SOURCE: HQ Global Education

April 15, 2010 08:00 ET

HQ Global Education Inc. Reports Fiscal Year Second Quarter and First Half Results

Full Year Revenues and Profits Expected to Grow at Least 25% Based on Anticipated Large Third Quarter Increases, Second Half Classroom Additions and New Higher Margin Programs; Results as Reported Are Skewed by the Exclusion of One Full Month of Holiday Deferred Second Semester Revenues Compared With the Same Periods Last Year and Which This Year Will Be Recorded in Q3

NINGXIANG COUNTY, CHINA--(Marketwire - April 15, 2010) - HQ Global Education Inc. (OTCBB: HQGE), which controls and operates eight vocational schools in China under the widely known "HQ" brand and is one of China's leading providers of customized or "order-oriented" vocational education, today reported results for its fiscal second quarter and first half ended February 28, 2010. While the Company continued in a very positive growth mode, because winter vacation this year lasted the entire month of February (due to the Chinese New Year occurring in mid February in 2010 compared with late January last year) and the start of the second semester of the school year was on March 1, 2010 as compared with February 12th in 2009, no revenues were recorded during the month of February. This lowered reported revenues in the second quarter and first half of the current fiscal year by one full month compared with results last year, and deferred those revenues to the third quarter this year.

Due to the imbalance in fiscal year over year revenue comparisons, the Company reported that net profit in this year's fiscal second quarter and first half also was lower than in the same periods last year. This occurred despite higher margins and an approximately 14% increase in revenues and a 23% increase in net profits in the first school semester which began on September 1, 2009 and ended January 31, 2010, compared with the first semester last year which ended on January 15, 2009.

Expanding Second Half Profits

Mr. Guangwen He, Chairman and CEO of the Company, and founder of its first vocational school in 1994, stated, "During the first school semester running from September 2009 to the end of January 2010, some of our schools operated nearly at full physical capacity, which slowed our revenue growth somewhat, but is being addressed by planned expansion in the second half of the year to accommodate more students. At the same time, we focused more on our bottom line through such actions as reducing enrollment in certain programs with comparatively lower margins. While we also saw some effects from the financial crisis at the start of the semester, we nevertheless managed to achieve a profit advance in the first school semester of about 23% compared with last year, which we anticipate will expand in the second semester together with increased revenues. Revenues will be especially strong in the third fiscal quarter which incorporates the start of the new semester that was 'missing' in our fiscal second quarter due to the timing of the Chinese New Year and month long vacation period this year in February."

Reported Results

For the three months ended February 28, 2010, the Company reported revenues of $6,865,096 compared with $9,930,518, in the year earlier period, a decline of 30.87%. Net income in the three months ended February 28, 2010 was $2,597,915, down 28.76% from $3,646,898.

For the six months ended February 28, 2010, revenues were $19,874,174, down 8.17% from revenues in the same period a year earlier of $21,642,933. Six month net income in the period ended February 28, 2010 was $6,172,085, down 15.28%, compared with $7,285,290 in the comparable period in the prior fiscal year.

Calculated on the basis of 33,000,000 shares outstanding, EPS was $0.09 in the second quarter ended February 28, 2010 and $0.21 in the first six months of the fiscal year.

Continuing Semester By Semester Growth

The Company reported that key measures of the Company's growth continued to advance through its first semester ended January 31, 2010. Of note, student enrollment in its customized education programs grew to 32,238 students in the first semester of 2010, from 28,782 in the year earlier semester. The cumulative number of students currently attending and who have graduated from its eight vocational schools reached approximately 93,800 in 2010.

The Company also has seen successive bottom line growth in each semester of its recent fiscal years beginning with a net profit of $3,641,279 in the first semester of 2008, growing semester by semester to $6,172,085 in the first semester of 2010.

Contributing to this has been the growth in the number and types of programs offered by the Company, including the recent addition of a maritime school in Shandong Province to help meet the anticipated growth in the re-emerging shipping industry. Increased cooperation with employers also resulted in an increased number of students enrolled in fee generating off campus internship arrangements.

At the same time, the success and continually enhanced reputation of the Company's schools have helped reduce the expense of attracting new students and employers to participate in its training programs which have generated 100% employment rates for graduating students. Continuously focused on bottom line improvement, in the first semester of 2010, the Company's profit margin was 31.06% compared with 28.56% in the year earlier semester. In the second fiscal quarter, the net profit margin was 37.84%, up from 36.72% in the same prior year period.

Outlook: 25%+ Year Over Year Growth

"Our confidence in continuing growth over both the long term and the short term remains very high," stated Mr. He, adding, "in the current fiscal year we are looking forward to cooperating with two new maritime schools with about one thousand new students each which will add further to an anticipated increase in third quarter revenues that were deferred from the second quarter. Further, the new education and training programs we are launching in this increasingly popular field generate higher fees than in many other programs we offer, in line with our overall plan to upgrade to programs with higher fees and margins." Mr. He continued, "We also will be adding new on the job shorter training programs which we see as a higher margin growth area. A little later in the year we also expect to reach cooperative agreements with two additional schools possibly located in Liaoning or Guangxi Province. All in all, we are confident that in 2010 we will maintain our track record of outstanding top and bottom line growth of at least 25% annually."

"Longer term," Mr. He stated, "the increasing demand for well trained employees in the face of growing shortages of workers in many key industries in China will spur further growth and expansion of our time tested successful programs. Our focus will be not only on adding schools and classrooms, but also on programs and related activities that can contribute to improving profits, such as publishing of educational materials in hard copy and on the Internet. There is a very large opportunity ahead for us and, as a newly public company, we will do everything necessary to achieve our potential and to build shareholder value."

HQ Global Education Inc. ("HQ")

As of the first semester of 2010, a faculty and support staff of nearly 2800 served a total of more than 32,000 HQ students from 21 provinces throughout China. They are taught a wide range of vocational skills in approximately 60 programs in 17 technical career categories at eight vocational schools in the Sichuan and Hunan Provinces. In cooperation with nearly 120 participating employers, HQ has become increasingly synonymous throughout China with superior training to meet employer needs and for producing outstanding technical specialists with immediate jobs and fulfilling career opportunities. Students of HQ schools have consistently achieved 100% employment upon graduation.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

                            HQ GLOBAL EDUCATION INC.
                       (FORMERLY GREEN STAR MINING CORP.)
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

                   For the three months ended    For the six months ended
                         February 28,                 February 28,
                     2010           2009          2010            2009
                 ------------   ------------   ------------   ------------
Revenues         $  6,865,096   $  9,930,518   $ 19,874,174   $ 21,642,933
Cost of
 revenue           (3,656,526)    (5,643,869)   (11,515,018)   (13,067,679)
                 ------------   ------------   ------------   ------------
Gross profit        3,208,570      4,286,649      8,359,156      8,575,254

Selling expenses     (107,664)      (149,169)      (243,758)      (346,232)
General and
 administrative
 expenses            (476,672)      (462,701)      (928,236)      (889,531)
                 ------------   ------------   ------------   ------------

Income from
 operations         2,624,234      3,674,779      7,187,162      7,339,491

Other expenses
  Interest
   expenses           (25,766)       (20,559)       (45,127)       (39,428)
  Other expenses         (553)        (7,322)      (969,950)       (14,773)
                 ------------   ------------   ------------   ------------
Total other
 expenses             (26,319)       (27,881)    (1,015,077)       (54,201)
                 ------------   ------------   ------------   ------------

Income before
 income taxes       2,597,915      3,646,898      6,172,085      7,285,290

Provision for
 income taxes              --             --             --             --
                 ------------   ------------   ------------   ------------

Net income          2,597,915      3,646,898      6,172,085      7,285,290
                 ------------   ------------   ------------   ------------
Other
 comprehensive
 item
  Foreign
   currency
   translation
   gain (loss)          5,762        (44,350)        19,627         (1,929)
                 ------------   ------------   ------------   ------------

Comprehensive
 Income          $  2,603,677   $  3,602,548   $  6,191,712    $  7,283,361
                 ============   ============   ============    ============

Basic and
 diluted income
 per common
 share           $       0.11   $       0.18   $       0.28    $       0.36
                 ============   ============   ============    ============
Basic and
 diluted weighted
 average common
 shares
 outstanding       23,416,667     20,500,000     21,950,276      20,500,000
                 ============   ============   ============    ============





OPERATING RESULTS FOR EACH SEMESTER FROM 2008 TO 2010

Stated        2010               2009                      2008
 in US$   ------------ ------------------------- -------------------------
          1st Semester 2nd Semester 1st Semester 2nd Semester 1st Semester
          ------------ ------------ ------------ ------------ ------------
Revenues    19,874,174   18,518,788   17,592,570   16,005,406   12,798,577
Cost of
 revenue   (11,515,018) (11,477,851) (11,358,571) (10,805,949)  (8,387,230)
          ------------ ------------ ------------ ------------ ------------

Gross
 profit      8,359,156    7,040,937    6,233,999    5,199,457    4,411,347

Selling
 expenses     (243,758)    (307,196)    (333,380)    (430,592)    (294,483)
G&A
 expenses     (928,236)    (986,070)    (832,107)    (539,539)    (460,900)
          ------------ ------------ ------------ ------------ ------------

Income
 from
 operations  7,187,162    5,747,671    5,068,512    4,229,326    3,655,964

Other
 expenses   (1,015,077)    (105,460)     (43,548)     (73,047)     (14,685)
          ------------ ------------ ------------ ------------ ------------

Income
 before
 income
 taxes       6,172,085    5,642,211    5,024,964    4,156,279    3,641,279
          ============ ============ ============ ============ ============

Contact Information

  • Contacts:

    Mr. Guangwen He
    Chairman and Chief Executive Officer
    HQ Global Education Inc.
    Tel: (86 731) 87828601
    Fax: (86 731) 87828601

    In the U.S.

    Ken Donenfeld
    DGI Investor Relations
    donfgroup@aol.com
    kdonenfeld@dgiir.com
    Tel: 212-425-5700
    Fax: 646-381-9727