SOURCE: Xinde Technology Company

September 30, 2010 08:42 ET

Xinde Technology Company Reports 56% Year Over Year Increase in Fiscal Year 2010 Revenues

Profits Also Climbed in Surging Chinese Economy

WEIFANG, CHINA--(Marketwire - September 30, 2010) -   Xinde Technology Company (OTCBB: WTFS), a widely respected China based designer and manufacturer of internal combustion engines and parts, primarily for the domestic market, announced today a sharp increase in sales in its fiscal year ended June 30, 2010, which were up 56% year over year to approximately $123.3 million from approximately $78.8 million in fiscal 2009. The Company attributed the gain primarily to the growth in the domestic economy which led to a dramatic increase in market demand which was coupled with successful marketing and the Company's optimization of its manufacturing capacity. The Company also noted that its technical ability permitted it to compete with environmentally friendly products for which demand has increased, in large part due to China's adoption of higher environmental standards. The Company also reported a 39% increase in gross profits in the 2009 fiscal year which reached approximately $14.9 million compared with approximately $10.7 million in the fiscal year ended June 30, 2010. Additionally, year over year income from operations grew 20% from approximately $8.1 million to $9.7 million.

The Company noted that higher raw material costs impacted year over year gross profit, while significantly higher general and administrative costs -- largely attributable to the Company's preparation for going public during the year -- impacted operating income. The Company added, however, that net income for the year ended June 30, 2010, benefitted from a government refundable Value Added Tax (approximately $12.1 million) related to the Company's performance which contributed to a 241% year over year gain in net income to approximately $19.9 million. This compared with net income of $5.8 million in the fiscal year ended June 30, 2009. 

Revenue Gain Led By Increases In Generator Set Sales

The Company said that the year over year sales gain achieved in the 2010 fiscal year was primarily attributable to the 1,434% increase it achieved in generator set sales, which accounted for 27% of the Company's total revenues during the fiscal year. It attributed this increase to the more than 20% increases in power demand that China has been experiencing in recent years, while power supply has increased by less than 2% yearly in each of the past five years according to the China Statistical Yearbook. In these conditions, demand for the Company's generator products has greatly exceeded the Company's production capacity of 20,000 sets a year.

The Company noted further that many of the sales if made to major customers resulted in the resale of its products to customers in Asean countries. Additionally, the Company saw revenue from its new electricity pump, which meets the Euro III Standard, grow 65% year over year to approximately $7.6 million. As was the case in the prior year, the largest contributor to sales in fiscal 2010 were diesel engines, which accounted for 36% of sales in 2010 and 51% in the prior year. The Company said its current focus in this area is on smaller, lighter, highly reliable fuel efficient engines for non-vehicle use, where it believes it is creating a strong niche market with far fewer competitors than the market for larger engines.

During the year, the Company also maintained a strong emphasis on building its nationwide marketing network, as well as its after-sale service network. Currently, the Company has established more than 20 branches throughout China.

Continuing Strong Growth Outlook

Mr. Dianjun Liu, President and Chief Executive Officer of the Company, stated, "In the current year, our focus is on continuing to expand our market penetration in China, particularly with sales of our higher margin products. We believe the Company is very well positioned for success with existing products, as well as products it has under development. For example, we believe our electronically controlled fuel injection systems can currently meet Euro III as well as Euro IV emissions standards -- and even higher standards through technological upgrading -- and will not come up against other Chinese manufactured products. With respect to generator products, the supply and demand situation in China clearly points to the potential for significant growth over the next ten years for our diesel generator sets. This includes an 'intelligent' generator set currently under development with a number of highly attractive 'green' feature." He added, "In the diesel engine product area we intend to strengthen our sales and marketing efforts in the international market and are devoting significant development effort to electronically controlled non-vehicle diesel engines. Our newest Xuaxin 'Zhongkang' product line has been meeting with great success, and we believe these smaller, lighter engines eventually may find a place in the automotive industry, in addition to their current uses."

SEE TABLE BELOW

About Xinde Technology Company

Based in China's Shandong Province in the city of Weifang, Xinde Technology Company competes in three primary product segments, namely (1) fuel injection system products, (2) diesel engine products and (3) generator products. The Company has a broad range of products including non-vehicle diesel engines, diesel generators, injection pumps, injectors and three-coupling components, agricultural machinery and construction machinery which greatly reduces its comprehensive costs which, in turn, increases its competitiveness. The Company recently announced the successful launch of its 6CT/6LT Internal Combustion Engine Product Line.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, statements concerning the Company's operations, financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results my differ materially depending on a variety important factors, including, but not limited to, the impact of competitive conditions and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, financing and other factors as discussed in the Company's reports filed with the Securities and Exchange Commission from time to time, In addition, the Company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date hereof. No securities regulatory authority has either approved or disapproved the contents of this new release. This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements. The Company filings with the US Securities and Exchange Commission, including the annual report for the fiscal year ended March 31, 2009 on Form 10-K, can be viewed on EDGAR Online or www.sec.gov.

XINDE TECHNOLOGY COMPANY
RESULTS OF OPERATIONS - YEAR ENDED JUNE 30, 2010 AS COMPARED TO YEAR ENDED JUNE 30, 2009

The following table sets forth the amounts and the percentage relationship to revenues of certain items in our consolidated statements of income for the years ended June 30, 2010 and 2009:

    For the Years Ended June 30,  
    2010     2009     Comparisons  
    Amount   % of Revenues     Amount   % of Revenues     Change in Amount   Change in %  
    $         $         $      
REVENUES, NET   123,305,388   100 %   78,834,535   100 %   44,470,853   56 %
                               
COST OF GOODS SOLD   (108,438,204 ) 88 %   (68,142,558 ) 86 %   40,295,646   59 %
GROSS PROFIT   14,867,184   12 %   10,691,977   14 %   4,175,207   39 %
                               
Selling and marketing   (2,813,270 ) 2 %   (1,813,235 ) 2 %   (1,000,035 ) 55 %
General and administrative   (2,303,965 ) 2 %   (769,673 ) 1 %   (1,534,292 ) 199 %
INCOME FROM OPERATIONS   9,749,949   8 %   8,109,069   10 %   1,640,880   20 %
                               
Interest expense, net   (345,172 ) 0.3 %   (352,063 ) 0.4 %   6,891   (2 )%
Other (expense) income, net   (15,020 ) -     28,774   -     (43,794 ) (152 )%
Refundable value added tax   12,085,158   10 %   -   -     12,085,158   100 %
                               
INCOME FROM OPERATIONS BEFORE INCOME TAXES   21,474,915   17 %   7,785,780   10 %   13,689,135   176 %
INCOME TAXES   1,560,419   1 %   1,946,938   2 %   (386,519 ) (20 )%
                               
NET INCOME   19,914,496   16 %   5,838,842   7 %   14,075,654   241 %
                               
OTHER COMPREHENSIVE INCOME                              
Foreign currency translation gain   226,719   -     130,167   -     96,552   74 %
OTHER COMPREHENSIVE INCOME   226,719   -     130,167   -     96,552   74 %
                               
COMPREHENSIVE INCOME   20,141,215   16 %   5,969,009   8 %   14,172,206   237 %

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