SOURCE: China Auto Logistics Inc.

China Auto Logistics Inc.

August 15, 2011 08:00 ET

China Auto Logistics 2011 Second Quarter Set New Records; Revenues Increased 130% and Net Income Advanced 23% Year Over Year

Investor Conference Call to Be Held Wednesday, August 17th, at 8:00am ET

TIANJIN, CHINA--(Marketwire - Aug 15, 2011) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of automobile-related websites, a top seller in China of imported luxury vehicles and a leading provider in China of automobile-related services, today announced a more than doubling in revenues from imported luxury auto sales and substantial top and bottom line gains in its automobile related services businesses combined to generate record 2011 second quarter and first half results.

In the second quarter ended June 30, 2011:

  • Net revenues increased 130% to $126.2 million compared with $54.8 million a year earlier, led by a 133% jump in sales of imported luxury autos to $123.1 million;
  • Net income attributable to shareholders grew 23% to $2.3 million, or $0.12 per share on 19.2 million weighted average shares, compared with $1.9 million or $0.10 per share on 18.1 million weighted average shares in the 2010 second quarter;
  • Once again the Company's web-based advertising services generated the largest contribution to operating income in the quarter, as year over year revenues grew 71% to $2 million and contributed $1.5 million to second quarter income from operations, outpacing the $1.1 million contributed by sales of automobiles. All other auto related services businesses also generated increased operating income in the quarter compared with the prior year.

For the six months ended June 30, 2011, revenues reached $207 million, an increase of 90% from $109 million a year earlier. Net income attributable to shareholders grew 29% from $3.4 million in the 2010 first half to $4.4 million or $0.23 per share compared with $0.19 per share a year earlier. The largest contributor to operating income in the six month period was web-based advertising services. Revenues grew 77% to approximately $4 million from $2.2 million in the prior year and generated $3 million in operating income in 2011, compared with a $2 million contribution from auto sales.

Highly Profitable Auto-related Services

"Once again," stated Mr. Tong Shiping, CEO and Chairman of the Company, "roughly two-thirds of our operating profits in the quarter were contributed by our auto related services, in particular, the very rapid growth we have continued to see in our Web-based Advertising Services, as we pursue our goal of becoming the leading automobile portal in China."

Mr. Tong added, "A key element in our success was the continuing successful integration of our www.goodcar.cn site into our www.cali.com.cn portal, where its popularity continues to grow with China's drivers for the discounts delivered to members. Going forward, we will expand 'goodcar' in line with the growth plans for our other sites, which we expect to expand from serving the information needs of consumers in 35 cities to 60 cities reaching more than 70% of China's auto buying public."

"In this outstanding quarter we took particular advantage of the very strong market in China for luxury imported autos, and continued our shift to the potentially more profitable high end of the market," stated Mr. Tong. "Reflecting this," he added, "the average price of the vehicles we sold in the quarter increased 41% year over year from $77,507 to $109,029 as unit sales increased 66% to 1,129 vehicles, together generating the 133% year over year increase in revenues."

As of June 30, 2011 the Company's facility line of credit with several of China's leading banks was $135 million, more than a doubling of the credit line since the end of 2010. This increase enabled continuing growth in the Company's auto-related financing services for imported auto dealers and, more recently, a growing number of domestic dealers. Mr. Tong commented, "We believe the very safe, short term inventory financing we provide to dealers will help open the door to developing other new, profitable services for them. We also believe having access to these credit lines in a period when China's banks have been tightening their loan policies provides us with a strong competitive advantage and reflects very well on our Company's financial strength and growth outlook."

Successful Above Market Raise for Expansion in the Domestic Auto Sector

On July 7, the Company was pleased to announce a $5.25 million private equity placement of 3 million unregistered shares at an above market price of $1.75 per share, which it expects to utilize in connection with plans to acquire and develop the largest domestic auto mall in its home city of Tianjin.

The Company saw the willingness of the accredited investors to acquire shares above their price in the market as a strong vote of confidence in the Company's shares which Mr. Tong believes are, "significantly undervalued mainly because of the prevailing negativity temporarily affecting all Chinese shares in the U.S."

In its news release on the equity sale, the Company also took the opportunity to counter any concerns about the growth potential of the Chinese auto market following its very extraordinary 32% growth in 2010. It cited the views of close observers of the market who believed an anticipated drop in oil prices and increased liquidity would spur the world's number one auto market to double digit growth levels in the second half of 2011, following the roughly 6% growth in passenger auto sales in the first half of the year.

The Company also announced plans for a significant new expansion into China's domestic auto market on the heels of its recent successes in growing domestic auto related services, such as its www.at160.com website for domestic auto buyers, and www.goodcar.cn for domestic auto drivers. Specifically, the Company expects to acquire a large auto mall in Tianjin that will sell over 70 different car models and become the largest mall in the city. The Company also believes the mall will be a key element in plans to develop and grow a variety of new online auto-related services for the very large and growing domestic auto market.

Continuing Strong Growth Ahead

"Over the past several quarters since becoming a publicly traded Company, I believe CALI has clearly and openly demonstrated that not only is it on an exciting growth track, but that management is very capable of developing well grounded growth strategies and successfully executing them," Mr. Tong stated. He continued, "As we enter the second half of 2011, it may well be looked on as the beginning of one of the most exciting new chapters in the Company's history, as we take another giant step forward, this time into the very large and growing domestic auto market in China. The opportunity is there for us and we intend to seize it, first with the acquisition and development of the domestic mall, and then with the further rapid expansion of our web-based auto-related services serving the full spectrum of auto sector buyers, dealers and drivers."

"As we move ahead," Mr. Tong added, "we will continue to be fully transparent and firmly believe we will be among the top Chinese companies to emerge strongly from this period of investor uncertainty."

Conference Call Invitation

The Company will discuss 2011 second quarter results during a live conference call and webcast on Wednesday, August 17th, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-1427 when calling within the United States or 1-480-629-9664 when calling internationally. Please ask for the China Auto Logistics 2011 Second Quarter Earnings Conference Call, Conference ID: 4464940. There will be a playback available until 08/24/11. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4464940.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=00008B6C or at ViaVid's website at www.viavid.net.

SEE TABLE BELOW

About China Auto Logistics Inc. (CALI)

China Auto Logistics Inc. operates www.cali.com.cn, which rapidly has become one of the leading automobile portals for car dealers and consumers of vehicles and auto-related services throughout China. The Company also is one of China's top sellers of luxury imported cars as well as one of the country's leading developers of websites for buyers and sellers of imported and domestic automobiles. Recently initiating auto-related services for dealers and purchasers of domestic autos, it is China's leading "one stop" provider of logistical services and financing to imported car dealers nationwide and manager of the large imported auto mall in Tianjin. Its subscription and advertising based www.at188.com is the number one site for imported car dealers and consumers. Its www.at160.com site, focused on the domestic auto market, has climbed rapidly to become one of the top domestic auto websites and ranks among the top 125 most visited sites in China. In 2010, the Company completed the acquisition of www.goodcar.cn, a highly popular internet destination for auto drivers attracted by the discount cards offered on the site for a variety of automotive products and services including 5% discounts on gas purchases. The Company believes the integration of these wide ranging sites and services in a single portal serving a broad spectrum of China's "auto living" public, as well as the addition of new web-based auto-related services for businesses and consumers, will drive future growth. For additional information visit www.chinaautologisticsinc.com.

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.

CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2011 2010 2011 2010
Net revenue $ 126,226,569 $ 54,820,581 $ 207,437,369 $ 108,969,853
Cost of revenue 122,069,426 51,786,674 199,306,002 103,199,954
Gross profit 4,157,143 3,033,907 8,131,367 5,769,899
Operating expenses:
Selling and marketing 364,496 187,127 738,643 385,527
General and administrative 667,018 292,362 1,349,834 684,672
Total operating expenses 1,031,514 479,489 2,088,477 1,070,199
Income from operations 3,125,629 2,554,418 6,042,890 4,699,700
Other income (expenses)
Interest income 15,164 5,582 27,682 38,167
Interest expenses - (28,191 ) - (67,742 )
Miscellaneous (1,490 ) 5,928 (10,577 ) 5,928
Total other income (expenses) 13,674 (16,681 ) 17,105 (23,647 )
Income before income taxes 3,139,303 2,537,737 6,059,995 4,676,053
Income taxes 825,932 650,734 1,642,120 1,235,250
Net income 2,313,371 1,887,003 4,417,875 3,440,803
Less: Net income attributable to noncontrolling interests
27,171

25,798

54,541

51,152
Net income attributable to shareholders of China Auto Logistics Inc. $
2,286,200
$
1,861,205
$
4,363,334
$
3,389,651
Earnings per share attributable to shareholders of China Auto Logistics Inc.
- basic and diluted $ 0.12 $ 0.10 $ 0.23 $ 0.19
Weighted average number of common share outstanding
- basic and diluted 19,163,427 18,100,000 19,163,427 18,100,000

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