BEIJING, Nov. 19 /Xinhua-PRNewswire-FirstCall/ -- Sino Gas
International Holdings, Inc. (OTC:SGAS) (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. In September 2007, the Company
entered into a private placement financing for $18.8 million in
gross proceeds. Approximately 8.34 million shares of the Company's
common stock were sold in a private sale at $2.25 per share. As a
part of the financing, the Company has cancelled most of its
outstanding warrants and clarified its capital structure without
dilution of its equity base. The financing closed on September 13,
2007. Business Outlook The Company believes that the underdeveloped
natural gas market in China has immense opportunities for rapid
growth. With natural gas contributing only 3% to China's total
energy consumption, compared to a world average of 24%, many
cities, especially small and mid-sized cities, remain unconnected.
Under favorable Chinese government policies in favor of less
reliance on coal, Sino Gas has been actively planning its expansion
to more provinces and regions. For the 2007 fiscal year, the
Company expects revenues between $18 million and $20 million and
net income between $7.5 million $8 million. The Company's previous
guidance for 2007 included the effect of a major acquisition to be
completed in the fourth quarter of 2007. While the Company still
intends to make an acquisition in the coming months, the timing is
uncertain. As a result, Sino Gas has revised 2007 guidance to
reflect its existing operations. "Our solid financial performance
so far this year demonstrates the success of our strategy of
acquiring distribution systems in small and mid-sized cities,
increasing our share in existing markets and expanding into new
markets," said Mr. Liu. "The dynamics in our industry are
favorable, and we will continue our current expansion plan. Backed
by the additional capital from our recent financing, we expect to
complete a major acquisition in early 2008, which will greatly
enhance our scale and contribute to our leadership position in the
natural gas distribution industry in small and medium-sized cities
in China." Recent Events In July 2007, the Company established
Baishan Zhong Ran Wei Ye Gas Co., Ltd. ("Baishan Gas") and acquired
all of the operating assets of Baishan Gas Co., Ltd., a privately
held natural gas distribution business in Jilin Province for
approximately $5.0 million in cash and assumed debt. Baishan Gas'
current distribution network includes 8,000 connected households
and one gas station, with an estimated total of 30,000 households
to be connected in the next three years. This transaction was
completed on July 9, 2007. Conference Call The Company will conduct
a conference call at 10:00 a.m. Eastern Time on Monday, November
19, 2007 to discuss the third quarter 2007 financial results.
Joining Mr. Yu-chuan Liu, President and Chief Executive Officer of
Sino Gas, will be Ms. Fang Chen, Chief Financial Officer, and Mr.
Brad Shao, Assistant Chief Financial Officer. To participate in the
live conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: 866-800-8648.
International callers should dial 617- 614-2702. When prompted by
the operator, mention Conference Passcode 101 498 79. If you are
unable to participate in the call at this time, a replay will be
available for seven days starting on Monday, November 19 at 12:00
p.m. Eastern Time. To access the replay, dial 888-286-8010 and
enter the passcode 65532159. International callers should dial
617-801-6888 and enter the same passcode. About Sino Gas The
Company, through its indirectly wholly-owned subsidiary, Beijing
Zhong Ran Wei Ye Gas Co., Ltd. ("Beijing Gas"), and the
subsidiaries of Beijing Gas, is a leading developer of natural gas
distribution systems in small and medium-sized cities in China, as
well as a distributor of natural gas to residential, commercial and
industrial customers in China. The company owns and operates 24
natural gas distribution systems serving approximately 70,000
residential and six commercial and industrial customers. Facilities
include over 700 kilometers ("km") of pipeline and delivery
networks with a designed daily capacity of approximately 70,000
cubic meters of natural gas ("m3"). The company is currently
constructing four additional natural gas distribution systems and
is planning two more natural gas distribution systems. Beijing Gas
Company owns and operates natural gas distribution systems
primarily in Hebei, Jiangsu and Anhui, Shandong Provinces. For
further information, visit the Company's website at
http://www.sino-gas.com/ . Safe Harbor Statement This announcement
contains forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact in
this announcement are forward-looking statements, including but not
limited to, the Company's ability to raise additional capital to
finance the Company's activities; the effectiveness, profitability,
and the marketability of its products; the ability of the Company
to identify attractive acquisition candidates and close on
acquisitions; the period of time for which its current liquidity
will enable the Company to fund its operations; the Company's
ability to protect its proprietary information; general economic
and business conditions; the volatility of the Company's operating
results and financial condition; the Company's ability to attract
or retain qualified senior management personnel and research and
development staff; and other risks detailed in the Company's
filings with the Securities and Exchange Commission. These
forward-looking statements involve known and unknown risks and
uncertainties and are based on current expectations, assumptions,
estimates and projections about the companies and the industry. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or to changes in its expectations, except as may be required by
law. Although the Company believes that the expectations expressed
in these forward looking statements are reasonable, they cannot
assure you that their expectations will turn out to be correct, and
investors are cautioned that actual results may differ materially
from the anticipated results. All information in this release is as
of November 19, 2007. The Company undertakes no duty to update any
forward-looking statements to conform the release to actual results
or changes in its circumstances or expectations after the date of
this release. The financial information stated above and in the
tables below has been abstracted from the Company's Form 10-K,
filed with the SEC on November 19, 2007, and should be read in
conjunction with the information provided therein. --FINANCIAL
TABLES FOLLOW-- SINO GAS INTERNATIONAL HOLDINGS, INC. CONSOLIDATED
STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER
30, 2007 AND 2006 (Stated in US Dollars) Nine months ended Three
months ended September 30, September 30, 2007 2006 2007 2006 Net
revenues $10,886,612 $4,971,156 $5,652,240 $3,471,616 Cost of
revenues (5,696,918) (1,849,128) (1,965,085) (865,641) Gross profit
5,189,694 3,122,028 3,687,155 2,605,975 Operating expenses Selling
and marketing expenses (376,233) (66,497) (176,739) (39,673)
General and administrative expenses (1,310,811) (693,973) (621,952)
(440,154) Income from continuing operations $3,502,650 $2,361,558
$2,888,464 $2,126,148 Finance costs, net 11,527 (2,169) (22,023)
973 Other income 9,046 13,205 (2,735) -- Other expenses (13,197)
(159) (1,220) (30,417) Income before taxation $3,510,026 $2,372,435
$2,862,486 $2,096,704 Income tax (255,230) (183,755) (227,887)
(166,168) Net income 3,254,796 2,188,680 2,634,599 1,930,536 Net
income per share, Basic $0.21 $0.15 $0.15 $0.13 Diluted $0.17 $0.15
$0.12 $0.13 Weighted average shares outstanding of common stock,
Basic 15,779,750 14,361,646 17,889,867 14,361,646 Diluted
19,573,911 14,361,646 21,856,124 14,361,646 SINO GAS INTERNATIONAL
HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2007
AND DECEMBER 31, 2006 (Stated in US Dollars) 30-Sep-07 31-Dec-06
ASSETS (unaudited) (audited) Current assets Cash and cash
equivalents $16,474,397 $3,638,673 Restricted cash 172,986
3,124,541 Notes receivable 623,071 477,390 Accounts receivable
6,329,633 6,534,740 Inventory 282,700 -- Advances to suppliers
538,731 68,309 Prepayments and others 118,211 141,878 Other
receivables 1,247,546 1,263,800 Total current assets $25,787,275
$15,249,331 Long term assets Investments in equity securities
3,131,322 2,939,029 Plant and equipment, net 20,206,229 10,608,530
Construction in progress 8,959,416 4,628,076 Intangible assets
354,491 457,830 Goodwill 962,582 -- TOTAL ASSETS $59,401,315
$33,882,796 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Bank Loans $2,660,424 $2,430,445 Accounts payable
3,447,280 3,891,388 Other payables 5,702,409 1,790,500 Unearned
revenue -- 37,760 Accrued liabilities 1,101,586 325,922 Total
current liabilities $12,911,699 8,476,015 TOTAL LIABILITIES
$12,911,699 $8,476,015 STOCKHOLDERS' EQUITY Preferred Stock A
US$0.001 par value; 20,000,000 authorized; nil and nil issued and
outstanding as of September 30, 2007 and December 31, 2006
respectively Preferred Stock B US$0.001 par value; 5,000,000
authorized; 3,387,446 and 4,023,268 issued and outstanding as of
September 30, 2007 and December 31, 2006 respectively $4,858 $4,023
Common Stock US$0.001 par value; 250,000,000 authorized; 24,764,122
and 14,692,647 issued and outstanding as of September 30, 2007 and
December 31, 2006 respectively 24,764 14,693 Additional
paid-in-capital 29,212,878 12,069,176 Statutory reserves 2,002,684
2,025,022 Retained earnings 13,435,444 10,469,571 Accumulated other
comprehensive income 1,808,988 824,296 TOTAL STOCKHOLDERS' EQUITY
$46,489,616 $25,406,781 TOTAL LIABILITIES AND STOCKHOLDERS'
$59,401,315 $33,882,796 EQUITY SINO GAS INTERNATIONAL HOLDINGS,
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTHS AND
THREE-MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (Stated in US
Dollars) Nine months ended Three months ended September 30,
September 30, 2007 2006 2007 2006 Cash Flows from Operating
Activities Net income $3,254,796 $2,188,680 $2,634,599 $1,930,538
Depreciation and Amortization 1,544,072 799,780 847,619 734,626
(Increase)/decrease in accounts and other receivables (371,075)
(34,644) 259,352 (2,596,984) (Increase) in inventories (282,700) --
(225,010) 12,899 Increase/(decrease) in accounts and other payables
4,140,130 526,407 1,186,313 1,435,096 Net Cash Provided by
Operating Activities $8,350,798 $3,480,223 $4,702,873 $1,516,175
Cash Flows from Investing Activities Purchase of plant and
equipment $(10,938,911) $(1,042,371)$(6,205,268) $1,075,041
Restricted Cash 2,951,555 -- (172,986) -- Payment for the
construction in progress (4,331,340) (2,727,284) (1,514,904)
(2,727,284) Payment of cost of intangible assets (852,243) (11,141)
(1,159,406) (5,463) Acquisition of subsidiaries (192,293) (254,474)
(19,126) (226,620) Increase in minority interest -- -- -- -- Net
Cash Used in Investing Activities $(13,363,232)
$(4,035,270)$(9,071,690) $(1,884,326) Cash Flows from Financing
Activities Repayment of Bank borrowings 229,979 -- 37,404 --
Dividend Paid (521,121) -- (521,121) -- Issue of share capital
17,154,609 5,246,891 14,566,850 5,246,891 Net Cash Provided by
Financing Activities $16,863,467 $5,246,891 $14,083,133 $5,246,891
Net in Cash & Cash Equivalents $11,851,033 $4,691,844
$9,714,316 $4,878,740 Sourced/(Used) Effect of foreign currency
translation on Cash & Cash equivalents 984,691 65,268 106,442
(244,085) Cash & Cash Equivalents at Beginning of Period
3,638,673 571,194 6,653,639 693,651 Cash & Cash Equivalents at
End of Period $16,474,397 $5,328,306 $16,474,397 $5,328,306 For
more information, please contact: Sino Gas International Holdings,
Inc. Ms. Fang Chen, Chief Financial Officer Tel: +86-10-8260
0527(China) Email: CCG Elite Investor Relations Crocker Coulson,
President Tel: +1-646-213-1915(New York) Email: DATASOURCE: Sino
Gas International Holdings, Inc. CONTACT: Ms. Fang Chen, Chief
Financial Officer of Sino Gas International Holdings, Inc.,
+86-10-8260 0527(China), or ; Or Crocker Coulson, President of CCG
Elite Investor Relations, +1-646-213-1915(New York), or Web Site:
http://www.sino-gas.com/
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