SOURCE: Man Shing Agricultural Holdings

February 07, 2012 09:00 ET

Man Shing Earns $0.10 per Share for the First Six Months of Fiscal 2012

HONG KONG--(Marketwire - Feb 7, 2012) - Man Shing Agricultural Holdings, Inc. (OTCBB: MSAH) ("Man Shing," the "Company," "we," "us," or "our"), located in the Shandong Province and one of the largest Chinese exporters of high quality, fresh ginger to Japan, the United Kingdom, and the Netherlands, today announced the financial results for the quarter and six months ending December 31, 2011. The Company earned $0.06 and $0.10 per share for the quarter and six months ended December 31, 2011. Additionally, Man Shing reported $11.8 million, or $0.25 per share, in cash and cash equivalents as of December 31, 2011.

Financial Highlights for the Three Months Ended December 31, 2011

  • Revenue increased 8% year-over-year to $8.8 million;
  • Gross profit increased 15.2% to $3.8 million, gross margin improved to 43.6% vs. 40.9% YOY;
  • Net income increased 18.8% to $2.7 million;
  • EPS of $0.06 based on 48 million shares outstanding;
  • Cash and cash equivalents totaled $11.8 million, or $0.25 per share.

Mr. Shili Liu, Chairman and Chief Executive Officer of Man Shing, stated, "We are pleased to report yet another strong quarter of revenue and net income growth yielding earnings per share for the quarter of $0.06. Harvesting on all 7.7 million square meters of farmland was completed as planned in November. Growth in our business is directly attributable to the increase in the amount of land we have on which to harvest our high quality fresh ginger and other vegetable products. During the quarter, the demand for our products remained at an all-time high. Additionally, we generated cash flow from operations of approximately $4.8 million for the period ended December 31, 2011 and had cash on hand of $11.8 million or approximately $0.25 per share."

Mr. Liu continued, "Our business model is unique. Given our current infrastructure we are able to generate more revenue with low increases in expenses yielding increased margins and profitability. During the quarter we successfully increased margins from 40.9% to 43.9% and net income increased 18.8% year over year. The increase in revenue from our increased farmland capacity yielded increased cash flow for the Company. The additional product harvested will allow us to increase our inventory and fulfill more purchase orders, which should ultimately lead to increasing revenue and earnings going forward."

Financial results for the second quarter ended December 31, 2011

Second Fiscal Quarter 2012 (USD) (unaudited)
Three Months Ended December 31, 2011 2010 CHANGE
Revenue $8.8 million $8.2 million +8%
Gross Profit $3.8 million $3.3 million +15.2%
Gross Profit Margin 43.6% 40.9% +6.7%
Net Income $2.7 million $2.3 million +18.8%
Basic EPS* $0.06 $0.06 -
Diluted EPS ** $0.05 $0.03 -
* Based on 48 million and 36 million shares outstanding for 2012 and 2011 fiscal second quarters, respectively.
** Based on 50 million and 67.9 million fully diluted shares outstanding for 2012 and 2011 fiscal second quarters, respectively.

Financial Results for the Second Quarter Ended December 31, 2011
Revenue for the second quarter ended December 31, 2011 totaled $8.8 million, an increase of 8%, as compared to $8.2 million for the same period in fiscal 2011. The increase in revenue during the quarter was attributable to the additional 2.4 million square meters we leased and an increase in our marketing efforts. Harvesting took place in November 2011 on the original 5.2 million square meters of farmland and the additional 2.4 million square meters of farmland leased in March 2011. During the quarter, the demand for our products remained at an all-time high. Geographic revenue contribution during the quarter was 69% through distribution partners within China and direct sales of 19% to Japan, 7% to the United Kingdom, 4% to the Netherlands and 1% to other countries.

Cost of sales for the second quarter ended December 31, 2011 totaled $5 million, an increase of 3%, compared to $4.8 million for the second quarter ended December 31, 2010. Cost of sales includes the costs associated with the planting, harvesting, storing ginger and other agricultural products such as ginger seeds and fertilizers. Cost of revenues as a percentage of total revenue decreased from 59% in fiscal 2011 to 56% during the current quarter due primarily to a decrease in costs of planting and production.

Gross profit for the second quarter ended December 31, 2011 totaled $3.8 million, an increase of 15.2% compared to $3.3 million for the second quarter ended December 31, 2010. Gross profit margin increased to 43.6% during the current quarter as compared to 40.9% for the prior year. During the quarter, the Company was successful in tightening operating costs and material costs decreased.

Net income for the second quarter ended December 31, 2011 totaled $2.7 million, an increase of 18.8%, as compared to $2.3 million for the second quarter ended December 31, 2010. Net income margin improved to 30% for the current quarter as compared to 28% the year prior. Basic and diluted earnings per share for the second quarter ended December 31, 2011 were $0.06, based on 48 million basic, and $0.05 based on 49.8 million diluted shares outstanding, respectively. These results compare to basic and diluted earnings per share of $0.06 and $0.03 for the same periods the year prior, based on 36 million basic and 67.9 million diluted shares outstanding, respectively.

Financial Highlights for the Six Months Ended December 31, 2011

  • Revenue increased 3.1% year-over-year to $16 million;
  • Gross profit increased 3.7% to $6.7 million; gross margin was 42.2%;
  • Net income increased 6.2% to $4.7 million;
  • EPS of $0.10 based on 48 million shares outstanding.

Financial results for the six months ended December 31, 2011

2012 Fiscal First Six Months (USD) (unaudited)
Six Months Ended September 30, 2011 2010 CHANGE
Revenue $16 million $15.5 million +3.1%
Gross Profit $6.7 million $6.5 million +3.7%
Gross Profit Margin 42.2% 42% -
Net Income $4.7 million $4.5 million 6.2%
Basic EPS* $0.10 $0.12 -
Diluted EPS ** $0.10 $0.06 -
* Based on 48 million and 38 million shares outstanding for 2012 and 2011 fiscal first quarters, respectively.
** Based on 49.8 million and 70.6 million fully diluted shares outstanding for 2012 and 2011 fiscal first quarters, respectively.

Financial Results for the Six Months Ended December 31, 2011
Revenue for the six months ended December 31, 2011 totaled $16 million, an increase of 3.1% compared to $15.5 million for the same period in fiscal 2011. Geographic revenue contribution for the six month period ended December 31, 2011 was 67% through distribution partners within China and direct sales of 18% to Japan, 7% to the United Kingdom, 4% to the Netherlands and 4% to other countries.

Cost of sales for the six months ended December 31, 2011 totaled $9.2 million, an increase of 28.5% compared to $9 million for the 2011 fiscal first six months ended December 31, 2010. Cost of sales includes the costs associated with the planting, harvesting and maintaining of ginger and other agricultural products. Cost of revenues as a percentage of total revenue remained stable at 58% during both six month periods.

Gross profit for the six months ended December 31, 2011 totaled $6.7 million, an increase of 3.7% compared to $6.5 million for the six months ended December 31, 2010. Gross profit margin was 42.2% for the current six month period ended December 31, 2011 as compared to 42% the year prior.

Net income for the six months ended December 31, 2011 totaled $4.7 million, an increase of 6.2% compared to $4.5 million for the six months ended December 31, 2010. Net income margin increased slightly to 30% for the current six month period as compared to 29% the year prior. Basic and diluted earnings per share for the six months ended December 31, 2011 was $0.10, based on 48 million basic and 49.8 million diluted shares outstanding, versus basic and diluted earnings per share of $0.12 and $0.06 for the same period the year prior, based on 38 million basic and 70.6 million diluted shares outstanding, respectively.

Liquidity and Capital Resources
As of December 31, 2011, Man Shing had approximately $11.8 million in cash and cash equivalents, or $0.25 per share based on 48 million shares outstanding. As of December 31, 2011, total current assets and total assets were approximately $33.9 million and $35.7 million, respectively. Inventory increased from $4.9 million as of June 30, 2011 to $12 million as of December 31, 2011 as a result of the increased land capacity harvested during the quarter. Total current liabilities and total liabilities were approximately $5.1 million and $6.6 million, respectively. Working capital totaled $28.8 million as of December 31, 2011, as compared to $23.6 million as of June 30, 2011. Shareholder's equity totaled $29.1 million as of December 31, 2011, as compared to $23.7 million as of June 30, 2011.

About Man Shing Agricultural Holdings, Inc.
Man Shing Agricultural Holdings, Inc., through its operating subsidiary in Shandong China, is focused on the production and processing of fresh ginger and other select vegetables such as onion and garlic. The Company produces high quality ginger which meets the requirements of the British Retail Consortium Global Food Standard. The Company focuses on customers located in countries such as Japan and the European Union which are food safety oriented. For further information about Man Shing Agricultural Holdings, Inc., please visit the Company's website at http://www.msaginger.com/

Forward-Looking Statement:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "expects," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predict," "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions. Uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date hereof, and we do not intend to update any of the forward-looking statements after the filing date to conform these statements to actual results, unless required by law.

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. You may read and copy these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding us and other companies that file materials with the SEC electronically.

Man Shing Agricultural Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
ASSETS December 31, 2011 June 30, 2011
CURRENT ASSETS
Cash and cash equivalents $ 11,841,067 $ 7,081,297
Accounts receivable, trade, net 8,450,524 6,330,625
Inventories 12,040,134 4,880,266
Deferred inventory costs -- 9,064,571
Prepayments 225,444 371,881
Other receivables 821 787
Tax recoverable 1,295,050 577,995
TOTAL CURRENT ASSETS 33,853,040 28,307,422
FIXED ASSETS
Property, plant, and equipment 1,947,361 1,619,838
Accumulated depreciation (347,950 ) (257,250 )
Construction in progress 244,454 211,752
NET FIXED ASSETS 1,843,865 1,574,340
TOTAL ASSETS $ 35,696,905 $ 29,881,762
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowing $ 1,967,973 $ 1,916,064
Accounts payable 1,148,678 691,628
Other payables and accrued liabilities 1,614,918 1,685,016
Receipts in advance 375,329 402,557
TOTAL CURRENT LIABILITIES 5,106,898 4,695,265
LONG-TERM LIABILITIES
Convertible Note 1,500,000 1,500,000
TOTAL LIABILITIES 6,606,898 6,195,265
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 25,000,000 shares authorized, 176,750 shares issued and outstanding at December 31, 2011 and June 30, 2011, respectively 177 177
Common stock, $.001 par, 175,000,000 shares authorized, 48,026,958 shares issued and outstanding at December 31, 2011 and June 30, 2011, respectively 48,027 48,027
Additional paid-in capital 4,240,545 4,210,545
Accumulated other comprehensive income 1,820,851 1,180,599
Statutory reserves 10,198,223 5,823,139
Retained earnings 12,782,184 12,424,010
TOTAL STOCKHOLDERS' EQUITY 29,090,007 23,686,497
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,696,905 $ 29,881,762
Man Shing Agricultural Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three and Six Months Ended December 31, 2011 and 2010
For the Three Months Ended For the Six Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Revenues
Sales $ 8,798,455 $ 8,147,275 $ 15,969,860 $ 15,474,501
Cost of sales 4,960,953 4,816,635 9,231,131 8,974,943
Gross Profit 3,837,502 3,330,640 6,738,729 6,499,558
Operating expenses
Selling and marketing expenses 629,540 715,642 1,275,008 1,498,401
General and administrative expenses 489,885 306,183 638,147 455,581
Total Operating Expenses 1,119,425 1,021,825 1,913,155 1,953,982
Operating Income 2,718,077 2,308,815 4,825,574 4,545,576
Other income (expenses), net
Financial income (expenses), net (66,587 ) (59,295 ) (135,268 ) (87,910 )
Non-operating income (expense), net 23,559 1,403 42,953 1,153
Total Other Income (Loss), net (43,028 ) (57,892 ) (92,315 ) (86,757 )
Income from Operations Before Income Tax 2,675,049 2,250,923 4,733,259 4,458,819
Income taxes -- -- -- --
Net Income 2,675,049 2,250,923 4,733,259 4,458,819
Other comprehensive income, net
Foreign currency translation gain 227,970 195,326 640,252 445,164
Total Comprehensive Income $ 2,903,019 $ 2,446,249 $ 5,373,511 $ 4,903,983
Weighted average number of shares outstanding
Basic 48,026,958 38,026,958 48,026,958 38,026,958
Diluted 49,794,458 67,901,550 49,794,458 70,624,294
Earnings per share
Basic $ 0.06 $ 0.06 $ 0.10 $ 0.12
Diluted $ 0.05 $ 0.03 $ 0.10 $ 0.06

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