SGAS Sino Gas International Holdings, Inc. Announces Third Quarter 2007 Results

Sino Gas International Holdings, Inc. Announces Third Quarter 2007 ResultsPR Newswire "US Press Releases "
BEIJING, Nov. 19 /Xinhua-PRNewswire-FirstCall/ -- Sino Gas International Holdings, Inc. (OTC Bulletin Board: SGAS) ("Sino Gas" or the "Company"), a leading developer of natural gas distribution systems in small and medium- sized cities, as well as a distributor of natural gas to residential, commercial and industrial customers in China, today reported financial results for the third quarter ended September 30, 2007. Third Quarter 2007 Highlights
-- Revenue reached $5.7 million, up 62.8% from the third quarter of 2006
-- Gross profit reached $3.7 million, up 41.5% from the third quarter of
2006
-- Operating income totaled $2.9 million, up 35.9% from the third quarter
of 2006
-- Net income rose to $2.6 million, or $0.12 per fully diluted share, up
36.5% from the third quarter of 2006
-- Sales of natural gas totaled 6.45 million cubic meters, up 126% from
the third quarter of 2006
-- Number of new households connected was 15,043, an increase of 4,543
households from the same period in 2006
-- Established exclusive concession right of natural gas distribution in
Baishan County in Jilin Province
-- Completed a private placement financing, generating $18.8 million in
gross proceeds
"The third quarter marks the beginning of the seasonally strongest period of the year, and we achieved solid business performance in both connection fees and gas sales due to further penetration in our existing markets. We were also successful in expanding our presence in the Northeastern region of China. This resulted in strong growth in revenue and profits, which we expect to continue throughout the winter season," commented Mr. Yu-Chuan Liu, President and CEO of the Sino Gas.
Third Quarter 2007 Results
Revenues for the three months ended September 30, 2007 increased 62.8% over the same period in 2006 to $5.7 million, driven by new connection fees from an additional 15,043 households as well as a substantial increase in natural gas sales to 6.45 million cubic meters, up 126% over the same period in 2006. Connection fees accounted for 71% of revenues this quarter, with natural gas sales accounting for the balance.
Gross profit for the three months ended September 30, 2007 was $3.7 million, an increase of 41.5%, or 65.2% of revenues, compared to $2.6 million, or 75.1% of revenues in the third quarter of 2006. The increase in gross profit resulted from the overall increase in sales. Gross margin in the quarter declined due to higher depreciation costs for both connection fees and gas sales in the third quarter of 2007. The Company plans to increase new connection fees as well as natural gas sales in the future as a result of both organic growth and external acquisitions.
Operating expenses in the third quarter of 2007 were $798,691, an increase of 66.5% from $479,827 in the comparable period last year. The increase in operating expenses in the quarter was proportional to the overall revenue growth. As a percentage of revenues, operating expenses were 14.1% in the third quarter of 2007, up slightly from the third quarter last year, reflecting a similar cost structure.
Operating income in the third quarter of 2007 increased 35.9% to $2.9 million, or 51.1% of revenues, compared to $2.1 million, or 61.2% of revenues, for the same period of 2006.
Net income during the quarter was $2.6 million, or $0.12 per fully diluted share, up 36.5% from $1.9 million, or $0.02 per fully diluted share, in the third quarter of 2006. Earnings per basic and diluted share reflect an increase in weighted average shares of 7,494,478 related to a private placement financing in the third quarter of 2007.
Nine Month Results
Revenues for first nine months of 2007 increased 119.0% to $10.9 million, compared to $5.0 million in the first nine months of 2006. Connection fees accounted for 55% of revenues, versus 62% in the first nine months of 2006, with natural gas sales accounting for the balance in both periods. In the first nine months of 2007 gross profit was $5.2 million or 47.7% of revenues, up 66.2% from $3.1 million, or 62.8% of revenues, in the year ago period. Operating income increased 48.3% to $3.5 million, or 32.2% of revenues, compared to $2.4 million, or 47.5% of revenues, in the first nine months of 2006. Net income increased 48.7% to $3.3 million, or $0.17 per fully diluted share, compared to $2.2 million, or $0.02 per fully diluted share in the first nine months of 2006.
Financial Condition
On September 30, 2007, the Company had $16.5 million in cash and cash equivalents, $12.9 million in working capital and $2.7 million in bank notes and loans. In the first nine months of 2007, the Company generated $8.4 million in cash flows from operating activities, up from $3.5 million in the same period last year. Capital expenditures totaled $5.6 million for the third quarter. Shareholders' equity stood at $46.5 million, compared to $25.4 million at year end of 2006.