updated 5/25/2011 7:45:33 AM ET 2011-05-25T11:45:33

NEW YORK and SHANDONG, China, May 25, 2011 (GLOBE NEWSWIRE) -- Tsingyuan Brewery Ltd. (OTCQB:BEER), a Shandong-based manufacturer and distributor of brewer's malt and beer in China, today announced results for the first quarter ended March 31, 2011.

Q1 2011 financial highlights:

  • Revenue increased 441.8% to $21.1 million
  • Gross profit increased 529.1% to $4.2 million
  • Gross margin increased 278 basis points to 20.1%
  • Operating income increased 423.0% to $3.4 million
  • Net income increased 404.4% to $2.6 million, or $0.02 per diluted share

Zhang Dingyou, Chief Executive Officer, commented, "We are very pleased to report a 442% increase in revenue to $21.1 million, which resulted from strong growth in both our malt and beer segments. At the same time, gross margin on our beer products increased to 27% in the first quarter of 2011, from 15% for the same period last year. The demand for beer in second- and third-tier cities has grown rapidly, due in part to increasing disposable income in these areas. We attribute Tsingyuan's success to our ability to offer high quality and low cost beer, which appeals to consumers in our target markets. Specifically, our beers are crafted from high quality raw materials using advanced brewing techniques. As the largest malt producer in Shandong, our ability to internally source malt provides us a distinct pricing advantage. "

"Looking ahead, we plan to aggressively expand our distribution network, which already spans six provinces in eastern and northern China. In the first quarter alone, we added over 20 new sales representatives and launched a nationwide advertising campaign, which has helped drive awareness for our products. As we increase penetration of our target markets, we also plan to expand our production capacity to accommodate the growing demand. In the second half of 2010, we added a new canning line, which increased our beer production capacity to 98,000 metric tons. In 2011, we plan to further expand our beer production capacity through the addition of new bottling lines. Overall, we have built a highly scalable infrastructure with a well-established brand, which should allow us to achieve our goal to become one of the leading national beer companies in China."

Revenue for the first quarter ended March 31, 2011 increased 441.8% to $21.1 million, compared to $3.9 million for the first quarter ended March 31, 2010. Gross profit increased 529.1% to $4.2 million for the three months ended March 31, 2011, compared to $0.7 million for the first quarter ended March 31, 2010. Operating income increased 423.0% to $3.4 million for the three months ended March 31, 2011, compared to $0.7 million for the same period last year. Net income for the three months ended March 31, 2011 increased 404.4% to $2.6 million, or $0.02 per diluted share, compared to $0.5 million, or $0.00 per diluted share, for the same period last year.  

About Tsingyuan Brewery Ltd.

Tsingyuan Holding Inc., located in Shandong province, is a leading manufacturer and distributor of brewer's malt and beer throughout northern and eastern China. Tsingyuan Holding has two business lines: brewer's malt and beer production. The brewer's malt is currently shipped to brewers in ten provinces across China. The beer products are distributed throughout six provinces, and are well-renowned for their high quality yet affordable price. The company utilizes the latest German brewing techniques and uses the highest quality barley, water and hops. Tsingyuan promotes nine products under its trademarked brand names "Qinglin," "Qingyi," and "Qingyuan."

This release contains certain "forward-looking statements" relating to the business of the Company. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( www.sec.gov ). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

 

CONDENSED CONSOLIDATED BALANCE SHEETS
  March 31, 2011 December 31, 2010
  (Unaudited)  
ASSETS    
Current Assets:    
 Cash and cash equivalents $ 75,051 $ 1,117,383
 Accounts receivable 195,814 2,710,730
 Inventories 7,872,690 2,358,178
 Advances to suppliers -- 62,949
 Other receivables -- 35,945
       Total Current Assets 8,143,555 6,285,185
     
Plant and equipment, net of accumulated depreciation of $3,023,712 and $2,747,621 at March 31, 2011 and December 31, 2010, respectively 17,345,977 17,462,287
     
Intangible asset, net 1,443,369 1,442,271
Advance for long term assets 5,351,063 151,722
     
  Total Assets $ 32,283,964  $25,341,465
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current Liabilities:    
 Accounts payable and accrued expense $ 1,639,810  $346,798
 Advances from customers 891,230 322,943
 Taxes payable 2,799,613 2,978,635
 Due to related parties -- 519,381
     Total Current Liabilities 5,330,653 4,167,757
     
Stockholders' Equity:    
     
 Preferred stock, Series B -- ($0.001 par value, 1,000 authorized, no shares issued and outstanding) -- --
 Common stock ($0.001 par value, 300,000,000 shares authorized, 126,857,289 shares issued and outstanding as of March 31, 2011 and December 31, 2010 respectively) 126,857 126,857
 Additional paid in capital 14,065,434 11,012,046
 Statutory surplus reserves 832,981 832,981
 Retained earnings 9,739,553 7,155,952
     
 Accumulated other comprehensive income 2,188,486 2,045,872
     Total Stockholders' Equity 26,953,311 21,173,708
     
         Total Liabilities and Stockholders' Equity  $32,283,964 $ 25,341,465
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

 (UNAUDITED)
  For The Three Month Periods Ended March 31,
  2011 2010
     
     
Sales  $21,077,475  $3,890,286
Cost of goods sold 16,850,631 3,218,398
   Gross profit 4,226,844 671,888
     
Operating expenses:    
     
   General and administrative expenses 494,109 12,451
   Selling expenses 323,647 7,608
       Total operating expenses 817,756 20,059
     
Income from operations 3,409,088 651,829
     
Other income (expense):    
   Interest expense -- (57,379)
   Interest income 1,426 9,426
   Other income (expense) 281,263 (45,634)
     
       Total other income (expense) 282,689 (93,587)
     
Income before income taxes 3,691,777 558,242
     
Income taxes expense 1,108,176 46,070
     
Net income 2,583,601 512,172
     
Other comprehensive income:    
     
   Foreign currency translation adjustment 142,614 11,951
     
Comprehensive income  $2,726,215 $524,123
     
Earnings per share - basic and diluted:    
     
   Weighted-average shares outstanding, basic and diluted 126,857,289 125,107,671
     
   Earnings per share, basic and diluted  $0.02  $0.00
CONTACT: Crescendo Communications, LLC
         David Waldman or Vivian Huo
         Tel: (212) 671-1020
         E-mail:  sbrd@crescendo-ir.com

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