China Infrastructure Construction Corporation Reports Unaudited First Quarter 2011 Financial Results

BEIJING, Oct. 15 /PRNewswire-Asia-FirstCall/ -- China Infrastructure Construction Corp. (OTC Bulletin Board: CHNC) (''CHNC'', ''the Company'', "We", "Us"), one of the major U.S.- listed providers of ready-mix concrete in Beijing, today announced the financial results for its first quarter of fiscal year 2011 ended August 31, 2010.

"We are very pleased with our strong start of fiscal year 2011, particularly in terms of net income," said Mr. Rong Yang, Chairman, and CEO of CHNC. "Our geographic expansion beyond Beijing continues to pay-off.  The investments we made in Xi'an and Shidu combined with successes in increasing operational efficiency are producing the revenue and earnings momentum that we expected.  We believe we are well positioned for the rest of the year.

Net revenue for the three months ended August 31, 2010 was $21.19 million as compared to $12.26 million for the same period last year, an increase of $8.93 million, or approximately 72.88%. The significant increase in net revenue is mainly attributable to good execution of the Company's geographic expansion strategy. Supported by new production plants in Xi'an and Shidu, sales volume of concrete products increased approximately 125.09% for the quarter ended August 31, 2010 as compared to the same period last year. The increase in net revenue also resulted from technical solution services provided to a Tianjin concrete producer since late March 2010 with approximately $1.22 million in sales recorded during this quarter.

Gross profit for the three months ended August 31, 2010 was $6.13 million, an increase of approximately 154.85%, as compared to $2.41 million in the prior year period. The significant increase in gross profit was primarily driven by higher sales from geographic expansion, development of technical solution services, and vertical integration with one sand and stone vendor into the Company's product line.

General and administrative expenses for the three months ended August 31, 2010 were $1.44 million as compared to $0.39 million for the same period of the last year, an increase of $1.05 million or approximately 270.83%. The increase in G&A expenses was primarily due to the business expansion and higher professional fees incurred as a public company.

Operating income for the three months ended August 31, 2010 was $4.69 million, an increase of $2.67 million or approximately 132.50%, as compared to $2.02 million for the same period last year. The increase was mainly due to increased net revenue.

Net income was $3.98 million for the three months ended August 31, 2010, an increase of $2.07 million or approximately 108.54%, as compared to $1.91 million for the same period last year. The increase was primarily due to   higher sales resulting from robust business expansion and high margin business. Net income per share for the first quarter of the fiscal year 2011 was $0.31 (basic and diluted, based on 12.93 million basic and diluted weighted average shares outstanding), compared to net income per share of $1.25 for the same period of the last year (basic and diluted, based on 1.53 million weighted average shares outstanding). On September 28, 2009, the Company effectuated a 1-for-10 reverse stock split of the Company's common stock (the "Reverse Stock Split"). Upon the Reverse Stock Split, ten (10) shares of the outstanding common stock were automatically converted into one (1) share of common stock.

Financial Condition

As of August 31, 2010, we had cash and cash equivalents of $903,715. We have historically funded our working capital needs from operations, advance payments from customers, bank borrowings, and capital from shareholders. Our working capital requirements are influenced by the level of our operations, the numerical and dollar volume of our project contracts, the progress of our contract execution, and the timing of accounts receivable collections.

Net cash provided by operating activities was $0.33 million for the three months ended August 31, 2010, an increase of $1.21 million or 138%, as compared to $0.88 million used in operating activities for the same period last year. The increase of net cash provided by operating activities was due to the increase of trade accounts payable. Accounts receivable increased as well. The trade accounts receivable increased because of the growing sales. We typically had long-term annual and multi-year contracts with our major customers. We entered into varying payment terms with our customers ranging from payment before delivery, payment on delivery or up to 1 year after the project completion. As of August 31, 2010, trade accounts receivable with aging over twelve months old amounted to $1.85 million only 2.97% of total trade accounts receivable.

Business Outlook

Mr. Yang commented, "Looking forward, we will continue our geographic expansion and development projects in our target markets where we see the greatest potential. We will also continue to work on improving operating profitability. We expect that the successful execution of these strategies will generate additional revenue and earnings growth."

About China Infrastructure Construction Corporation

CHNC was founded in 2002 in Beijing, China. Since then it has developed into one of the top ready-mix concrete producers in Beijing. Its products are environmentally-friendly as CHNC is one of the providers of "green" concrete in China. Both the Company's revenue and net profit have shown significant growth in the last few years. Currently, the Company has four prime production facilities and eight production lines with a total operation capacity of 3.5 million cubic meters based on historical utilization rate. One production facility is located in Beijing's Nanhaizi area, on the west side of the Yizhuang Economic Development Zone south of Beijing.  One is located in the Shidu area, within the boundaries of the Zhangfang and Beijing Fangshan district. One is located in the Tangshan Development Zone, about two hundred kilometers east of Beijing and one is located in Xi'an.

In addition to its production and profit prowess, CHNC is a leader in China's "Green Concrete" movement referring to increased use of the environmentally-friendly content in ready-mix concrete, by reducing the energy and raw material consumption in its production, and by mixing and recycling various industrial wastes to create a more sustainable product.

All of CHNC's products have passed the ISO9001-2005 Certification Quality System and Integrated Certification System including Quality Management System Certification, Environmental Management System Certification and Occupational Health and Safety Management System Certification issued by Beijing Zhong Jian Xie Certification Centre.

Its major projects include the Beijing World Trade Central Business District project, and the Beijing Wangjing International Mansion.

Forward-looking Statements

Certain statements made in this news release, may contain forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors may include, but are not limited to, such factors as unanticipated changes in product demand especially in the infrastructure construction industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its products' applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

SOURCE China Infrastructure Construction Corporation