.02 0.28 0.13
=========== =========== =========== ===========
Weighted average number
of common stock
- Basic 13,562,597 13,562,596 13,621,466 13,088,737
=========== =========== =========== ===========
- Dilutive 13,612,097 13,615,096 13,673,966 13,108,644
=========== =========== =========== ===========
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
As of
---------------------------
September 30, December 31,
2009 2008
(Unaudited) (Audited)
$ $
ASSETS
Current Assets:
Cash and cash equivalents 7,203,175 4,175,780
Restricted cash 4,552,798 4,845,478
Accounts receivable 11,260,286 8,765,593
Notes receivable 400,876 429,815
Prepaid expenses and other receivables 4,191,720 1,732,709
Deferred charges - Stock-based compensation - 216,667
Inventories 10,437,454 11,208,697
------------- -------------
Total Current Assets 38,046,309 31,374,739
Deferred tax assets 137,400 104,556
Plant and equipment, net 9,962,416 7,778,477
Leasehold land, net 3,002,530 3,050,510
Intangible asset, net 862,500 900,000
Currency forward - 116,157
------------- -------------
TOTAL ASSETS 52,011,155 43,324,439
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Non-trading foreign currency derivatives
liabilities 5,335 293,830
Accounts payable 15,152,492 8,306,123
Other payables and accrued liabilities 9,067,162 3,139,275
Income taxes payable 812,688 476,330
Bank borrowings 6,495,909 14,829,228
------------- -------------
Total Current Liabilities 31,533,586 27,044,786
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock
Par value: US$0.0001
Authorized: 10,000,000 shares
Issued and outstanding: none
Common stock
Par value : US$0.0001
Authorized: 100,000,000 shares
Issued and outstanding: 2009 - 13,562,597
shares (2008 - 13,562,596 shares) 1,356 1,356
Additional paid-in capital 5,048,194 5,048,194
Accumulated other comprehensive income 1,987,709 1,595,091
Retained earnings 13,440,310 9,635,012
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 20,477,569 16,279,653
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 52,011,155 43,324,439
============= =============
Media and Investor Inquiries: Henry H. Ngan Chief Financial
Officer +1-917-887-0614 Email Contact Financial Profiles, Inc.
Tricia Ross (310) 277-4711 Email Contact
Hong Kong Highpower Technology, Inc. (AMEX:HPJ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hong Kong Highpower Technology, Inc. (AMEX:HPJ)
Historical Stock Chart
From Apr 2023 to Apr 2024