China Shuangji Cement, Ltd. Announces Third Quarter 2010 Results

ZHAOYUAN CITY, China, Nov. 22, 2010 /PRNewswire-Asia/ -- China Shuangji Cement, Ltd. (OTC Bulletin Board: CSGJ) ("China Shuangji" or the "Company"), a leading producer of high-quality Portland cement in Shandong and Hainan Provinces in the People's Republic of China (PRC), today announced its financial results for the third quarter ended September 30, 2010.

Third Quarter 2010 Highlights

• Total revenue increased 7% to $15.1 million from $14.1 million a year ago.
• Gross profit increased 36% to $2.1 million from $1.5 million a year ago.
• Gross margin increased to 14% from 11% in the same period last year.
• Operating expenses were $429,717, up from $100,846 in the same period last year.
• Operating income rose 15% to $1.7 million from $1.4 million a year ago.
• Net income declined 21% to $567,840 compared to $715,504 a year ago.
• Working capital increased 16% to $12.4 million at September 30, 2010, from $10.7 million at December 31, 2009.
• Shareholders' equity increased to $29.6 million at September 30, 2010, from $26.1 million at December 31, 2009.
• Moved closer to completing new 1,000,000 metric ton Zhaoyuan Cement production facility and began final testing of equipment.

"We experienced higher revenues in the third quarter due to an increase in cement sales to 361,562 metric tons from 329,832 metric tons in the same period last year. We also experienced strong margins from an increase in the average unit price of our cement, which was greater than the increase in raw material prices," commented Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. "This resulted in solid revenue increases and a 36% increase in gross profit in the third quarter as we continued to sell all the cement we produced. During the quarter, we moved closer towards completing our new, state-of-the-art cement factory in Zhaoyuan City, which we expect to bring into full production mode by the end of the year. We see more than enough demand from local contractors and increased infrastructure spending to absorb all of our new capacity as we bring our new 1,000,000 metric ton cement plant online.

Third Quarter 2010 Results

Revenue for the three months ended September 30, 2010, increased 7% to $15.1 million from $14.1 million a year ago. The increase was primarily due to an increase of sales quantity to 361,562 metric tons for the three months ended September 30, 2010 from 329,832 metric tons a year ago.

Cost of sales for the three months ended September 30, 2010, increased $418,348, or 3%, to $13.0 million from $12.6 million for the same period a year ago. The increase was primarily due to an increase of sales quantity and higher raw material prices. Cost of sales as a percentage of total net revenue decreased from 89.03% in the three months ended September 30, 2009, compared to 86.09% for the three months ended September 30, 2010.

Gross profit for the three months ended September 30, 2010, increased by $551,183, or 36%, to $2.1 million from $1.5 million for same period a year ago. The increase was primarily due to fact that the increase in average unit price of cement was greater than the increase in raw material prices. Gross margin increased to 14% from 11% in the same period last year.

Operating expenses for the three months ended September 30, 2010, increased by $328,871 to $429,717 from $100,846 for the same period a year ago. The increase was primarily due to issuances of stock and warrants as consideration for certain consulting and professional services.

Operating income for the three months ended September 30, 2010, increased by $222,312, or 15%, to $1.7 million from $1.4 million for the same period a year ago. The increase was primarily due to an increase in sales.

Net income for the three months ended September 30, 2010, was $567,840, or $0.01 per diluted share, compared to $715,504, or $0.02 per diluted share, a year ago, a decrease of 21%. The decrease was primarily due to the one-time impairment loss on assets held for sale recorded in other expenses in the amount of $810,056.

Financial Condition

As of September 30, 2010, China Shuangji Cement had $32,062 in cash and cash equivalents, $12.4 million in working capital, up 16% from working capital of $10.7 million at December 31, 2009, and approximately $1.3 million in short-term bank loans. Shareholders' equity at September 30, 2010, was approximately $29.6 million, a 13% increase compared to $26.1 million recorded at the end of 2009.

The Company generated $3.7 million in net cash flow from operating activities in the first nine months of 2010, versus $2.3 million in net cash flow in the corresponding period of 2009. The increase was primarily due to the timing of collection for Accounts Receivable and payments made to Accounts Payable.

Nine Month Operating Highlights

Revenue for the nine months ended September 30, 2010, totaled $42.3 million, compared to revenue of $39.3 million for the same period last year, an increase of 8%. The increase in revenue was primarily due to production from the Company's new Longkou Cement plant acquired in April 2009 and the increase of sales quantity of 23,752 metric tons, or 2%, to 1,031,684 metric tons for the nine months ended September 30, 2010, from 1,007,932 metric tons for the same period last year. Net income for the first nine months of 2010 was $2.5 million, or $0.08 per diluted share, versus net income of $3.1 million, or $0.10 per diluted share, in the same period in 2009, a decrease of 18%.

Business Outlook

"Going forward, we continue to see significant growth in the building sector in China, especially in the areas where we operate in Shandong and Hainan provinces," said Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. "This is supported overall by solid fundamentals for our industry, including a vibrant domestic economy, significant government stimulus and the rapid development of China's infrastructure as well as increased spending on urban infrastructure, which should have a significant impact on cement demand." Mr. Song added, "With the near completion of our new 1,000,000 metric ton cement plant we are now entering a growth phase. As a result, we anticipate that this will allow us to increase our production capacity by roughly 66%, to an estimated 2,500,000 metric tons per year, resulting commensurate increases in revenue and profitability."

About China Shuangji Cement, Ltd.

China Shuangji Cement, Ltd. (OTC.BB: CSGJ - News), through its affiliates and controlled entities, is a leading producer of high-quality Portland cement in Shandong and Hainan Provinces. Its processed cement products are primarily purchased by contractors for the construction of buildings, roads, and other infrastructure projects. The Company currently produces approximately 1,500,000 tons of Portland cement annually from two facilities in Hainan and one facility in Shandong and it expects its output will increase by 1,000,000 tons to a total of 2,500,000 tons once the new Zhaoyuan (Shandong Province) plant and upgrades are completed. For more information about China Shuangji, please visit its corporate website at http://www.chinashuangjicement.com.

Safe Harbor Statement

The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. 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. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development and market conditions. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act. In addition, please refer to the Risk Factor section of our 2009 Form 10-K filed with the Securities and Exchange Commission on April 15, 2010 and detailed in other reports filed with the Securities and Exchange Commission from time to time.

Note: Some numbers in the text of this press release have been rounded. Actual numbers are stated below.

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SOURCE China Shuangji Cement, Ltd.