SOURCE: Sancon Resources Recovery Inc

November 16, 2010 09:32 ET

Sancon Announces 2010 Third Quarter Results Significant Undervaluation With Strong Cash Position and Continued Growth Prospects

SHANGHAI, CHINA--(Marketwire - November 16, 2010) -  Sancon Resources Recovery, Inc. (OTCBB: SRRY) (or "Sancon"), a growing environmental waste logistics and recycling company with operations in both China and Australia, announced today the results for its 2010 third quarter ended September 30, 2010. Sancon presents a significant investment opportunity and is an undervalued company underpined by its strong cash balance and continued growth prospects.

Financial highlights of 2010 third quarter:

  • Revenue of $3.35 million, an increase of 19% compare to the same period in 2009.
  • Gross profit of $1.49 million, an increase of 25% compare to the same period in 2009.
  • Gross margin was 44%, an increase of 2% compared to the same period in 2009.
  • EBITDA of $0.6 million, an increase of 9% compared to the same period in 2009.
  • Cash Balance of $5.6 million

Results of Operations -- Comparison between the three months ended September 30, 2010 and the same periods in 2009

The Company generated revenues of $3.35 million in the 2010 third quarter, representing $452,691 or 19% increase compared to $2.81 million in the 2009 third quarter. Revenue from our China operations increased $421,359 or 19% from $2.19 million in the 2009 third quarter to $2.61 million in the 2010 third quarter. Revenue from our Australia operations has increased by $121,332 or 19% from $622,921 in the 2009 third quarter to $744,253 in the 2010 third quarter. The increase in revenue from China operations is partially because of the investment in the waste paper and cardboards recycling business from June 2010. Although exports of materials from Australia are still suffering from the global financial crisis, our Australia operation business is gradually recovering.

Gross profit increased $298,355 or 25% to $1.49 million in the third quarter 2010 from $1.19 million in the third quarter 2009. Gross profit of China operation increased $197,168 or 24% from $0.8 million in the 2009 third quarter to $1.03 million in the 2010 third quarter. In Australia, gross profit also increased by $101,187 or 28% from $357,073 in the 2009 third quarter to $458,260 in the 2010 third quarter. Gross margin increased from 42% in the 2009 third quarter to 44% in the 2010 third quarter.

Net income for the 2010 third quarter was $0.546 million, or $0.02 basic and diluted earnings per share, compared to $0.504 million or $0.02 basic and diluted earnings per share one year ago.

Results of Operations -- Comparison between the nine months ended September 30, 2010 and the same periods in 2009

The Company generated revenue of $9.49 million for the nine months ending 2010, representing $1.34 million or 16% increase compared to $8.15 million for the nine months ending 2009. Revenue from China operations increased $791,681 or 12% from $6.61 million for the nine months ending 2009 to $7.4 million for the nine months ending 2010. Revenue from Australia operations has increased by $549,191 or 36% from $1.54 million for the nine months ending 2009 to $2.09 million for the nine months ending 2010.

Gross profit increased $589,029 or 15% to $4.51 million for the nine months period ended September 30, 2010 from $3.93 million for the same period in 2009. Gross profit of China operation increased $0.3 million or 11% from $3 million for the nine months ending 2009 to $3.3 million for the nine months ending 2010. In Australia, gross profit also increased by $272,247 or 29% from $929,617 for the nine months ending 2009 to $1.2 million for the same period in 2010. Gross margin was 48% for the nine months ending 2009 and 2010.

Net income for the nine months ending 2010 was $1.65 million, or $0.07 basic and diluted earnings per share, compared to $1.6 million, or $0.05 basic and $0.07 diluted earnings per share one year ago.

"The revenue and profit from our existing business continues to grow in 2010 third quarter. With our strong balance sheet we are well positioned to consider acquisitions and investment opportunities to accelerate growth to our business," said Jack Chen, Sancon's Chief Executive Officer. "Our new waste paper and cardboards collection business that we have invested in June 2010 has been ramping up nicely. We are now closely evaluating a number of investment and consolidation opportunities that will complement our existing business and extend our footprints in China and service offerings. We will be updating our shareholders on the potential acquisitions and investment opportunities which will enable us to expand and scale."

About Sancon Resources Recovery, Inc.

Sancon Resources Recovery, Inc. is an environmental service company specializes in the collection, processing, and selling of the reprocessed waste material such as plastic, metal, paper, cardboard, glass etc. The recycled materials are re-used by Sancon's manufacturing clients to make a wide variety of new products that include outdoor furniture, construction materials, building materials, packaging materials, and various other products. The use of recycled raw materials is both environmentally friendly and an important method to lower production costs for manufacturers to stay competitive. Sancon also invests in the renewable energy area by sponsoring the development of biofuel production technique that thrives on the supplies of carbon dioxide. Sancon currently has recycling plants based in Melbourne Australia and China. For more information please visit: www.sanconinc.com

Forward-looking statements:

The statements made in this press release, which are not historical facts, may contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.

SANCON RESOURCES RECOVERY, INC.  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
           
  Assets  
  As at  
  September 30, 2010     December 31, 2009  
  Current assets              
    Cash and cash equivalents $ 5,624,717     $ 3,703,716  
    Trade receivables, net   981,785       988,673  
    Inventory   22,604       16,013  
    Deferred Tax Asset   35,907       33,057  
    Other current assets   172,208       285,933  
    Advance and prepayment   115,467       49,502  
    Held to maturity securities   129,892       129,000  
      Total current assets   7,082,580       5,205,894  
               
  Property, plant & equipment, net   1,215,711       958,041  
  Security deposit   30,820       9,824  
  Held to maturity securities -- non current   -       129,993  
  Investment   -       42,678  
  Long Term Deferred Expenses   14,792       -  
  Goodwill   27,688       -  
    Total Assets $ 8,371,591     $ 6,346,430  
               
  Liabilities and Stockholders' Equity  
               
Liabilities              
  Current liabilities              
    Trade payables $ 742,572     $ 886,034  
    Capital lease -- current   2,398       15,925  
    Tax payables   80,789       97,779  
    Due to related parties   700,504       420,504  
    Loan Payable -- current   28,298       26,199  
    Accrued expenses and other payables   396,752       371,593  
      Total current liability   1,951,313       1,818,034  
               
  Long term liability              
    Capital lease   23,679       21,799  
    Loan Payable   35,841       56,117  
    Total liability   2,010,833       1,895,950  
               
Stockholders' Equity              
  Share Capital              
    Authorized: 500,000,000 common shares, par value $0.001 per share          
    Issued and Outstanding: 22,964,996 shares as of September 30, 2010 and December 31, 2009   22,965       22,965  
  Additional paid-in capital   899,347       860,449  
  Deferred Compensation   (113,100 )     (124,800 )
  Other comprehensive income   99,941       71,641  
  Retained Earnings   5,112,502       3,461,642  
    Total   6,021,655       4,291,897  
  Non-controlling interest   339,103       158,583  
    Total stockholders' equity   6,360,758       4,450,480  
    Total liabilities & stockholders' equity $ 8,371,591     $ 6,346,430  
               
   
   
   
   
SANCON RESOURCES RECOVERY, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(UNAUDITED)  
                       
  For the three months periods     For the nine months periods  
 ended September 30,  ended September 30,
  2010     2009     2010     2009  
                               
Net Revenue $ 3,354,608     $ 2,811,917     $ 9,490,416     $ 8,149,544  
Cost of Revenue   1,861,857       1,617,521       4,975,953       4,224,110  
  Gross profit   1,492,751       1,194,396       4,514,463       3,925,434  
                               
Operating Expenses                              
  Depreciation   61,139       54,958       182,783       145,268  
  Selling, General and Administrative   895,868       588,521       2,695,493       2,108,126  
    Total operating expenses   957,007       643,479       2,878,276       2,253,394  
Operating Income   535,744       550,917       1,636,187       1,672,040  
                               
Other Income (Expense)                              
  Other income /(Expense), net   7,671       (43,380 )     (1,343 )     (5,729 )
  Investment loss prior to acquisition   (9 )     3,019       (3,148 )     4,432  
  Gain on acquisition   -       -       34,805       -  
  Interest income /(Expense), net   2,276       -       4,765       -  
  Total other income   9,938       (40,361 )     35,079       (1,297 )
                               
Income from continued operations before income taxes and discontinued Operation   545,682       510,556       1,671,266       1,670,743  
                               
Discontinued Operation                              
  Loss from Discontinued Operation   -       -       -       (50 )
  Loss on Disposal of a subsidiary   -       -       -       (1,834 )
Loss on Discontinued Operations   -       -       -       (1,884 )
                               
Income before income taxes and non-controlling interest   545,682       510,556       1,671,266       1,668,859  
                               
Less:Income taxes   6,868       1,348       18,253       37,360  
                               
Less: Net income attributed to non-controlling interest   (7,474 )     5,196       2,153       20,045  
                               
Net income   546,288       504,012       1,650,860       1,611,454  
                               
Other comprehensive item:                              
Foreign currency translation gain/(loss)   48,318       17,099       28,300       50,159  
                               
Net comprehensive income $ 594,606     $ 521,111     $ 1,679,160     $ 1,661,613  
                               
Earnings per share:                              
  Basic earnings per share-continued operations $ 0.02     $ 0.02     $ 0.07     $ 0.07  
  Basic earnings per share-discontinued operations $ -     $ -     $ -     $ -  
  Basic earnings per share $ 0.02     $ 0.02     $ 0.07     $ 0.07  
  Basic weighted average shares outstanding   22,964,996       22,964,996       22,964,996       22,833,746  
  Diluted earnings per share -- continued operations $ 0.02     $ 0.02     $ 0.07     $ 0.07  
  Diluted earnings per share -- discontinued operations $ -     $ -     $ -     $ -  
  Diluted earnings per share $ 0.02     $ 0.02     $ 0.07     $ 0.07  
  Diluted weighted average shares outstanding   22,964,996       22,964,996       23,041,989       22,833,746  
   
   

Contact Information

  • Contact:

    Sancon Resources Recovery, Inc.
    Ms. Maggie Zhang
    +86 21 6775 6099
    info@sanconinc.com