Report 1Q earning of China Valves Technology, Inc.
China Valves net income in the first quarter of 2009 totaled $ 17.2 million, an increase of 32.8% from 13.0 million dollars in the first quarter of 2008. Turnover was 3737 metric tons in the first quarter of 2009, which is 10,8% from 3372 tons in the first quarter of 2008.
Net income increased primarily due to strong sales of high pressure and high temperature valves used in power and two channels of sealing metal fittings for water systems. These products are responsible for $ 7.3 million of net income, about 42.0% of net income in the first quarter of 2009. There is strong demand for premium products, as more stringent government requirements for new power plants, as well as state programs aimed at developing, improving and expanding the civilian infrastructure. Sales in the energy industry accounted for 28.5% of sales and sales of water supply and drainage in the industry accounted for 29.7% of the turnover in the company during the first quarter of 2009.
Revenues from domestic sales in the first quarter of 2009 totaled $ 15.4 million, or 89.6% of net income, compared with $ 12.5 million, 96.3% of net income in the first quarter of 2008. Revenue from international sales were 1.8 million, or 10.4% of net income during the quarter, compared with $ 0.48 million, or 3.7% of net income during the first quarter of 2008. International sales increased primarily due to sales and marketing efforts and peace valves, butterfly valves, and recognition in the broader context of China Valves products.
Gross profit in the first quarter of 2009 was $ 8.3 million, an increase of 63.0% with 5.1 million dollars in the first quarter of 2008. Gross margin was 48.3% compared to 39.3% in the first quarter of 2008. Gross margin increased due to low production costs include the costs of raw materials, strict control of production costs, rising prices for the sale of finished products and increased sales of premium products – the valve. Gross margin increased due to lower prices for raw materials and managerial capacity to control costs. In raw material prices were lower in the first quarter of 2009, the fourth quarter of 2008. Sales prices of key raw materials, including foundry, steel, weld puddle, and the rotor disk, were lower by 18.0% on average in the first quarter of 2009 compared to the same period in 2008.
Operating expenses in the first quarter of 2009 was 3.7 million dollars, an increase of 2.6 million dollars in the first quarter of 2008. Operating expenses increased primarily due to increased general and administrative costs associated with the increase in costs associated with the growth of sales, consulting and professional fees related to the S-1 filing, travel related to the acquisition of new companies, as well as high administrative costs as a result of the expansion business. The new production facility with a capacity of more than 13000 square meters and 70 new employees, including technicians.
Total other expenses $ 384,744 for the three months ended March 31, 2009, compared with $ 42.280 for the period ended March 31, 2008. Increase in other expenses was mainly due to the non-cash for 0.4 million dollars related to the change in fair value of liabilities recorded in the order in accordance with EITF 07-5, which deals with company guarantees that the products liability and brands on the market each period. The company does not justify the claim within three months ended March 31, 2008.
The cost of income tax expense was $ 1.3 million compared with $ 0.66 billion in the first quarter of 2008. Income tax will be increased in proportion to the increase in taxable income in the first quarter of 2009.
Net profit for the first quarter of 2009 totaled $ 3.0 million, an increase of 68.6% of net income of $ 1.8 million dollars in the first quarter of 2008. Basic and diluted earnings per share were $ 0.05 compared to basic and diluted earnings per share of $ 0.04 for the quarter ended March 31, 2008.
