China Growth Development (CE) (USOTC:CGDI)
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China Growth Development, Inc. (OTCBB:CGDI) (“China Growth Development”
or “the Company”), the largest investor, owner and manager of commercial
real estate in Taiyuan, the capital city of the Shanxi Province, PRC,
today announced its financial results for the third quarter ended
September 30, 2008.
Third Quarter 2008 Highlights:
Net revenue increased approximately 23% year-over-year to $4.42
million.
Operating expenses decreased approximately 8% year-over-year to $2.04
million.
Net income improved approximately 45% year-over-year to $1.38 million,
or $0.04 per diluted share.
Net income for the first nine months of 2008 was $2.6 million, or
$0.08 per diluted share, compared with $2.9 million or $0.09 per share
for the first nine months of 2007.
“The continued growth in our third quarter is a testament to the
strength of our business model and the success of the prime location of
our shopping centers,” stated Mr. Ning Liu, COO of China Growth
Development, Inc. “We offer our tenants innovative payment options that
enable us to maximize lease payments and reduce our accounts receivable.
We also boast a seasoned management team with extensive and innovative
commercial real estate experience.
“Based on our land banking strategy to acquire three additional shopping
centers on popular and profitable land in Taiyuan we are well positioned
to continue to grow our business,” Mr. Ning added, “In addition, we will
continue our financially prudent practice of requiring prepaid rent from
our commercial tenants for the entire term of their leases, which
typically span five to eight years. This method allows for an
expeditious return of capital to the Company, while greatly reducing
debt service carried on the properties.”
Financial Results for the Three Months Ended September 30, 2008
Net revenue for the third quarter of 2008 increased by approximately 23%
to $4.4 million, compared with $3.6 million for the third quarter of
2007. The increase was primarily the result of recognition of rental
revenue from the Company’s new Xicheng Shopping Mall, which began
operations in December 2007.
Operating expenses for the three months ended September 30, 2008
decreased by approximately 8% to $2.0 million, compared with $2.2
million for the same period in 2007. The decrease in operating expenses
was mainly attributed to the longer estimated economic useful lives
applied for amortization of rights to use land.
For the three months ended September 30, 2008 net income was $1.4
million, or $0.04 per diluted share based on approximately 35.0 million
weighted average shares outstanding. This compares with net income for
the three months ended September 30, 2007 of approximately $957,000, or
$0.03 per diluted share based on 31.5 million weighted average shares
outstanding.
Financial Results for the Nine Months Ended September 30, 2008
Net revenue for the nine months ended September 30, 2008 increased by
20% to $11.8 million, compared with $9.8 million for the comparable
period in 2007. The increase was primarily the result of recognition of
rental revenue from the Company’s new Xicheng Shopping Mall, which began
operations in December 2007.
Operating expenses increased by 12% to $6.3 million, compared with $5.6
million. This increase was primarily attributed to one-time charges of
approximately $880,000 associated with the issuances of warrants related
to the closing of the Company’s reverse acquisition in May 2008.
Excluding the one-time charges, operating expenses for the third quarter
of 2008 would have decreased 3% year-over-year to $5.5 million.
Minority interest for the nine months ended September 30, 2008 increased
to $2.3 million, compared with $914,000 for the nine months ended
September 30, 2007. This increase resulted from the decline in ownership
of the Company’s five subsidiaries in Taiyuan, China to 60.9% from 76.1%
in 2007, subsequent to the reverse acquisition in May 2008.
Net income for the first nine months of 2008 was $2.6 million, or $0.08
per diluted share based on 33.1 million weighted average shares
outstanding. This compares with net income for the first nine months of
2007 of $2.9 million, or $0.09 per share based on 31.5 million weighted
average shares outstanding. The decrease in the year-to-date net income
was primarily attributed to the increase in minority interest and the
one-time charges associated with the closing of the Company’s reverse
acquisition.
About China Growth Development
China Growth Development Inc. (CGDI) is the largest investor, owner and
manager of commercial real estate in the capital city of Taiyuan,
located in the Shanxi Province of southern China. China Growth
Development Inc. owns and manages 5,000 commercial units within
its six strategically located shopping centers, servicing an urban
population of 3.4 million people.
Formed in 2005, CGDI provides high-quality leasing opportunities for
both retail and wholesale clients in convenient, modern shopping
centers. Our continued focus on anticipating and satisfying the evolving
needs of our retail and wholesale clients has positioned us as a leader
in commercial real estate leasing. With a portfolio valued at more than
US $60 million and more than half of the market share in commercial
leasing, we are committed to defining the urban commercial landscape of
Shanxi.
Forward Looking Statements
Forward Looking Statements: This news release contains certain
“forward-looking statements.” Forward-looking statements are based on
current expectations and assumptions and are inherently subject to risks
and uncertainties, some of which cannot be predicted or quantified, and
many of which are beyond the Company’s control. The forward-looking
statements are also identified through the use of words “believe,”
enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,”
“plan,” “predict” “probable,” “potential,” “possible,” “should,”
“continue,” and other words of similar meaning. Actual results could
differ materially from these forward-looking statements as a result of a
number of risk factors detailed in the Company’s periodic reports filed
with the SEC. Given these risks and uncertainties, investors are
cautioned not to place undue reliance on such forward-looking statements
and no assurances can be given that such statements will be achieved.
China Growth Development, Inc. does not assume any duty to publicly
update or revise the material contained herein.
CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three Months Ended September 30,
For The Nine Months Ended September 30,
2008
2007
2008
2007
Net revenue
$
4,422,398
$
3,601,977
$
11,789,732
$
9,797,877
General, selling and administrative expenses
2,037,041
2,223,198
6,333,042
5,646,011
Operating income
2,385,356
1,378,779
5,456,690
4,151,866
Non-operating income (expenses)
Interest income
1,714
63,473
5,180
67,187
Interest expense
(53,747
)
(29,249
)
(226,364
)
(168,220
)
Other expense
(35,133
)
(143,907
)
(136,681
)
(143,907
)
Total non-operating expenses
(87,167
)
(109,683
)
(357,866
)
(244,940
)
Income before provision for income tax
2,298,189
1,269,096
5,098,824
3,906,926
Provision for income tax
26,872
14,848
69,941
45,711
Net income before minority interest
2,271,317
1,254,248
5,028,883
3,861,215
Minority interest
886,392
296,902
2,319,339
914,015
Net income from continuing operations
1,384,925
957,346
2,709,544
2,947,200
Loss from discontinued operations
-
-
(87,064
)
-
Net income
$
1,384,925
$
957,346
$
2,622,480
$
2,947,200
Weighted average number of common shares:
Outstanding, basic and diluted
34,970,007
31,500,000
33,018,023
31,500,000
Net earnings per share from continuing operations
$
0.04
$
0.03
$
0.08
$
0.09
Net loss per share from discontinued operations
$
-
$
-
$
-
$
-
Basic & diluted earnings per share
$
0.04
$
0.03
$
0.08
$
0.09
CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Nine Months Ended September 30,
2008
2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
2,622,480
$
2,947,200
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation & amortization
1,791,574
1,307,132
Minority interest
2,319,339
914,015
Warrants issued for compensation
191,138
-
Warrants issued in reverse acquisition
689,347
-
Loss from discontinued operations
87,064
-
Decrease (increase) in current assets:
Other receivable
(44,557
)
(78,634
)
Other receivable from related parties
(114,717
)
-
Interest receivable from related parties
-
3,658
Advances to suppliers
(104,688
)
632,632
Prepaid expenses
22,885
141,644
Increase (decrease) in liabilities:
Construction payable
(537,629
)
(932,081
)
Other payable
230,432
1,212,219
Advance from customers
269,863
420,587
Tax payable
99,170
802,351
Accrued expense
(117,609
)
30,725
Deferred revenue
(5,467,843
)
(3,738,006
)
Net cash used in discontinued operations
(3,893
)
-
Net cash provided by operating activities
1,932,355
3,663,442
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired on reverse acquisition
3,742
-
Acquisition of property & equipment
(867,933
)
(4,046,418
)
Proceeds from loan receivables from employees
9,232
-
Proceeds from loan receivables from related parties
-
56,722
Proceeds from loan receivables from others
-
82,474
Net cash used in investing activities
(854,959
)
(3,907,221
)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from loans from related parties
127,307
4,227
Repayments of short-term loan
(145,695
)
(1,201,538
)
Proceeds from long-term debt
-
1,100,975
Net cash provided by discontinued operations
3,531
-
Net cash used in financing activities
(14,858
)
(96,337
)
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS
107,711
58,867
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS
1,170,250
(281,249
)
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
1,184,621
1,676,718
CASH & CASH EQUIVALENTS, ENDING BALANCE
$
2,354,871
$
1,395,468
SUPPLEMENTAL DISCLOSURES:
Interest paid
$
226,364
$
168,220
Income tax paid
$
-
$
-
CHINA GROWTH DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Assets
September 30,
2008
December 31,
2007
(Unaudited)
(Audited)
Current Assets
Cash and cash equivalents
$
2,354,871
$
1,184,621
Other receivables, net
45,924
8,947
Other receivables from related party
216,753
92,634
Interest receivables from related parties
9,741
9,160
Notes receivable from related party
145,792
137,088
Prepaid expenses
-
22,179
Advances to suppliers
11,685,044
10,885,969
Assets from discontinued operations
46,280
-
Total Current Assets
14,504,405
12,340,598
Fixed assets, net
61,050,812
58,139,771
Intangible assets, net
10,770,378
10,288,717
Total Assets
$
86,325,595
$
80,769,086
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses
$
97,466
$
205,627
Loans payable
1,960,899
1,985,030
Loans payable to related parties
512,526
358,548
Advance from Customers
278,143
-
Construction payable
2,738,064
3,095,639
Income tax payable
346,117
229,343
Other payable
764,754
495,774
Deferred revenue - current
10,149,842
9,530,814
Liabilities from discontinued operations
75,634
-
Total Current Liabilities
16,923,444
15,900,775
Deferred revenue - non-current
25,724,975
29,501,367
Total Liabilities
42,648,419
45,402,142
Minority interest
15,934,462
7,159,250
Stockholders' Equity
Preferred stock - $.0001 par value; 10,000 shares authorized, 0
shares issued and outstanding
-
-
Common stock - $.0001 par value; 200,000,000 shares authorized,
34,970,007 and 31,500,000 shares issued and outstanding
3,497
3,150
Additional paid-in capital
5,914,536
9,131,176
Other comprehensive income
4,433,889
1,958,238
Retained earnings
17,390,792
17,115,130
Total Stockholders' Equity
27,742,714
28,207,694
Total Liabilities and Stockholders' Equity
$
86,325,595
$
80,769,086