PINGDINGSHAN, China, November 10, 2011 /PRNewswire-Asia-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK.NSDQ) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced its financial results for the 2012 first quarter ended September 30, 2011.
First Quarter 2012 vs. First Quarter 2011
* Revenue increased by 70.3% to $22,151,334 from $13,008,462, due to an increase in all product categories in terms of both sales volumes and selling prices except for the slight decrease in the raw coal sales volume.
* Revenue from the sale of coal products increased by 191% to approximately $11,303,713 and comprised 51% of total revenues as compared to 30% of total revenues in last year's first quarter.
o Total metric tons of coal products sold increased by 59% to 84,085 metric tons.
o Raw coal revenue rose 13% due to a 28% increase in average selling prices and despite the slight decrease in raw coal sales volume. We were unable to produce or purchase sufficient raw coal to sell as a result of the mining moratorium.
o Washed coal revenue increased 579% due to a 23% increase of average selling prices and increased volume.
o Coal tar revenue increased 69% due to a 6% increase in average selling prices and increased volume.
* Revenue from the sale of coke products increased by 19% to approximately $10,847,621 and comprised 49% of total revenues for the quarter as compared to 70% a year ago.
o Total metric tons sold increased by 12% to 45,060 metric tons.
o Average selling prices for coke products increased by 6%.
* Gross margin decreased to 32.5% as compared to 35.7%, due to higher average prices of raw coal purchased in the open market driven by supply shortages.
* Income from operations increased 78.7% to $6,478,405 compared to $3,624,739.
* Pre-tax income, including the change in fair value of warrants, decreased to $9,785,097 as compared to $16,430,766(1).
* Net income, including the change in fair value of warrants, was $8,308,713, or $0.39 per diluted share as compared to $15,481,998, or $0.73 per diluted share(1).
* Excluding the change of fair value of warrants, net income increased by 106.4% to $5,288,991, or $0.25 per diluted share as compared to $2,562,323, or $0.12 per diluted share(1).
1. Fair value of warrants for the three months ended September 30, 2011 and September 30, 2010 was $3,019,722 $12,919,675, respectively.
SinoCoking's Chairman and CEO, Mr. Jianhua LV noted, "We started the first quarter of fiscal 2012 on a strong note with increases in revenue and operating income. In response to market demand, we continued to optimize our product mix and took advantage of higher selling prices for coal products. As a result, revenue generated from the sale of coal products increased to over 51% of total revenue as compared to only 30% one year earlier.
"Our business continues to be impacted by several factors such as a) the mine consolidation process and mining moratorium in Henan, b) the acceleration of government-mandated closure of small-sized and less-efficient coking facilities, and c) the central government's efforts to provide economic stimulus to maintain momentum and growth in domestic consumption. We are working hard to minimize the effects of these factors and take advantage of opportunities that have been presented to us by executing our ambitious business plan which includes:
* The completion of the construction of the new coking facility by 2011 year-end, which at full capacity is projected to produce up to 900,000 metric tons of coke and coke products annually and generate over $100 million in revenue and over $20 million in net income annually. In addition, this new modern, state-of-the-art facility will help us:
o Expand our product portfolio, by recapturing more coking by-products for refinement into useful industrial chemicals, and production of more high value-added chemical products
o Achieve greater energy efficiency while also lessening any environmental impact
o Generate power for our own use and/or sale
o We also intend to produce purified coal gas at this plant to sell as a fuel source to local residents through the state-owned gas grid
* The resumption of operations at full capacity for our Hongchang and Xingsheng mines; finalize the preparation work for the Shuangrui and Shunli coal mines to receive clearance to start production.
* The acquisition of other coal mines to source raw materials."
Discussing the new coking facility, Mr. Lv went on to say, "The construction of the facility continues and is scheduled to be completed by December 31, 2011, with production to begin shortly thereafter. Thus far, we have completed the construction of the shallow foundation, an underground workshop and the furnace and chimney rack, and we expect to complete the building of furnaces and start installing equipment and machinery by the end of November. Pictures of the construction of the facility are available on our website www.sinocokingchina.com."
Regarding the status of mine operations Mr. Lv added, "In August, our Hongchang and Xingsheng mines received clearance from Henan Coal Seam Gas to resume operations. In September 2011, Hongchang mine halted operations to complete certain mine engineering work and safety upgrades, which have not been completed. Additionally, Henan Coal Seam Gas has applied with the appropriate provincial-level agencies to confirm these clearances; upon such confirmation, we expect both mines will be issued the licenses and permits necessary to resume operations at full capacity. We expect this process to be completed by calendar 2011 year-end. Additionally, Shuangrui and Shunli mines should receive clearance from Henan Coal Seam Gas to resume operations by calendar 2011 year-end as well, and then will apply with local authorities for the necessary licenses and permits."
Mr. Sam Wu, SinoCoking's Chief Financial Officer noted, "We continue to fund our business activities from cash flow from operations. During the three months ended September 30, 2011, we used approximately $20.1 million to purchase equipment and machinery, as well as for the construction of the new coking facilities and approximately $1.2 million for the land use rights to the land underlying our new coking plant. Additionally, we have access to an aggregate of approximately RMB 360 million (approximately $55 million) under a medium-term loan, and the credit to issue approximately $14 million bank guaranteed notes under our Hongli and Hongchang affiliates, with the term of 50% cash deposit of the face value in advance. We believe that cash flow from operations and our credit line are sufficient to complete our major business initiatives."
Conference Call
SinoCoking's Chairman and CEO, Jianhua Lv, and CFO, Sam Wu, will host a conference call on Friday, November 11, 2011 at 10:00 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 www.sinocokingchina.com and then to the 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.