China Power Equipment, Inc. Reports Record Revenue and Net Income

Wednesday, Aug 19, 2009

NEW YORK, Aug. 18 /PRNewswire-Asia-FirstCall/ -- China Power Equipment, Inc. ("China Power") (OTC Bulletin Board: CPQQ) today reported its operating results for the second quarter of 2009.

Net revenues for the six months were $8,590,671, an 88% increase over the first six months of 2008. Net income for the period nearly doubled to $1,634,383, or $0.11 per share, as compared to $822,141, or $0.06 per share for the first six months of 2008. These improvements were largely due to the Company's strong performance in the second quarter. Revenue for the period was $5,888,375, more than double the $2,236,584 earned in the second quarter of 2008. Net income for the second quarter of 2009 was $1.3 million, or $0.09 per share, as compared to $310,746, or $0.02 per share, for the same period in 2008.

The increases to net income as a percent of sales reflect a decrease in the selling, general and administrative expenses, which were 4% of revenues in the second quarter of 2009 as compared to 8% of revenues for the same period in 2008.

Yong Xing Song, Chairman of the Board of the Company, stated, "We are quite pleased with the Company's performance during the second quarter. The improved results reflect the investment we have made in our product line and sales effort. We expect these trends will continue as China's economy continues to expand, and with it, the demand for efficient, clean transfer of energy. We look forward to building on the strong foundation we have built with many of the regional utilities and government agencies as they continue to increase and improve China's power grid."

                           China Power Equipment, Inc.
                           Consolidated Balance Sheets

                                                    June 30,      December 31,
                                                     2009              2008
                                                 (Unaudited)
    Assets
    Current Assets
    Cash                                         $1,525,418        $1,071,038
    Accounts receivable, net                      2,422,684         2,013,305
    Advance to suppliers                            475,200           771,407
    Inventory, net                                1,098,316           461,634
    Prepaid expenses and other receivables          320,256           257,700
    Total Current Assets                          5,841,874         4,575,084

    Related party receivables                        23,781            97,248
    Property, plant and equipment, net            3,693,776         3,116,422
    Intangible assets, net                          423,388           220,742
    Long-term investment                            244,245           236,384
    Deposit on contract rights                    1,314,867         1,313,064
    Prepaid capital lease                           114,106           116,694
    Total Assets                                $11,656,037        $9,675,638

    Liabilities and Stockholders' Equity
    Current Liabilities
    Accounts payable                               $943,584          $710,480
    Accrued liabilities and other payables          499,359           409,040
    Advance from customers                           33,242           142,156
    Lease payable - current portion                   1,947             1,944
    Note payable                                     58,439            58,358
    Value-added tax payable                          72,609            64,686
    Income taxes payable                            348,550           235,262
    Related party payable                             1,169             1,167
    Total Current Liabilities                     1,958,899         1,623,093

    Long-term Liabilities
    Lease payable - non current portion             117,489           117,327
    Total Long-term Liabilities                     117,489           117,327

    Stockholders' Equity
    Preferred stock: par value $0.001 per
     share, 10,000,000 shares authorized;
     None issued and outstanding at March
     31, 2009 and December 31, 2008                      --                --
    Common stock: par value $0.001 per
     share, 100,000,000 shares authorized;
     14,908,313 shares issued and
     outstanding at June 30, 2009 and
     December 31, 2008                               14,908            14,908
    Additional paid in capital                    7,176,041         7,176,041
    Statutory surplus reserve fund                  202,665           202,665
    Retained earnings/(Accumulated deficit)       1,171,412          -462,971
    Accumulated other comprehensive income        1,014,623         1,004,575
    Total stockholders' equity                    9,579,649         7,935,218
    Total Liabilities and Stockholders'
     Equity                                     $11,656,037        $9,675,638



                           China Power Equipment, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)

                                  Three Months Ended,      Six Months Ended,
                                        June 30,                June 30,
                                    2009        2008        2009        2008

    Revenue, net               $5,888,375  $2,236,584  $8,590,671  $4,566,249
    Cost of goods sold         -4,510,872  -1,727,023  -6,663,451  -3,312,075
    Gross profit                1,377,503     509,561   1,927,220   1,254,174

    Selling, general and
     administrative expenses      224,650     176,589     425,217     335,793

    Net income (loss) from
     operations                 1,152,853     332,972   1,502,003     918,381

    Other income (expenses)
    Gain on investment             21,409      40,045      51,373      62,253
    Other income                  350,881          --     350,881      13,936
    Interest income                 1,441         235       5,815       2,467
    Interest expense                   --     -56,214        -117     -79,516
    Foreign exchange loss              --          --          --      -2,712
    Total other income            373,731     -15,934     407,952      -3,572

    Net income before income
     taxes                      1,526,584     317,038   1,909,955     914,809

    Income taxes                  220,222       6,292     275,572      92,668

    Net income after income
     taxes                     $1,306,362    $310,746  $1,634,383    $822,141

    Earnings per share - basic      $0.09       $0.03       $0.11       $0.08
    Earnings per share - diluted    $0.09       $0.02       $0.11       $0.06

    Weighted average common
     shares outstanding:
    Basic                      14,908,313  10,886,413  14,908,313  10,879,246
    Diluted                    14,908,313  14,908,313  14,908,313  14,901,146

ABOUT CHINA POWER EQUIPMENT, INC.

China Power Equipment, Inc., through its wholly-owned subsidiary, Xi'an Amorphous Zhongxi Co., Ltd., has developed a proprietary, patented technology to produce a new generation of energy saving transformers and transformer cores. The Company currently manufactures 55 different models of transformers in four product series which are sold throughout China. The Company was formed in 2006 as a U.S. corporation, and in November 2006, formed a Chinese subsidiary which was granted a license as a privately held, Wholly-Owned Foreign Enterprise, or "WOFE", by the Chinese government.

Safe Harbor

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings, including our Prospectus dated November 7, 2008, and 10-K filed on March 31, 2009 and our other recent filings. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

For More Information on China Power Equipment, Inc., visit the website at: http://www.chinapower-equipment.com

 

Source: PR Newswire