Wonder Auto Reports Its First Quarter 2009 Financial Results
--JINZHOU CITY,
JINZHOU CITY, China, May 4, 2009 /PRNewswire-Asia-FirstCall via COMTEX/ -- Wonder Auto Technology, Inc. (Nasdaq: WATG) (''Wonder Auto'' or ''the Company''), a leading manufacturer of automotive electrical parts, suspension products and engine accessories in China, today announced its financial results for the first quarter ended March 31, 2009.
Highlights:
-- Sales revenue increased 28.5% year-over-year to $40.0 million;
-- Gross profit increased 23.5% to $10.1 million;
-- Net income increased 29.8% year-over-year to $5.2million;
-- EPS was $ 0.19, representing a 26.7% increase compared with first
quarter 2008.
Business outlook
For the second quarter of 2009, our sales revenue is expected to be approximately $45 million with the net income to be approximately $5.3 million.
Growth drivers
Our products are increasingly demanded attributable to the following advantages:
-- Market oriented focus. Our alternator and starter products are
primarily for mid- to small sized engine vehicles, which are encouraged
in sales by China's government in the stimulus plans.
-- New joint development programs. In the first quarter of 2009, we
developed 17 joint programs, among which 11 were with international
customers. Most of these programs will turn into sales contracts.
-- Strategic acquisitions. We will be able to achieve market expansion and
cross-selling synergies through acquisitions.
-- Favorable government policies. China has implemented a series of
stimulus policies to bolster its auto industry.
Financial performance
Our sales revenue of the first quarter 2009 rose to a record high of $40.0 million, a 28.5% increase from $31.1 million in the first quarter of 2008. The increase was mainly attributable to the acquisition of Jinan Worldwide, which contributed $7.3 million to our sales revenue in the first quarter 2009. Sales revenue from China increased $10.9 million, or 41.9%, to $37.0 million in the first quarter of 2009, compared with $26.1 million for the same period last year. The organic revenue increase from China was $4.0 million, or 15.4%, to $30.1 million for the first quarter of 2009, compared with $ 26.1 million for the same period last year.
In the first quarter of 2009, our gross profit increased 23.5% to a record of $10.1 million from $8.2 million in the first quarter of 2008. Our gross margin was 25.3% in the first quarter of 2009 compared with 26.3% for the first quarter of 2008. The decreased gross margin was due to the change of our product portfolio. In the first quarter of 2009, a large portion of our total sales revenue was generated from the sales of alternators and starters for mid- to small displacement engine vehicles. Our alternators and starters for smaller displacement engine products usually have a lower gross margin than those for larger displacement engine vehicles.
Our operating expenses for the first quarter 2009 increased $1.6 million, or 64.4%, to $4.0 million from $2.4 million of the first quarter 2008. As a percentage of the sales revenue, the total expenses increased to 10.0% for the three months ended March 31, 2009 from 7.8% for the same period last year.
Our administrative expenses increased $977,619, or 73.0%, to $2.3 million for the first quarter 2009 from $1.3 million for the same quarter last year. The increase was primarily due to the consolidation of Jinan Worldwide and the related professional fees.
Our research and development expenses increased $78,675, or 20.8%, to $456,232 for the first quarter 2009 from $377,557 for the same quarter last year. As a percentage of the sales revenue, our research and development expenses decreased to 1.1% in the first quarter 2009 from 1.2% for the first quarter 2008. The company expects to maintain the percentage of research and development expenses to our total sales revenue at approximately 1.0%.
The selling expenses increased $504,802 to $1.2 million for the first quarter 2009 from $707,857 for the same quarter last year. As a percentage of the sales revenue, our selling expenses were 3.0% for the first quarter of 2009 compared with 2.3% for the first quarter of 2008. The increase of the selling expenses was mainly due to the consolidation of Yearcity.
Our net finance cost decreased $869,713, or 91.2% to $83,989 for the first quarter 2009 from $953,702 for the same quarter last year. The decrease of net finance cost was mainly attributable to the foreign exchange gain of $762,035 resulted in the 8.3 million Euro long-term bank loan.
Income taxes increased $489,188, or 113.5%, to $920,005 for the first quarter 2009 from $430,817 for the same quarter 2008. Our effective income tax rate was approximately 14.6% for the first quarter 2009 as compared to 8.8% for the same quarter 2008.
Net income attributable to the Company increased $1.2 million, or 29.8%, to $5.2 million in the first quarter 2009 from $4.0 million of the same quarter last year.
EPS was $0.19, representing 26.7% increase compared with $0.15 in the first quarter of 2008.
As of March 31, 2009, Wonder Auto had $13.6 million in cash and cash equivalents, a current ratio of 1.2 to 1, working capital of $17.9 million. Shareholders' equity increased to $104.9 million.
Events overview
In February, Jinzhou Halla, a wholly-owned subsidiary of Wonder Auto, was awarded a bid to supply starters to Dongfeng Passenger Vehicle Company (''DFPV''), an affiliate of Dongfeng Automotive Co., Ltd, one of the ''Big 3'' automakers in China. Upon receipt of the acceptance notice, Jinzhou Halla has become a sole supplier of starters for passenger vehicles to be launched by DFPV in China at the end of 2010. The total estimated amount for the emerging passenger vehicles will be about 1.8 million units for the period of 2011 to 2019, according to DFPV. Our estimated sales to DFPV will be approximately $20 million, progressively from 2011 to 2015.
In March, Mr. Xiaoyu Zhang and Mr. Xianzhang Wang were appointed to be the Company's new independent directors. The Company values the two outstanding experts as tremendous assets for the company as they will be of immense benefit to the company attributable to their background: Mr. Xiaoyu Zhang is the president of the Society of Automotive Engineers of China and the vice president of China Machinery Industry Federation. Mr. Xianzhang Wang is president of the Insurance Association of China and vice president of China Insurance Academy.
Mr. Qingjie Zhao, Chairman and Chief Executive Officer of Wonder Auto commented, ''Under current global recession, the auto industry in western countries dropped sharply, while in China and other emerging economies still remain growing. I foresee this momentum will continue. Wonder Auto is well positioned in this weather, and achieved remarkable results this quarter. To adapt to these changes, I believe new concepts, new valuation models and new investment strategies are essential for success.''
''Looking forward, we remain optimistic about the growth potentials from our internal competitive advantages and the external opportunities from the bolstered auto market in China. Our management and work force did an excellent job during this quarter, and I am confident they are well prepared for the coming quarters of 2009.''
Conference call
The company will host a conference call on Tuesday, May 5 at 8:00 a.m. U.S. Eastern Daylight time. A question and answer session will follow management's presentation. Mr. Qingjie Zhao (Chairman &CEO), Mr. Ryan Yuan (CFO), Mr. Peng Li (Investor Relations Officer) and Ms. Lydia Zhao (Assistant CFO) will be the primary speakers for the call.
To participate, please call the following numbers ten minutes before the call start time:
Phone number: +1 866 242 1388 (United States)
Phone number: +852 800 968 831 (Hong Kong)
Phone number: +86 10 800 264 0084 (China)
Phone number: +86 10 800 640 0084 (China)
Conference ID: 97332088
A live webcast of the conference call will be available on the investor relations page of Wonder Auto's web site at http://www.watg.cn . In addition, a set of slides for management's presentation will be available to download from the same website, 30 minutes prior to the webcast.
About Wonder Auto
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 accessories. Wonder Auto was ranked second in sales revenue in the China market for automotive alternators and starters in 2007. With respective 5 different series and over 150 models of alternators, 70 models of starters, various suspension and engine related parts, the Company supplies to a wide range of automakers, engine producers and auto parts suppliers both in domestic China and overseas. Wonder Auto's main customers include Beijing MOBIS Auto Parts & Components Co., Ltd, Harbin Dongan Automotive Engine Co., Ltd, Shenyang Xinguang Huachen Auto Engine Co., Ltd, SWT, Shenyang Aerospace Mitsubishi Motors Engine Co., Ltd., Shanghai VW and Weifang Diesel Engine. For more information, please log on http://www.watg.cn .
Safe harbor statement
This press release may contain forward-looking information about Wonder Auto Technology, Inc. and its wholly owned subsidiaries which are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. 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, and include discussions of strategy, statements about industry trends and Wonder Auto Technology, Inc.'s future performance, operations and products. This and other "Risk Factors" are contained in Wonder Auto Technology, Inc.'s public filings with the SEC.
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
For the three months ended March 31, 2009 and 2008
(Unaudited)
(Stated in US Dollars)
Three months ended
March 31
2009 2008
Sales revenue $39,976,020 $31,116,707
Cost of sales 29,881,662 22,943,936
Gross profit 10,094,358 8,172,771
Operating expenses
Administrative expenses 2,315,992 1,338,373
Research and development expenses 456,232 377,557
Selling expenses 1,212,659 707,857
3,984,883 2,423,787
Income from operations 6,109,475 5,748,984
Other income 114,516 105,063
Government grants 175,062 --
Net finance costs (83,989) (953,702)
Income before income taxes and
noncontrolling interests 6,315,064 4,900,345
Income taxes (920,005) (430,817)
Net income 5,395,059 4,469,528
Net income attributable to
noncontrolling interests (223,435) (483,745)
Net income attributable to Wonder Auto
Technology, Inc. common stockholders $5,171,624 $3,985,783
Net income $5,395,059 $4,469,528
Other comprehensive income
Foreign currency translation adjustments (65,109) 2,587,046
Comprehensive income 5,329,950 7,056,574
Comprehensive income attributable to
noncontrolling interests (208,020) (881,889)
Comprehensive income attributable to
Wonder Auto Technology, Inc.
common stockholders $5,121,930 $6,174,685
Earnings per share attributable to Wonder Auto
Technology, Inc. common stockholders:
basic and diluted $0.19 $0.15
Weighted average number of shares outstanding:
basic and diluted 26,959,994 26,959,994
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets
As of March 31, 2009 and December 31, 2008
(Stated in US Dollars)
March 31, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $13,631,522 $8,159,156
Restricted cash 13,056,224 24,181,645
Trade receivables, net 52,247,092 46,571,619
Bills receivable 6,174,025 8,388,926
Other receivables, prepayments and deposits 6,369,530 16,408,304
Inventories 41,285,100 44,016,192
Amount due from Hony Capital -- 7,637,216
Income tax recoverable -- 289,000
Deferred taxes 676,482 1,075,766
Total current assets 133,439,975 156,727,824
Intangible assets 22,020,974 22,062,560
Property, plant and equipment, net 67,165,805 69,131,579
Land use rights 10,319,372 10,391,527
Deposit for acquisition of property,
plant and equipment 5,688,427 3,845,774
Deferred taxes 1,142,117 870,500
TOTAL ASSETS $239,776,670 $263,029,764
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets (Cont'd)
As of March 31, 2009 and December 31, 2008
(Stated in US Dollars)
March 31, December 31,
2009 2008
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities
Trade payables $22,091,564 $21,616,932
Bills payable 17,162,475 31,247,100
Other payables and accrued expenses 19,778,886 20,465,014
Provision for warranty 2,565,162 2,377,620
Payable to Hony Capital -- 10,187,216
Income tax payable 371,534 --
Secured borrowings 53,155,457 44,055,803
Early retirement benefits cost 394,425 419,301
Total current liabilities 115,519,503 130,368,986
Secured borrowings 9,512,568 16,054,478
Deferred revenue - government grants 2,741,622 2,806,777
Early retirement benefits cost 713,785 798,115
TOTAL LIABILITIES 128,487,478 150,028,356
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: par value $0.0001 per share;
authorized 10,000,000 shares in 2009 and
2008; none issued and outstanding -- --
Common stock: par value $0.0001 per share
Authorized 90,000,000 shares in 2009 and
2008; issued and outstanding 26,959,994
shares in 2009 and 2008 2,696 2,696
Additional paid-in capital 67,711,999 71,349,599
Statutory and other reserves 7,944,120 7,628,541
Accumulated other comprehensive income 9,448,925 8,424,270
Retained earnings 19,826,211 14,654,587
TOTAL WONDER AUTO TECHNOLOGY, INC.
STOCKHOLDERS' EQUITY 104,933,951 102,059,693
NONCONTROLLING INTERESTS 6,355,241 10,941,715
TOTAL EQUITY 111,289,192 113,001,408
TOTAL LIABILITIES AND EQUITY $239,776,670 $263,029,764
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2009 and 2008
(Unaudited)
(Stated in US Dollars)
Three months ended March 31
2009 2008
Cash flows from operating activities
Net income attributable to Wonder Auto
Technology, Inc. common stockholders $5,171,624 $3,985,783
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,373,739 721,576
Amortization of intangible assets and
land use rights 98,848 34,476
Deferred taxes 125,167 (85,579)
Provision for doubtful accounts 10,794 28,504
Provision of obsolete inventories 19,498 89,171
Noncontrolling interests 223,435 483,745
Exchange (gain) loss on translating of
monetary assets and liabilities (762,035) 480,381
Loss on disposal of property,
plant and equipment (296) (1,205)
Deferred revenue amortized (61,329) --
Changes in operating assets and liabilities:
Trade receivables (5,749,760) 162,770
Bills receivable 2,203,465 1,738,842
Other receivables, prepayments and deposits 4,142,968 (116,634)
Inventories 2,650,725 (3,470,261)
Trade payables 504,105 4,514,176
Amount due from a related company -- 547
Early retirement benefit costs (107,547) --
Other payables and accrued expenses (2,050,977) (1,823,881)
Provision for warranty 190,783 85,207
Income tax payable 652,399 (143,264)
Net cash flows provided by
operating activities $8,635,606 $6,684,354
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows (Cont'd)
For the three months ended March 31, 2009 and 2008
(Unaudited)
(Stated in US Dollars)
Three months ended March 31
2009 2008
Cash flows from investing activities
Payment to acquire intangible assets $-- $(4,152)
Payments to acquire and for deposit for
acquisition of property,
plant and equipment (1,422,433) (2,942,933)
Proceeds from sales of property,
plant and equipment 5,421 76,570
Net cash paid to acquire Jinzhou Hanhua
Electrical Systems Co., Ltd -- (3,042,676)
Net cash paid to acquire Jinzhou Karham
Electrical Equipment Co., Ltd -- (703,712)
Net cash paid to acquire Yearcity (2,197,500) --
Net cash flows used in investing activities (3,614,512) (6,616,903)
Cash flows from financing activities
Bills payable (14,042,025) (5,896,500)
Decrease in restricted cash 11,092,454 2,227,576
Repayment of bank loans (10,662,270) (6,095,280)
New bank loans 14,064,001 1,102,008
Net cash flows provided by (used in)
financing activities 452,160 (8,662,196)
Effect of foreign currency translation on cash
and cash equivalents (888) 467,371
Net increase (decrease) in cash and
cash equivalents 5,472,366 (8,127,374)
Cash and cash equivalents
- beginning of period 8,159,156 26,102,993
Cash and cash equivalents
- end of period $13,631,522 $17,975,619
Supplemental disclosures for cash
flow information:
Cash paid for:
Interest $923,530 $187,140
Income taxes $103,140 $599,198
Non-cash investing and financing activities:
Acquisition of Yearcity by offsetting with
receivable from disposal of an
unconsolidated affiliate $5,950,000 $--
Settlement of amount due to Hony Capital
II, L.P. (''Hony Capital'') by offsetting
with amount due from Hony Capital $7,626,804 $--
For more information, please contact:
Lydia Zhao
Assistant CFO
Tel: +86-10-8478-5339
Cell: +86-130-2118-4792
Email: lydiaz@watg.cn
Yechon Xie
Investor Relations Manager
Tel: +86-416-266-1186
Cell: +86-137-0006-1685
Email: ycxie@watg.cn
SOURCE Wonder Auto Technology, Inc.
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