Changfeng Energy Inc. ("Changfeng" or the "Company") (TSX VENTURE:CFY), a
natural gas utility in China, today reported its unaudited interim consolidated
financial results for the third quarter ended September 30, 2012. All figures
are in Canadian dollars unless otherwise stated. The unaudited interim
consolidated financial statements and Management Discussion and Analysis can be
downloaded from www.SEDAR.com or from the Company's website at
www.changfengenergy.com.




Summary of Q3 2012 Consolidated Financial Results                           
                                                                            
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(in thousands in                                                            
$Cdn) except               Q3     Q3                 YTD    YTD             
percentages and                      Change    %                Change    % 
per share data           2012   2011                2012   2011             
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Revenue                 7,929  5,936  1,993   34% 22,416 19,247  3,169   16%
Gross profit            3,164  2,059  1,105   54% 10,488  7,424  3,064   41%
EBITDA (note a)         1,349    612    737  120%  5,603  3,389  2,214   65%
Net income (loss)          55   -326    381  117%  1,707    484  1,223  253%
Adjusted net income                                                         
(loss) (note b)            55   -326    381  117%  1,074    484    590  122%
Basic and diluted EPS   0.001 -0.005  0.006  120%  0.026  0.008  0.018  225%
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(a) This is a non-GAAP financial measure. The definition and reconciliation of
GAAP to this non-GAAP financial measure are included in the Management
Discussion and Analysis, under the heading "Non-GAAP Financial Measures".


(b) The adjusted net income excludes a one-time government grant of $722,535 and
associated income tax provision of $90,000.


Financial Results

Revenue

Revenue for the third quarter of 2012 was $7.9 million, an increase of $2.0
million, or 34%, from $5.9 million for the same quarter in 2011. Revenue for the
nine months ended September 30, 2012 was $22.4 million, an increase of $3.2
million, or 16%, from $19.2 million for the same period in 2011. The increases
in revenue during the quarter and YTD of 2012 versus the same periods last year
are mainly attributable to continued gas volume growth (109% in Q3'12 and 115%
YTD) and a 15% price increase from the CNG refueling retail station. Piped gas
sales from its operation in the Sanya Region for the quarter and YTD of 2012
were relatively flat compared to the same periods of 2011 due to limited sources
of gas supply. Pipeline connection fees from its operation in the Sanya Region
for the quarter and YTD of 2012 increased by 40% and 17%, respectively, compared
to the same periods of 2011 due to an increase in the number of residential
customers and an increase in certain higher-value commercial customers despite
fewer commercial connections.


Gross profit

Gross profit for the third quarter of 2012 increased by $1.1 million (or 54%)
and for the nine months ended September 30, 2012 increased by $3.1 million (or
41%), compared to the same periods of 2011. Gross profit as a percentage of
sales for the third quarter and nine months of 2012 increased by 5% to 40% and
by 8% to 47%, respectively, compared to the same periods of 2011. CNG refueling
retail station gross margins year- over-year improved 9% due primarily to sale
price increases and lower operating costs as a result of gas volume increase.
Piped gas gross margins year-over-year improved 6% reflecting the reduced volume
of gas purchased at market rate prices. Pipeline connection fee margins
year-over-year improved 19% due to higher-value commercial customers.


Operating expenses

General and administrative expenses for the third quarter of 2012 increased by
$0.3 million (or 22%) to $1.7 million and for the nine months ended September
30, 2012 increased by $0.9 million (or 24%) to $4.4 million, compared to the
same periods of 2011. The increases were attributable to general expenses
increases including employee salary and benefits as a result of a high inflation
rate in China, and sales increases. General and administrative expense as a
percentage of sales for the quarter of 2012 decreased by 2% to 21%, and for the
nine months ended September 30, 2012 increased by 1% to 20%, compared to the
same periods of 2011.


Travel and business development expenses for the third quarter of 2012 increased
by $0.2 million (or 28%) to $0.8 million and for the nine months ended September
30, 2012 increased by $1.0 million (or 50%) to $2.9 million, compared to the
same periods of 2011. The increases were attributable to the travel and business
development activities in mainland China as the Company seeks to develop new
projects in close proximity to the new national pipelines. Included in this
amount was a $0.2 million one-time sponsorship fee for a provincial-level table
tennis tournament. The majority of the travel and business development expenses
did not relate to the Company's business in the Sanya Region or the CNG retail
station but instead related to projects under consideration or development in
mainland China.


EBITDA

Earnings before interest, tax, depreciation and amortization ("EBITDA") as
defined in the Management Discussion and Analysis for the third quarter of 2012
increased by $0.7 million, or 120%, to $1.4 million and for the nine months
ended September 30,2012 increased by $2.2 million, or 65%, to $5.6 million,
compared to the same periods of 2011. The increases were primarily attributable
to the reasons noted above relating to the sales increases, higher gross margins
and a $0.7 million one-time government grant, partially offset by higher
operating expenses.


Net income (loss)

The net income for the third quarter of 2012 was $0.06 million or $0.001 per
basic and diluted share compared to a net loss of $0.3 million or -$0.005 per
basic and diluted share for the same period in 2011, primarily due to the
reasons stated above. The net income for the nine months ended September 30,
2012 was $1.7 million, or $0.026 per basic and diluted share compared to $0.5
million or $0.008 per basic and diluted share for the same period of 2011.


Financial position

Cash increased by $0.1 million to $5.2 million at September 30, 2012 from $5.1
million at December 31, 2011, primarily from cash provided by operating
activities of $4.8 million and a government grant of $0.8 million, offset by
cash used for capital expenditures of $1.4 million and $0.6 million of principal
repayments of the bank term loans.


Working capital deficit as at September 30, 2012 was $10.4 million, relatively
constant when compared to $10.7 million as at December 31, 2011.


The adjusted working capital as defined in the Management Discussion and
Analysis under the heading "Non-GAAP Financial Measures" was $4.5 million as at
September 30, 2012, compared to $2.4 million as at December 31, 2011.


Business Update

Xiangdong project, Xiangdong District, Pingxiang City, Jiangxi Province

The Company continues to accelerate the first phase of construction at
Xiangdong. Currently, the Company has completed construction of the 7km main
pipelines and site preparation for construction of the citygate in the Park, and
it is expected that the Company will be able to supply gas for the ceramic
manufacturers in the Park by late 2012 upon completion of the first phase of
construction. In addition, the Company is negotiating with a local bank for
financing related to upcoming second phase of construction.


On October 30, 2012, the Company entered into its first pipeline installation
contract with a local real estate developer. It is expected that the Company
will supply gas for a condominium located in the downtown district with a total
of 400 units by May 2013, depending upon the progress of construction of the
condominium which is currently under construction.


A 24 kilometer pipeline connecting the Company's citygate to the existing
intra-provincial pipeline network will be built by a state-owned company.
Construction of this pipeline is postponed to mid-2013 subject to the approval
of the development by the state-owned company. Once the pipeline is built, it
will ship the gas from the PetroChina's Second West-East Pipeline to the
Xiangdong district. Before that, the Company will purchase CNG to supply to its
customers in this area. The gas quota as previously announced on November 23,
2011 will be saved and accumulated until the Company can access to the gas from
the PetroChina's Second West-Ease Pipeline.


On November 13, 2012, the Company received the land use right for an 18-mu
(approximately 1.20 hectare) parcel of land which is being used for the Company
to construct a citygate for this project.


Sanya Operation, Sanya City, Hainan Province

In connection with the Gas & Electricity Exchange Program (the "Program") as
previously announced on February 22, 2012 and April 30, 2012, a total of $0.4
million (RMB 2.4 million) has been paid as of September 30, 2012 for the first
phase of construction of the Program. The completion of the first phase of
construction is delayed to early 2013 due to certain engineering design
modifications.


In addition, the Company's application to raise the sales prices for its
commercial customers is waiting for the final approval by the Hainan Provincial
Pricing Bureau. The price increase application was made based on the long term
Budget Process previously announced on June 27, 2012 that was approved by Sanya
Municipal government as part of the solution to address the gas shortage issue
in the Sanya Region.


Proposed Joint Venture for the Pipeline Project, Guangdong Province

During the quarter, the Company continued to work on the proposed joint venture
with the subsidiary of PetroChina as previously announced on March 29, 2012. An
arm's- length pipeline project research firm has finalized a project feasibility
study for supplying gas for one of the targeted industrial customers in these
regions. The establishment of the proposed joint venture is subject to the
approval by PetroChina after review of the feasibility study.


The proposed joint venture will build, own and operate natural gas pipelines to
connect the potential industrial customers to an existing and/or planned
intra-provincial pipeline network within four (4) cities in west Guangdong area.
Those four (4) cities include Zhaoqing City, Foshan City, Zhuhai City and
Jiangmen City.


CNG Refuelling Station, Changsha City, Hunan Province

On October 24, 2012, the Company reached an agreement with the existing
shareholder of Hunan CNPC Guangda Gas Co., Ltd. ("Guangda Gas") for return of
the good faith deposit in amount of RMB1.0 million (approx.$0.2 million) that
was advanced in early 2010 in connection with the proposed acquisition of
Guangda Gas. The good faith deposit will be repaid to the Company by way of
partially offsetting gas purchase to be made from Guangda Gas over a ten-month
period starting in November 2012.


Guangda Gas owns and runs a CNG wholesales station in the Changsha City and has
been one of gas suppliers for the Company's CNG refueling retail station in the
city.


Due to favorable market conditions after the PetroChina's Second West-East
Pipeline commenced supplying gas for this region, the gas shortage situation has
been significantly alleviated. As a result, the Company has no intention of
proceeding with this proposed acquisition of Guangda Gas.


"We are pleased with our financial performance achieved for this quarter. We are
also very pleased to see the progress we made to address the gas shortage issue
in the Sanya Region, and the progress on our other projects under development in
Mainland China, especially on the Xiangdong Project and Guangdong Project,"
stated Mr. Huajun Lin, Chairman and CEO of the Company. "We have nearly
completed the first phase of construction of the Xiangdong Project, and remain
on target to commence supply of gas for the Park in 2012. In addition, we are
optimistic about the proposed joint venture with a subsidiary of PetroChina and
see a tremendous opportunity ahead from the Guangdong Project."


About Changfeng Energy Inc.

Changfeng Energy Inc., is a local natural gas distribution company ("LDC" or
natural gas utility) with operations located throughout the southern part of
People's Republic of China. The Company serves industrial, commercial and
residential customers, providing them with natural gas for heating purposes and
fuel for transportation. The Company has developed a significant natural gas
pipeline network as well as urban gas delivery networks, stations, substations
and gas pressure regulating stations in Sanya City & Haitang Bay. Through its
network of pipelines, the Company provides safe and reliable delivery of natural
gas to both homes and businesses. The Company is headquartered in Toronto,
Ontario and its shares trade on the Toronto Venture Exchange under the trading
symbol "CFY". For more information, please visit the Company website at
www.changfengenergy.com.


Forward-Looking Statements

Information set forth in this news release may involve forward-looking
statements under applicable securities laws. The forward-looking statements
contained herein are expressly qualified in their entirety by this cautionary
statement. The forward-looking statements included in this document are made as
of the date of this document and the Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable securities legislation. Although Management believes that
the expectations represented in such forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to be correct. This
news release does not constitute an offer to sell or solicitation of an offer to
buy any of the securities described herein and accordingly undue reliance should
not be put on such.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Changfeng Energy Inc.
Mr. Kevin M. Zhang
Chief Financial Officer
416.362.5032
kevin@changfengenergy.com


Changfeng Energy Inc.
Ms. Ann S.Y. Lin
Corporate Secretary
416.362.5032
ann@changfengenergy.com
www.changfengenergy.com

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