Business News
Shiner International Reports Sales, Net Income Double in First Quarter
Monday 05. May 2008 - Organic Growth and New Contract Wins Drive Growth
Shiner International, Inc. (NASDAQ:BEST), an emerging global supplier of anti-counterfeiting and flexible packaging products, today announced financial results for the first quarter ended March 31, 2008, highlighted by an 88.8 percent increase in revenues and 186.1 percent increase in net income.
Shiner reported total revenue of $11.28 million for the first quarter of 2008, compared with revenue of $6.0 million in the prior-year period. Revenue increased in each of Shiner’s four product segments during the quarter, highlighted by significant growth in its domestic and international sales of anti-counterfeiting and coated films. In addition, an increasing market awareness of the advantages of Shiner’s flexible packaging technology helped drive gains in the quarter. Shiner’s patented packaging technology ensures the authenticity, safety and quality of consumer goods such as food and beverages, tobacco, CD/DVDs, cosmetics and other branded items.
Net income in the 2008 first quarter increased to $1.6 million, or $0.06 per fully diluted share, compared to net income of $0.5 million, or $0.03 per fully diluted share, in the 2007 first quarter. Shiner’s record performance was driven by higher sales volume of anti-counterfeiting films, coated films and BOPP tobacco films, coupled with a favorable pricing environment and better capacity utilization. Shiner also benefited from a decline in raw material costs due to structure adjustment and technical improvement, which resulted in gross margin improving from 16.8 percent in last year’s first quarter to 22.5 percent in the current quarter.
“We are very pleased with our first quarter results, as our strong performance reflects a continuation of the momentum we established in 2007,” said Mr. Jian Fu, CEO of Shiner International. “Shiner remains well-positioned to take advantage of the increasing domestic and international market demand for our flexible packaging products, especially within our anti-counterfeiting product line, as these products provide peace of mind to manufacturers and consumers focused on product safety and authenticity.”
Sales of the Company’s anti-counterfeiting films grew 742.5 percent in the quarter driven by new international customers and an increasing demand among Chinese consumers for higher product standards. Internationally, sales of Shiner’s anti-counterfeiting films increased 681.2 percent on the strength of Shiner’s proprietary technology, which prevents duplication or re-use of its films. In addition, sales of coated films increased 37.1 percent and BOPP tobacco sales grew 125.5 percent in the first quarter.
For the first quarter ended March 31, 2008, coated film products accounted for approximately 23.6 percent of overall revenue, while BOPP tobacco film accounted for 31.8 percent. The Company noted that anti-counterfeiting film products continue to grow as a percentage of overall revenue, contributing 19.6 percent, up from 11.4 percent in the first quarter of 2007. Color printing accounted for the remaining 25.0 percent of revenue in the quarter.
Mr. Fu added: “We continue to realize multiple benefits from our high-quality, low-cost manufacturing model as we won a number of new contracts in the quarter that helped increase our penetration in key international markets such as Australia, Europe and our newest market, South America. With a growing demand for our products, especially within our anti-counterfeiting line, we believe we have the ability to capitalize on numerous growth opportunities during the balance of 2008.”
Shiner noted that it entered into contracts during the first quarter to supply 565 tons of its industry-leading anti-counterfeiting film to six new China-based customers. The contracts, expected to generate $4 million in revenue, further demonstrates the growing demand for Shiner’s anti- counterfeiting products. While these contracts did not impact the 2008 first quarter results, the Company noted it expects to begin realizing revenue from these contacts in the second quarter of 2008.
Shiner said it also made infrastructure investments in the quarter to improve efficiency and boost production capacity to meet increasing domestic and international demand. The Company will launch two productions lines of coated films and one production line of anti-counterfeiting films in the second quarter of 2008 with the goal of increasing production to 28,100 tons, up from 17,200 in 2007.
In addition, the Company’s commitment to cost-effective manufacturing practices helped decrease debt by more than 40 percent to $4.8 million, and boosted cash and cash equivalents at March 31, 2008 of $1.4 million.
2008 Financial Guidance
Shiner reiterated its previous guidance for 2008 and said the Company remains on track towards its projections.
— 2008 Revenue Guidance: Shiner projects 2008 revenue to be in the range
of $64 to $70 million, an increase of 50% to 64% from 2007
— 2008 Net Income Guidance: Shiner projects 2008 net income to be in the
range of $8.0 to $9.0 million, an increase of 76% to 98% from 2007
— 2008 EPS Guidance: Shiner projects 2008 EPS to be in the range of $0.31
to $0.35 per fully diluted share