SOURCE: Man Shing Agricultural Holdings

September 28, 2011 12:07 ET

Man Shing Exceeds 2011 Fiscal Year End Guidance With $9 Million in Net Income or $0.21 EPS

HONG KONG--(Marketwire - Sep 28, 2011) - Man Shing Agricultural Holdings, Inc. (OTCBB: MSAH) (OTCQB: 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 fiscal year ending June 30, 2011. Net income for the 2011 fiscal year totaled $9 million, or basic earnings per share of $0.21, exceeding guidance of $8.8 million.

Financial Highlights for the Fiscal Year Ended June 30, 2011

  • Revenue increased 43.8% year-over-year to $32.3 million;
  • Gross profit increased 61.8% to $13.6 million; gross margin improved to 42.2%;
  • Net income increased 72.1% to $9 million;
  • Basic earnings per share of $0.21 based on 42.3 million weighted average shares outstanding;
  • Cash and cash equivalents totaled $7.1 million;
  • Working capital increased year-over-year by $13.3 million to $23.6 million.

Operational Highlights for the Fiscal Year Ended June 30, 2011

  • Successfully leased an additional 2.4 million square meters of farmland in March 2011, increasing total farmland by approximately 45% to 7.7 million square meters.
  • Focused on producing high quality ginger which provides several important advantages including a higher price point and increased customer confidence.
  • Appointed Mr. Xuguang Qiao and Mr. Kun Xu to the Board of Directors, each of whom have extensive experience in the agricultural industry.
  • Approximately 3.4 million preferred shares outstanding were canceled.

Mr. Shili Liu, Chairman and Chief Executive Officer of Man Shing, stated, "We are pleased that we generated $9 million in net income and exceed our guidance. Additionally, we successfully increased our land capacity by 45%, from 5.3 million to 7.7 million square meters, allowing us to significantly increase our production capacity for the current fiscal year. We completed planting on all 7.7 million square meters in April and will begin to harvest the ginger by October 2011. The uniqueness of our business model is apparent as we increase our land capacity and are able to continually implement our quality standards without incurring additional expenses. This enabled us to increase our gross margins year over year from 37.5% in fiscal 2010 to 42.2% in fiscal 2011. Our company is well capitalized and as of June 30, 2011, we had approximately $7.1 million in cash which will provide us with sufficient capital to fuel the future growth of the Company."

Financial results for the twelve months ended June 30, 2011

Year to Date Financials (USD) (unaudited)
Twelve months ended June 30, 2011 2010 CHANGE
Revenue $32.3 million $22.4 million +43.8%
Gross Profit $13.6 million $8.4 million +61.8%
Gross Profit Margin 42.2% 37.5% +12.5%
Net Income $9 million $5.2 million +72.1%
Basic EPS* $0.21 $0.18 +16.7%
Diluted EPS ** $0.15 $0.07 +114.3%
* Based on 42.3 million and 28.8 million shares outstanding for fiscal 2011 and 2010, respectively.
** Based on 59.6 million and 72.3 million fully diluted shares outstanding for fiscal 2011 and 2010, respectively.

Financial Results for the Fiscal Year Ended June 30, 2011
Revenue for the fiscal year ended June 30, 2011 totaled $32.3 million, an increase of 43.8% as compared to $22.4 million for the same period in 2010. The revenue increase was due primarily to the increase in sales of frozen and fresh ginger and other agricultural products and the leasing of more farmland, our marketing strategy and customer loyalty. The average market price of ginger reached $1,366 per ton during fiscal 2011, compared to the average market price of $1,046 per ton for the same period in fiscal 2010.

Cost of sales for the fiscal year ended June 30, 2011 totaled $18.7 million, or 57.8% of revenue, an increase of 33.1% compared to $14 million, or 62.5% of revenue, for the fiscal year ended June 30, 2010. Cost of sales includes the costs associated with the planting, harvesting and maintaining of ginger and other agricultural products. Cost of sales as a percentage of revenues decreased mainly due to cost controls associated with planting and production and the market price appreciation of ginger. The Company minimizes waste by storing the ginger in a thermostatic warehouse.

Gross profit for the fiscal year ended June 30, 2011 totaled $13.6 million, an increase of 61.8% compared to $8.4 million for the fiscal year ended June 30, 2010. Gross profit margin improved to 42.2% for the 2011 fiscal year as compared to 37.5% for the 2010 fiscal year. The increase in gross profit margin was primarily attributable to the increase in selling prices and control of material costs and overhead resulting from better utilization of facilities due to economies of scale from larger output volume.

Operating expenses for the fiscal year ended June 30, 2011 totaled $4.5 million as compared to $3.1 for the fiscal year ended June 30, 2010. The increase in operating expenses for fiscal 2011 consisted of an increase in selling and marketing expenses due primarily to the increase in distribution costs and an increase in sales and marketing activities to both existing and new customers.

Net income for the 2011 fiscal year ended June 30, 2011 totaled $9 million, an increase of 72.1% compared to $5.2 million for the 2010 fiscal year ended June 30, 2010. Basic earnings per share for fiscal 2011 were $0.21, based on 42.3 million basic shares outstanding versus earnings per share of $0.18 for fiscal 2010, based on 28.8 million basic shares outstanding. Diluted earnings per share for fiscal 2011 totaled $0.15 based on 59.6 million shares outstanding, as compared to $0.07 based on 72.3 million shares outstanding for fiscal 2010.

Liquidity and Capital Resources
As of June 30, 2011, Man Shing had approximately $7.1 million in cash and cash equivalents. As of June 30, 2011, total current assets and total assets were approximately $28.3 million and $29.9 million, respectively. During the same period, total current liabilities and total liabilities were approximately $4.7 million and $6.2 million, respectively. Working capital increased year-over-year by $13.3 million to $23.6 million as of June 30, 2011, as compared to $10.3 million as of June 30, 2010. Shareholder's equity increased 146% to $23.7 million as of June 30, 2011, compared to $9.6 million as of June 30, 2010.

Mr. Shili Liu concluded, "As a public company, it will always be our intention to provide shareholders and prospective investors with business transparency and open communication as it relates to capital markets. We will continue to work diligently to continue building the trust of the PRC government, our loyal customer base and our shareholders. Strong relationships with the local government and customers and our focus on quality products are at the heart of our success. We are looking forward to the upcoming harvest season."

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
Consolidated Balance Sheets
As of June 30, 2011 and 2010
ASSETS 2011 2010
CURRENT ASSETS
Cash and cash equivalents $ 7,081,297 $ 378,929
Accounts receivable, trade 6,330,625 2,249,998
Inventories 5,443,117 4,938,043
Deferred inventory costs 9,064,571 5,118,558
Prepayments 371,881 350,668
Other receivables 787 747
Tax recoverable 15,144 -
TOTAL CURRENT ASSETS 28,307,422 13,036,943
FIXED ASSETS
Property, plant, and equipment 1,619,838 908,105
Accumulated depreciation (257,250 ) (182,665 )
Construction in progress 211,752 124,697
NET FIXED ASSETS 1,574,340 850,137
TOTAL ASSETS $ 29,881,762 $ 13,887,080
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 1,916,064 $ 352,087
Note payable - 318,375
Accounts payable 691,628 597,791
Other payables and accrued liabilities 1,685,016 1,047,529
Receipts in advance 402,557 314,916
Tax payable - 128,338
TOTAL CURRENT LIABILITIES 4,695,265 2,759,036
LONG-TERM LIABILITIES
Convertible notes (convertible up to 750,000 common stock with $2 conversion price) 1,500,000 1,500,000
TOTAL LIABILITIES 6,195,265 4,259,036
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 25,000,000 shares authorized, 176,750 and 3,535,000 shares issued and outstanding at June 30, 2011 and June 30, 2010, respectively 177 3,535
Common stock, $.001 par, 175,000,000 shares authorized, 48,026,958 and 38,026,958 shares issued and outstanding at June 30, 2011 and June 30, 2010, respectively 48,027 38,027
Additional paid-in capital 4,210,545 177,187
Accumulated other comprehensive income 1,180,599 189,187
Statutory reserves 5,823,139 2,134,501
Retained earnings 12,424,010 7,085,607
TOTAL STOCKHOLDERS' EQUITY 23,686,497 9,628,044
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,881,762 $ 13,887,080
The accompanying notes are an integral part of these consolidated financial statements.
Man Shing Agricultural Holdings, Inc. and Subsidiaries
Consolidated Statements of Operation and Comprehensive Income
For the Years Ended June 30, 2011 and 2010
2011 2010
Revenues
Sales $ 32,253,922 $ 22,425,534
Cost of sales 18,652,553 14,018,540
Gross profit 13,601,369 8,406,994
Operating expenses
Selling and marketing expenses 2,974,674 1,487,801
General and administrative expenses 1,505,852 1,605,348
Total operating expenses 4,480,526 3,093,149
Operating income 9,120,843 5,313,845
Other income (expenses)
Financial income (expenses) (169,791 ) (13,590 )
Interest on convertible notes (120,000 ) (60,000 )
Non-operating income (expenses) 195,989 4,238
Total other income (expenses) (93,802 ) (69,352 )
Income from before income taxes 9,027,041 5,244,493
Income taxes - -
Net income $ 9,027,041 $ 5,244,493
Other comprehensive income
Foreign currency translation gain 991,412 55,753
Comprehensive income $ 10,018,453 $ 5,300,246
Weighted average number of shares outstanding
Basic 42,273,533 28,833,604
Diluted 59,590,191 72,298,661
Earnings per share
Basic $ 0.21 $ 0.18
Diluted $ 0.15 $ 0.07
The accompanying notes are an integral part of these consolidated financial statements.

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