Kingold Jewelry, Inc. Reports Third Quarter 2011 Results

WUHAN CITY, China, Nov. 9, 2011 /PRNewswire-Asia/ -- Kingold Jewelry, Inc. ("Kingold" or the "Company") (NASDAQ: KGJI), one of China's leading manufacturers and designers of 24-karat gold jewelry and ornaments, today announced financial results for the third quarter ended September 30, 2011.

Third Quarter 2011 Highlights

• Revenue increased 24.2% to $210.7 million from $169.7 million in the third quarter 2010
• Gross profit rose 62% to $14 million from $8.6 million in the third quarter 2010
• Net income attributable to common stockholders grew 103.5% to $9.3 million, or $0.18 per diluted share, from $4.6 million, or $0.10 per diluted share, in the third quarter 2010
• In the third quarter, Kingold started to roll out its investment related gold business across networks within China Merchant Bank as well as Bank of Communication.
• Kingold completed testing at the end of September of its new e-commerce channel and successfully launched the new initiative in October.

"We have worked to maintain a smooth operation in the third quarter of 2011 despite a very volatile gold market during the period. After conducting successful trials of our investment-oriented gold line, we have been working closely with our partners in the banking sector to roll out investment related gold products across China. Our two new distribution centers in Shenzhen and Beijing have also started to perform well, helping us expand smoothly over major local markets in Southern and Northern China," said Mr. Zhihong Jia, Kingold's Chairman and CEO. "Finally, we finished the testing and launch of our new e-commerce business, which will target new customers."

Third Quarter 2011 Results

Third quarter 2011 revenue increased 24.2% to $210.7 million from $169.7 million for the same period of 2010. In the third quarter of 2011, the Company produced 6.61 metric tons of 24-karat gold products compared to 7.54 metric tons in the same period of 2010.

Third quarter 2011 gross profit grew to $14 million, up 62% from $8.6 million for the same period of 2010. Gross margin increased to 6.6% in the third quarter 2011 from 5.1% in the third quarter 2010.

Third quarter 2011 operating expenses decreased by 46.2% to $0.92 million, compared to $1.7 million in the same period last year. The decrease was primarily due to one-time expenses incurred in the third quarter of 2010 related to our public listing.

Net income attributable to common shareholders increased 103.5% to $9.3 million, or $0.18 per diluted share, as compared to $4.6 million, or $0.10 per diluted share, in the third quarter of 2010.

Nine Months 2011 Results

In the first nine months of 2011, our revenue increased 83.6% to $620.5 million from $338.1 million in the same period of 2010. During the first nine months of 2011, the Company produced 24.27 metric tons of 24-karat gold products compared to 19.26 metric tons in the same period of 2010.

Gross profit during the nine months ended September 30, 2011 grew 63.5% to $35.4 million from $21.6 million in the same period of 2010. Gross margin declined to 5.7% for the nine months ending September 30, 2011 from 6.4% in the same period of 2010.

Total operating expenses for the nine months ended September 30, 2011 were $2.915 million, an increase of $0.015 million, or 0.55%, from $2.9 million for the same period in 2010. In the nine months ended September 30, 2011, we incurred numerous one time expenses related to our public offering of 7.2 million shares, such as listing fees, advisory fees and related insurance costs.

Net income attributable to common stockholders increased 66.0% to $23 million, or $0.46 per diluted share, as compared to $12.8 million, or $0.29 per diluted share, in the first nine months of 2010.

Financial Condition

As of September 30, 2011, Kingold had $3.2 million in cash and cash equivalents, $108.1 million in working capital, or $2.13 per fully diluted share and has no long-term debt. Total stockholders' equity was $118.8 million on September 30, 2011, up 65% from $72.1 million at the end of 2010. Accounts receivable totaled $0.18 million at September 30, 2011, compared to $1.2 million at December 31, 2010. The Company used $21.5 million in cash flow for operating activities for the nine months ended September 30, 2011.

Business Outlook

Based on the Company's performance during the first nine months of 2011 and management's current outlook for the remainder of the year, the Company has reassured its full year 2011 revenue guidance to a range of between $800 million and $850 million and net income guidance between $32 million and $34 million.

"Our performance in the first nine months of 2011 reinforces our optimism for another year of strong organic growth at Kingold," commented Mr. Jia. "Domestic demand for 24-karat gold products is still robust and we have been well positioned to take advantage of surging consumer demand in China."

About Kingold Jewelry, Inc.

Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, China's fourth largest city, was founded in 2002 and today is one of China's leading designers and manufacturers of 24-karat gold jewelry and ornaments sold by weight. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. Sales have grown from $29 million in FY 2006 to $523 million in FY 2010 with net income attributable to common stockholders growing from $1.3 million to $18.2 million over the same period. For more information, please visit www.kingoldjewelry.com.

Business Risks and Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements, including our 2011 business outlook, are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties, and readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the risk factors contained in Kingold's SEC filings available at www.sec.gov, including Kingold's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE Kingold Jewelry, Inc.