China Yida Announces First Quarter 2011 Results

FUZHOU, China, May 10, 2011 /PRNewswire-Asia-FirstCall/ -- China Yida Holding Company (Nasdaq: CNYD) ("China Yida" or the "Company"), a leading diversified tourism and entertainment enterprise in China, today announced financial results for the quarter ended March 31, 2011.

First Quarter 2011 Highlights

• Total net revenue was $11.8 million, a decrease of 20.4% as compared to $14.8 million in the first quarter of 2010
• Net revenue from the tourism business was $1.9 million, a decrease of 68.3% year over year with a gross margin of 43.1%
• Net revenue from the media business was $9.9 million, an increase of 12.6% year over year with a gross margin of 75.3%
• Gross profit was $8.3 million a decrease of 30.5% to compared to $11.9 million in the same period last year
• Net income attributable to China Yida Holding Company was $3.96 million, a decrease of 44.5% as compared to $7.1 million posted in the same period last year
• Fully diluted EPS was $0.20 per share compared to $0.37 in the first quarter of 2010

"Our first quarter results were impacted by the lingering effects of declining tourist traffic at our Great Golden Lake destination as a result of last year's floods.  While the physical damage to the facilities was repaired late last year, the region's natural landscape continues to recover.  We are currently developing a new marketing strategy that will educate the public that Great Golden Lake has regained its former state of natural beauty and is an attractive tourist destination.  We anticipate a rebound in visitor traffic at Great Golden Lake beginning in the third quarter," said Dr. Chen Minhua, Chairman and Chief Executive Officer of China Yida.  

"We are enthusiastic about the anticipated expansion of visitor attractions and experiences at Yunding Park, as our new marketing team is developing creative and innovative ideas to increase visitor traffic.  Finally, our media assets generated solid results and provide corporate synergy as well as diversify our products and services platform."

Tourism Business

Net revenue from the tourism business decreased 68.3% to approximately $1.9 million, compared with approximately $6.0 million in the first quarter of 2010. The decrease was primarily attributable to a continued negative impact from the massive flood in southern China last year. It has taken considerable time for the natural views of Great Golden Lake to recover, for the infrastructure that was damaged to be repaired and for the market perception of the tourist destination to change. As a result of lower revenue, gross margin from the tourism business was 43.1% for the first quarter of 2011, compared to 81.8% a year ago.

The total number of visitors that entered Great Golden Lake during the first quarter of 2011 was approximately 53,000, compared with approximately 160,000 in the same period of last year. Revenue from the Great Golden Lake totaled approximately $0.8 million for the first quarter of 2011.

For the first quarter of 2011, the Hua'An Tulou tourist destination received approximately 55,000 visitors and contributed approximately $0.9 million in revenue to the Company.

Yunding Recreational Park attracted 12,000 visitors in the first quarter of 2011 with an average contribution of RMB135 per person. The tourism traffic was seasonally low due to cooler weather since visitors prefer a warmer climate for climbing hills and trekking deep into the valley.

Media Business

Net revenue from the media business grew 12.6% to $9.9 million, compared with $8.8 million in the same period of last year. This increase was due to the organic growth of FETV's revenue and the revenue growth generated from the "Journey through China on the Train" infomercial programs.

Gross margin for the media business was 75.3% for the first quarter of 2011, as compared to 79.2% a year ago. The decrease was mainly due to higher production costs for the railway media broadcasting as well as higher costs associated with acquiring the rights to redistribute FETV's commercial airtime.

Consolidated Operating Results

Gross profit for China Yida's consolidated operations was $8.3 million in the first quarter of 2011, a decrease of 30% from the $11.9 million recorded in the first quarter of 2010.  The gross margin was 70.1%, compared to 80.3% for the comparable period of 2010, representing a decline of 102 basis points. As indicated, this decrease was primarily due to the drop in tourism gross margins via the adverse effects on revenue associated with the Great Golden Lake Resort during the restoration of the resort.

Total operating expenses decreased by 5.8% to $2.1 million in the first quarter of 2011, compared with $2.3 million in the first quarter of 2010.

Operating income decreased by 36.3% to $6.1 million, compared with $9.6 million a year ago. Operating margin for the first quarter of 2011 was 52.0%, compared with 65.0% for the first quarter of 2010.

Provision for income taxes was $2.0 million, compared with $2.5 million a year ago. The effective tax rate increased to 33.7% from 26.0% in the year ago quarter, due to higher administrative expenses, including share-based compensation incurred with offshore holding companies which were not tax-deductable.

Net income attributable to China Yida Holding Company for the first quarter of 2011 was $3.96 million, or $0.20 per diluted share, as compared with $7.1 million, or $0.37 per diluted share, for the first quarter of 2010.

Financial Condition

As of March 31, 2011, the Company had $21.5 million in cash and cash equivalents on its balance sheet. Working capital was $16.1 million with a current ratio of 3.3. As of March 31, 2011, the Company had $138.9 million in shareholders' equity compared to $133.7 million at the end of 2010.

In January 2011, China Yida secured a RMB 70 million (approximately $10.6 million) 6.4% annual interest rate long-term bank loan from Industrial and Commercial Bank of China Limited due on December 15, 2017. It will be used for the investment in properties and assets of the Company's new tourism projects.

For the first quarter of 2011, China Yida generated $4.6 million in cash flow from operating activities and spent $0.6 million on capital expenditures. Construction was slowed down due to the cold weather and the Chinese Spring Festival.

2011 Outlook

The Company commenced the second phase construction for Yunding Park and expects to introduce a new restaurant in the gorges and valley rafting by the end of June 2011. The Company is also designing a camping center and a shopping plaza to provide tourists with multiple activity choices and experiences. Management expects that the average expenditure per tourist can be readily increased through a combination of catering, entertainment, transportation and shopping visitor expenditures once the camping center and the shopping center are put into operation. Tourist traffic is expected to accelerate even further once the construction of the expressway connecting Fuzhou and Yunding Park is completed in June 2012.

Based on operational results in April 2011, management is satisfied with the recovery of Shangqing River, although the negative impact on the Great Golden Lake from the flood last summer is expected to persist.  The Company anticipates that normal operations will resume in the second quarter, with the number of visitors returning to seasonal levels in the third quarter of 2011.

In March 2011, China Yida hired Mr. Laihong Wang, former General Manager of Hengdian Dongyang Studio Tourism Marketing Company ("Hengdian"), who will lead the Company's newly formed tourism marketing center. Several other senior managers from Hengdian also joined China Yida. They will design and execute a more proactive marketing strategy to include building creative and constructive relationships with travel agencies as well as exploring new markets. The Company will continue to leverage its media resources to market tourism projects. With the effect of increased marketing efforts, the warmer vacation months and eventual recovery of the Great Golden Lake, management expects that the revenues from its tourism business will ramp up in the near future.

In the near term, management expects FETV's advertising revenue to be impacted by controls imposed by domestic media authorities that prohibit specialized channels such as FETV from broadcasting TV shopping programs, TV screen mini ads and certain medical ads. The Company's media management team is actively seeking to target new sponsors to help alleviate any negative impact of these controls. Longer term, the Company views the controls as a positive development for FETV, as it is expected to upgrade its profile in the community.  The management expects "Journey through China on the Train" infomercial program's revenue might decline slightly in 2011.

The construction of three new tourism projects outside Fujian Province was in line with the Company's schedule. Pursuant to the agreements signed with local governments, the Company was allowed to acquire the land use rights for a total area of approximately 5,000 Mu (approximately 824 acres, as 1 acre = 6.07 Mu) in Anhui and Jiangxi provinces. Management's goal is to acquire at least 3,000 Mu in 2011.

"Despite some short term disruptions to our top line, we remain optimistic about the future of our Company.  With our valuable land reserve base, a solid tourism marketing model and an expansion plan that will ensure China Yida a very promising future, we believe we are well positioned to take advantage China's growing tourism industry for years to come," concluded Dr. Chen.

Management reaffirms its belief that the Company can finance all of its ongoing capital expenditures from cash on hand, cash from operations and bank loans secured with its tourism assets.

Conference Call

China Yida will hold a conference call at 9:00 a.m. Eastern Time on Tuesday, May 10, 2011 to discuss its first quarter 2011 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-395-5819. International callers may dial +1-706-643-6986. The conference ID for this call is 65092451. If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Tuesday, May 10, 2011 at 12:00 p.m. ET. To access the replay, dial 800-642-1687, international callers may dial +1-706-645-9291. The Conference Replay pass-code is 65092451.

About China Yida

We, together with our subsidiaries, operate as a diversified entertainment company in the People's Republic of China, headquartered in Fuzhou, Fujian, China. Our business consists of two segments, advertising and tourism.  Our advertising segment includes the operation and management of a domestic television channel and outdoor on-train programming. This segment manages the content and re-sells airtime to advertisers and agencies for the television channel, and produces the content for outdoor on-train programming. Our tourism segment develops, operates, manages and markets domestic tourist destinations, including natural, cultural, and historical tourist destinations and theme parks. This segment also creates, designs and constructs new tourist concepts, attractions and properties for our tourist destinations.

Our advertisement segment currently operates and manages the Fujian Education Television Channel ("FETV"), a province wide television channel in Fujian, and the "Journey through China on the Train" programming (or the "Railway Media") on China's high-speed railway networks.

Our tourism segment currently has three destinations that are open to the public. They are (i) the Great Golden Lake tourist destination (the "Great Golden Lake", titled with Global Geopark and the part of China Danxia – a World Natural Heritage Site granted by the United Nations Educational, Scientific and Cultural Organization ("UNESCO") in Taining County, Fujian, (ii) Yunding Recreational Park (a large-scale recreational park, or the "Yunding Park") in Yongtai County, Fujian, and (iii) Hua'An Tulou cluster (or the "Earth Buildings" or the "Tulou", part of Fujian Tulou – a World Cultural Heritage Site granted by UNESCO) in Hua'An County, Fujian.

For further information, please contact the Company directly, or visit its Web site at http://www.yidacn.net.

Forward-Looking Statements

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "anticipate, "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of China Yida Holding Co., Inc. (the "Company") to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement; (ii) the Company's ability to build and maintain the management and human resources and infrastructure necessary to support the anticipated growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission, which are available for review at www.sec.gov.

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SOURCE China Yida Holding Company