2014

SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2014 Second Quarter Financial Results Gained Access to 650,000 Metric Tons Coking Capacity Through Entrustment Arrangement

PINGDINGSHAN, China, Feb. 19, 2014 /PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced its financial results for the fiscal 2014 second quarter ended December 31, 2013.  

Fiscal 2014 Second Quarter vs. Fiscal 2013 Second Quarter

  • Total revenue decreased to $13.2 million, as compared to $21.2 million
  • Gross margin improved to 15.6%, as compared to 13.8%. 
  • Income from operations decreased to $1.5 million, as compared to $2.3 million.
  • Net loss was $0.1 million or $(0.01) per diluted share, as compared to net income of $0.8 million or $0.04 per diluted share.

Fiscal 2014 First Half vs. Fiscal 2013 First Half

  • Total revenue decreased to $30.7 million, as compared to $38.8 million
  • Gross margin improved to 16.8%, as compared to 12.5%. 
  • Income from operations increased to $4.0 million, as compared to $3.6 million.
  • Net income decreased to $1.1 million or $0.05 per diluted share, as compared to $1.5 million or $0.07 per diluted share.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv, commented, "Our fiscal 2014 second quarter performance was mainly due to a significant decrease in sales of coal products, which reflected ongoing weak market demand, despite winter generally being a high coal consumption season."

Mr. Lv added, "Approximately 95% of our revenue came from coke products and only 5% from coal products, as compared to approximately 51% and 49%, respectively, in the same period of fiscal 2013.  This reflects changes to our operating strategy in order to adapt to market conditions, as current coal demand remains very weak due to over capacity of crude steel.  Thus, we temporarily stopped raw coal and washed coal trading. On the other hand, we have begun selling coke and coke powder to Fangda Special Steel Technology Co., Ltd. ("Fangda Steel"), one of China's best-known special steel manufacturers, and we expect sales to Fangda Steel to steadily rise."

Mr. Lv continued. "Although gross profit as compared to the same period of fiscal 2013 decreased by 30% to $2.1 million, gross margin increased to 15.6% as we stopped coal trading, which tends to be a low margin business."

Recent Business Developments

On December 18, 2013, we signed a 5-year entrusting agreement with Jiyuan Tianlong Coking Co., Ltd ("Tianlong") to manage Tianlong's coking equipment. Founded in 2003, Tianlong is a joint-venture private enterprise engaged in the production of metallurgical coke.

As per the terms of the agreement, Hongli will utilize Tianlong's equipment, which has an annual coking capacity of 650,000 metric tons, to produce high quality metallurgical coke for sales to steel manufacturers such as Fangda Steel. 

Including Tianlong's equipment, the Company has more than doubled its coking capacity to over 1.1 million metric tons annually as follows: 

  • Over 250,000 metric tons through Hongli's Baofeng plant;
  • 200,000 metric tons through the Pingdingshan Hongfeng Coal Processing and Coking, Ltd. ("Hongfeng"), a plant which the Company leased in early 2013 and plans to renew once the current lease expires in March 2014; and
  • 650,000 metric tons from Tianlong's equipment.

In November 2013, we signed an agreement to supply Fangda Steel with 6,000 metric tons of grade II coke and 3,000 metric tons of clean coke per month, and 36,000 metric tons of grade II coke and coke powder have been delivered as of December 31, 2013.  Our added coking capacity will enable us meet Fangda Steel's coke requirements even should they increase significantly.

Mr. Lv noted, "Since current market demand for coke products remains soft and timing of full recovery remains unknown, we have put the construction of our new coking plant on hold and have revised our business strategy as follows:

  • Expanded our access to raw coal by signing an agreement with a coal producer;
  • Increased our coke production capacity and product offering by leasing third party facilities and equipment with little upfront capital; and
  • Increased revenue stream by signing the agreement with Fangda Steel.

As a result of these initiatives, we have minimized the risks in and optimized our use of working capital by proactively using our assets."

Mr. Lv concluded, "We will continue our efforts to seek opportunities and innovative ways to support our business. We expect the foregoing initiatives to begin to yield positive results in fiscal 2014, and we look forward to report our progress in the coming months."

Conference Call

Mr. Lv and Mr. Sam Wu, CFO, will host a conference call on Friday, February 21, 2014 at 9:30 am ET 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/IC/CEPage.asp?ID=172312 or visit the Company's website www.scokchina.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.scokchina.com

www.theequitygroup.com

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES

 CONDESED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)





For the Three Months Ended
December 31,


For the Six Months Ended
December 31,





2013


2012


2013


2012












REVENUE

$

13,208,253

$

21,238,642

$

30,684,223

$

38,800,836












COST OF REVENUE


11,152,697


18,302,685


25,531,366


33,955,623












GROSS PROFIT    


2,055,556


2,935,957


5,152,857


4,845,213












OPERATING EXPENSES:










Selling


39,754


42,176


80,628


85,757


General and administrative


475,246


581,345


1,078,827


1,208,173



Total operating expenses


515,000


623,521


1,159,455


1,293,930












INCOME FROM OPERATIONS


1,540,556


2,312,436


3,993,402


3,551,283












OTHER INCOME (EXPENSE)










Interest income


184,247


208,461


367,340


431,101


Interest expense


(1,311,812)


(997,461)


(2,090,579)


(2,019,065)


Other finance expense


(87,717)


(91,123)


(150,260)


(163,367)


Other income, net


-


8,333


-


8,333


Change in fair value of warrants


-


41,317


12


714,847



Total other expense, net


(1,215,282)


(830,473)


(1,873,487)


(1,028,151)












INCOME BEFORE INCOME TAXES


325,274


1,481,963


2,119,915


2,523,132












PROVISION FOR INCOME TAXES


431,932


650,238


1,065,689


1,031,494












NET INCOME (LOSS)


(106,658)


831,725


1,054,226


1,491,638












OTHER COMPREHENSIVE INCOME (LOSS)










Foreign currency translation

adjustment


756,310


280,321


1,601,757


(8,374)












COMPREHENSIVE INCOME

$

649,652

$

1,112,046

$

2,655,983

$

1,483,264












WEIGHTED AVERAGE NUMBER

OF COMMON SHARES










Basic and diluted


21,121,372


21,121,372


21,121,372


21,121,372












EARNINGS (LOSS) PER SHARE










Basic and diluted

$

(0.01)

$

0.04

$

0.05

$

0.07

 

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

ASSETS






December 31,


June 30,






2013


2013

CURRENT ASSETS






Cash

$

87,328

$

782,018


Restricted cash


-


9,708,000


Accounts receivable, trade


13,561,596


9,474,197


Other receivables and deposits


5,790,761


4,334,370


Loans receivable


8,032,037


8,032,037


Inventories


3,601,486


3,018,909


Advances to suppliers


6,893,705


8,791,837


Prepaid expenses


194,530


-



Total current assets


38,161,443


44,141,368









PLANT AND EQUIPMENT, net


14,867,527


15,269,766









CONSTRUCTION IN PROGRESS


40,697,177


40,224,821









OTHER ASSETS






Refundable deposit


4,911,000


4,854,000


Prepayments


62,285,817


61,562,890


Intangible assets, net


32,587,066


32,244,071


Long-term investments


2,920,278


2,886,383


Other assets


114,590


113,260



Total other assets


102,818,751


101,660,604












Total assets

$

196,544,898

$

201,296,559









LIABILITIES AND EQUITY









CURRENT LIABILITIES






Current maturity of long term loan

$

-

$

50,158,000


Accounts payable, trade


1,658,892


183,504


Notes payable


-


9,708,000


Other payables and accrued liabilities


2,250,705


2,229,362


Other payables - related parties


304,513


140,465


Acquisition payable


4,747,300


4,692,200


Customer deposits


129,417


208,815


Taxes payable


1,208,325


1,133,450



Total current liabilities


10,299,152


68,453,796









LONG TERM LIABILITIES






Long term loan


50,747,000


-



Total long term liabilities


50,747,000


-












Total liabilities


61,046,152


68,453,796









COMMITMENTS AND CONTINGENCIES













EQUITY






Common stock, $0.001 par value, 100,000,000 shares

authorized,







21,121,372 shares issued and outstanding


21,121


21,121


Additional paid-in capital


3,592,053


3,592,053


Statutory reserves


3,689,941


3,689,941


Retained earnings


112,359,051


111,304,825


Accumulated other comprehensive income


11,504,980


9,903,223



Total SinoCoking Coal and Coke Chemicals Industries,

Inc.'s  equity


131,167,146


128,511,163










NONCONTROLLING INTERESTS


4,331,600


4,331,600












Total equity


135,498,746


132,842,763












Total liabilities and equity

$

196,544,898

$

201,296,559

 

SOURCE SinoCoking Coal and Coke Chemical Industries, Inc.



RELATED LINKS
http://www.scokchina.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.