Wonder Auto Reports Its First Quarter 2009 Financial Results
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JINZHOU CITY, China, May 4, 2009 Wonder Auto Technology, Inc. (''Wonder Auto'' or ''the Company''), a leading manufacturer of automotive electrical parts, suspension products and engine accessories in China, today announced its financial results for the first quarter ended March 31, 2009.
Highlights:
-- Sales revenue increased 28.5% year-over-year to $40.0 million;
-- Gross profit increased 23.5% to $10.1 million;
-- Net income increased 29.8% year-over-year to $5.2million;
-- EPS was $ 0.19, representing a 26.7% increase compared with first
quarter 2008.
Business outlook
For the second quarter of 2009, our sales revenue is expected to be approximately $45 million with the net income to be approximately $5.3 million.
Growth drivers
Our products are increasingly demanded attributable to the following advantages:
-- Market oriented focus. Our alternator and starter products are
primarily for mid- to small sized engine vehicles, which are encouraged
in sales by China's government in the stimulus plans.
-- New joint development programs. In the first quarter of 2009, we
developed 17 joint programs, among which 11 were with international
customers. Most of these programs will turn into sales contracts.
-- Strategic acquisitions. We will be able to achieve market expansion and
cross-selling synergies through acquisitions.
-- Favorable government policies. China has implemented a series of
stimulus policies to bolster its auto industry.
Financial performance
Our sales revenue of the first quarter 2009 rose to a record high of $40.0 million, a 28.5% increase from $31.1 million in the first quarter of 2008. The increase was mainly attributable to the acquisition of Jinan Worldwide, which contributed $7.3 million to our sales revenue in the first quarter 2009. Sales revenue from China increased $10.9 million, or 41.9%, to $37.0 million in the first quarter of 2009, compared with $26.1 million for the same period last year. The organic revenue increase from China was $4.0 million, or 15.4%, to $30.1 million for the first quarter of 2009, compared with $ 26.1 million for the same period last year.
In the first quarter of 2009, our gross profit increased 23.5% to a record of $10.1 million from $8.2 million in the first quarter of 2008. Our gross margin was 25.3% in the first quarter of 2009 compared with 26.3% for the first quarter of 2008. The decreased gross margin was due to the change of our product portfolio. In the first quarter of 2009, a large portion of our total sales revenue was generated from the sales of alternators and starters for mid- to small displacement engine vehicles. Our alternators and starters for smaller displacement engine products usually have a lower gross margin than those for larger displacement engine vehicles.
Our operating expenses for the first quarter 2009 increased $1.6 million, or 64.4%, to $4.0 million from $2.4 million of the first quarter 2008. As a percentage of the sales revenue, the total expenses increased to 10.0% for the three months ended March 31, 2009 from 7.8% for the same period last year.
Our administrative expenses increased $977,619, or 73.0%, to $2.3 million for the first quarter 2009 from $1.3 million for the same quarter last year. The increase was primarily due to the consolidation of Jinan Worldwide and the related professional fees.
Our research and development expenses increased $78,675, or 20.8%, to $456,232 for the first quarter 2009 from $377,557 for the same quarter last year. As a percentage of the sales revenue, our research and development expenses decreased to 1.1% in the first quarter 2009 from 1.2% for the first quarter 2008. The company expects to maintain the percentage of research and development expenses to our total sales revenue at approximately 1.0%.
The selling expenses increased $504,802 to $1.2 million for the first quarter 2009 from $707,857 for the same quarter last year. As a percentage of the sales revenue, our selling expenses were 3.0% for the first quarter of 2009 compared with 2.3% for the first quarter of 2008. The increase of the selling expenses was mainly due to the consolidation of Yearcity.
Our net finance cost decreased $869,713, or 91.2% to $83,989 for the first quarter 2009 from $953,702 for the same quarter last year. The decrease of net finance cost was mainly attributable to the foreign exchange gain of $762,035 resulted in the 8.3 million Euro long-term bank loan.
Income taxes increased $489,188, or 113.5%, to $920,005 for the first quarter 2009 from $430,817 for the same quarter 2008. Our effective income tax rate was approximately 14.6% for the first quarter 2009 as compared to 8.8% for the same quarter 2008.
Net income attributable to the Company increased $1.2 million, or 29.8%, to $5.2 million in the first quarter 2009 from $4.0 million of the same quarter last year.
EPS was $0.19, representing 26.7% increase compared with $0.15 in the first quarter of 2008.
As of March 31, 2009, Wonder Auto had $13.6 million in cash and cash equivalents, a current ratio of 1.2 to 1, working capital of $17.9 million. Shareholders' equity increased to $104.9 million.
Events overview
In February, Jinzhou Halla, a wholly-owned subsidiary of Wonder Auto, was awarded a bid to supply starters to Dongfeng Passenger Vehicle Company (''DFPV''), an affiliate of Dongfeng Automotive Co., Ltd, one of the ''Big 3'' automakers in China. Upon receipt of the acceptance notice, Jinzhou Halla has become a sole supplier of starters for passenger vehicles to be launched by DFPV in China at the end of 2010. The total estimated amount for the emerging passenger vehicles will be about 1.8 million units for the period of 2011 to 2019, according to DFPV. Our estimated sales to DFPV will be approximately $20 million, progressively from 2011 to 2015.
In March, Mr. Xiaoyu Zhang and Mr. Xianzhang Wang were appointed to be the Company's new independent directors. The Company values the two outstanding experts as tremendous assets for the company as they will be of immense benefit to the company attributable to their background: Mr. Xiaoyu Zhang is the president of the Society of Automotive Engineers of China and the vice president of China Machinery Industry Federation. Mr. Xianzhang Wang is president of the Insurance Association of China and vice president of China Insurance Academy.
Mr. Qingjie Zhao, Chairman and Chief Executive Officer of Wonder Auto commented, ''Under current global recession, the auto industry in western countries dropped sharply, while in China and other emerging economies still remain growing. I foresee this momentum will continue. Wonder Auto is well positioned in this weather, and achieved remarkable results this quarter. To adapt to these changes, I believe new concepts, new valuation models and new investment strategies are essential for success.''
''Looking forward, we remain optimistic about the growth potentials from our internal competitive advantages and the external opportunities from the bolstered auto market in China. Our management and work force did an excellent job during this quarter, and I am confident they are well prepared for the coming quarters of 2009.''
Conference call
The company will host a conference call on Tuesday, May 5 at 8:00 a.m. U.S. Eastern Daylight time. A question and answer session will follow management's presentation. Mr. Qingjie Zhao (Chairman &CEO), Mr. Ryan Yuan (CFO), Mr. Peng Li (Investor Relations Officer) and Ms. Lydia Zhao (Assistant CFO) will be the primary speakers for the call.
To participate, please call the following numbers ten minutes before the call start time:
Phone number: +1 866 242 1388 (United States) Phone number: +852 800 968 831 (Hong Kong) Phone number: +86 10 800 264 0084 (China) Phone number: +86 10 800 640 0084 (China) Conference ID: 97332088
A live webcast of the conference call will be available on the investor relations page of Wonder Auto's web site at WATG . In addition, a set of slides for management's presentation will be available to download from the same website, 30 minutes prior to the webcast.
