China America Holdings, Inc., the holding company which maintains a 56% ownership of subsidiary Shanghai Aohong Chemical Co., Ltd. (SAC), reported its financial results for the recent nine-month transition period ended September 30, 2009.
A manufacturer of single-use steel cylinders and a variety of liquid coolants used in multiple applications, like refrigerants used in commercial, home, and automobile air conditioning systems, CAAH’s subsidiary SAC was established in 2000 in the Huating Economic & Development Area of the Jiading District in Shanghai.
China America Holdings reported:
• Fiscal Year 2009 Revenue of $22.9 Million
• Fiscal Year 2009 GAAP Net Loss of ($362,000)
• Fiscal Year 2009 EBITDA Net Income of $46,000
Revenue from continuing operations generated during the three month period ended September 30, 2009 was up 3.5% to $8.5M from the three-month period ended June 30, 2009, while revenue and gross profit margin was down in the 2009 transition period when compared to the first nine months of 2008.
Aggressive pricing strategies enacted to offset a highly competitive domestic market, combined with decreased exports due to the global economic downturn (and subsequently increased supply of coolants in the global market), drove down gross profit margins.
However, as the over-supply was eaten up by market forces in the second half of calendar 09, constraints on profitability eased and competitors were forced out of the sector, leaving the Company able to weather the storm. The company’s management sees rebounding margins ahead in 2010.
CEO of CAAH Mr. Shaoyin Wang, confident in management’s immediate and decisive response to the prevailing competitive and market pressures experienced in the 2009 transition period, said that the “reduced pricing” succeeded in maintaining “existing clients”, and “attracting additional customers” which has “accelerated the business as conditions in China and the world continue to improve”.
At the close of the 2009 transition period:
• Total assets were $13.9M with shareholder equity at $8.7M compared to $9.3M and $8.6M respectively for the period ending December 31, 2008
• Cash equivalents were $1.7 million and working capital was $2.9 million compared to $2.2M and $4.2, respectively, for the period ending December 31, 2008.
Mr. Shaoyin Wang commented that many competitors had been forced out of the market due to the difficult circumstances and said that “we believe that we have successfully navigated through this difficult period in China and the worst of the global recession”.
Mr. Shaoyin Wang assured investors that the Company would now “emerge from this period as one of the leaders in our industry, poised for a strong reacceleration of growth with improved market conditions”, and that they could now “look forward to realizing rewards for the difficult measures taken in this past year”.