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In a release on November 2, the Company noted highlights include:
-- $59.0 million sales revenue for the third quarter of 2009, an increase
of 50.2 percent from the same quarter of last year; $41.0 million organic
sales revenue in China, an increase of 24.1 percent on year-over-year basis
excluding acquisition contribution.
-- $6.5 million net income, or $0.24 per share on a basic and diluted
basis, for the third quarter of 2009, an increase of 2.4 percent from the same
period of last year;
-- On a non-GAAP basis, net income for the third quarter of fiscal 2009
increased 25.8 percent to $6.9 million, or $0.26 per share, on a basic and
diluted basis, as compared with a non-GAAP net income of $5.5 million,
or $0.20 per share, for the third quarter of fiscal 2008. Non-GAAP net
income excludes non-cash exchange gain/loss in connection with a loan
denominated in euro.
Business outlook
The company said it projects approximately $208 million sales revenue and $23 million net income attributable to our common stockholders for the whole year ended December 31.
Financial performance
Sales Revenue. Sales revenue increased by approximately $19.7 million, or 50.2 percent, to approximately $59.0 million for the three months ended September 30, compared with $39.3 million of the same period last year. This increase was mainly attributable to the $12.9 million in additional revenues generated in the third quarter of 2009 by recently acquired subsidiary, Jinan Worldwide and increased sales volume of starter and alternator products in the third quarter of 2009 due to the high market demand.
Gross Profit. Gross profit increased by approximately $3.8 million, or 37.8 percent, to approximately $14.0 million for the three months ended September 30, compared with approximately $10.1 million for the same period in 2008 as a result of increased demand for and sales of alternator and starter products and the consolidation of the operating results of Jinan Worldwide which contributed $3.7 million to gross profit. Gross margin was 23.7 percent for the three-month period ended September 30, as compared to 25.8 percent of the same period in 2008. Such decrease was mainly due to a larger portion of sales revenue was generated from alternators and starters for small-to-mid displacement engine vehicles which generally have a lower margin than alternators and starters for large displacement engine vehicle.
Total Operating Expenses. Total operating expenses increased by approximately $1.8 million, or 54.3 percent, to approximately $5.2 million for the three months ended September 30, compared with approximately $3.3 million for the same period in 2008. As a percentage of sales revenue, total expenses increased to 8.8 percent for the three months ended September 30, compared from 8.5 percent for the same period in 2008.
Net finance cost. Net finance cost was $1.5 million for the three months ended on September 30, as compared to a net finance income of $139,381 for the same period last year. The Company has an outstanding loan of EUR8.3 million from DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH, (the "DEG Loan). Since the DEG Loan is denominated in euro, with the depreciation of RMB against euro, the Company incurred a $439,746 non-cash exchange loss during the three months ended September 30. In contrast, the Company had a non-cash exchange gain of approximately $1.0 million for the same period of 2008.
Income Taxes. Income taxes increased $307,503 to $939,622 during the three months ended September 30, from $632,570 during the same period in 2008. The income taxes increase is mainly due to the increase in income and the change in tax rate for the Company's subsidiary Jinzhou Wanyou. Jinzhou Wanyou was exempted from the PRC enterprise income tax in 2008 and its EIT rate increased to 12.5 percent in 2009.
Net Income. Net income increased by $153,483, or 2.4 percent, to approximately $6.5 million during the three months ended September 30, from approximately $6.4 million during the same period in 2008.
Events overview
On September 28, Wonder Auto's subsidiary Jinzhou Halla entered into a joint development agreement with Shenzhen BYD Auto Company Limited ("Shenzhen BYD) to design and develop alternator prototypes for Shenzhen BYD's F3/F3R sedan models, which have engine sizes between 1.3 liters and 1.5 liters, and were among the top ten best-selling models in China in the first nine months in 2009. Sample deliveries are expected to start in November 2009 for testing.
On September 22, Wonder Auto's subsidiary Jinzhou Wanyou Mechanical Parts Co., Ltd. acquired Friend Birch Limited and its China-based operating subsidiaries, Jinzhou Jiade Machinery Co., Ltd. and Jinzhou Lida Auto Parts Co., Ltd. Jinzhou Jiade Machinery and Jinzhou Lida Auto Parts manufacture and sell gas spring shafts and other thin mechanical shafts products, automotive springs and gas springs, and prior to the acquisition were among Wonder Auto's key suppliers of those products. As part of the transaction, Jinzhou Wanyou also acquired all proprietary technologies of Friend Birch Limited's rods and shafts technology center in Brazil.
Wonder Auto recently entered into an investment option agreement with the shareholders of Jinzhou Wonder Alternative Energy Vehicle Technology Co., Ltd. ("Jinzhou AEV), which allows Wonder Auto to acquire a 10 percent ownership interest in Jinzhou AEV by the end of 2009 and grants the Company a right of first refusal to acquire a greater ownership interest in Jinzhou AEV. In addition, Wonder Auto will be the preferred supplier of motors to Jinzhou AEV. Jinzhou AEV is a manufacturer of electric and alternative energy vehicles, including electric sedans, taxis, minivans, pick-ups, freight cars, tourist coaches, golf carts and motorized bikes. Wonder Auto's CEO and chairman, Qingjie Zhao, is a 60 percent owner of Jinzhou AEV.
Qingjie Zhao, Chairman and Chief Executive Officer of Wonder Auto commented, "In the process of fighting against the global economic recession, significant changes have taken place in the auto industry. As the 10 million sales target was achieved in the Chinese auto market during October, people begin to turn their focuses to China's economy recovery. We have achieved our preliminary goals for adjustments to response to the financial crisis, and thus reinforced our competitiveness in the markets."
Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc., through its Chinese subsidiaries, designs, develops, manufactures and sells automotive electrical parts, suspension products and engine components.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
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