Shares of China Direct Inc. (OTCBB: CHND) jumped up today after posting its second quarter results. In mid-day trading, China Direct was up 41 cents (10 percent) to $4.41 cents per share on volume of just over 482,000 shares.
China Direct reported revenues for the second quarter ended June 30, 2007, increased to $40.5 million as compared to revenues of $180,000 for the second quarter ended June 30, 2006. China Direct attributes the increase in revenues primarily to the three Chinese entities acquired since October 2006, Chang Magnesium, Lang Chemical and CDI Wanda, as well as a strong performance from the company’s consulting division.
“We are very pleased with the financial performance of our four divisions during the first six months of 2007,” said Dr. James Wang – CEO and Chairman of China Direct – in a statement. “We anticipate that this strong performance will carry over into the second half of the year.”
Net income for the second quarter of 2007 increased to $2.3 million or 15 cents per share, as compared to a loss of $363,000 or 4 cents per share for the second quarter of 2006.
As of June 30, 2007, cash and cash equivalents were $8.1 million and working capital was approximately $14.5 million.
“Based on our strong cash flow and the recent warrant exercise in which we received $4.2 million, the company is in a strong financial and operational position to pursue new acquisition opportunities,” said Dr. Wang in a statement.
China Direct anticipates that annual sales will now exceed $150 million as opposed to its previous 2007 estimate of $120 million. This new revenue estimate tops analysts’ estimates of $134.3 million for the full year 2007. The company also now believes that net income will exceed $8.25 million in 2007 as opposed to its previous guidance of net income of $6 million.
“We are confident that our strong balance sheet will enable management to effectively deploy capital throughout our divisions to increase capacity and marketing capabilities as we head into the second half of 2007 and beyond into 2008,” concluded Dr. Wang in a statement.
China Direct, through its subsidiaries, operates as a management and consulting company in China. It offers consulting and advisory services to public Chinese entities seeking to access the U.S. capital markets. The company also engages in the sale and distribution of industrial grade synthetic chemicals. It distributes products to industrial manufacturing company and trading companies, including property developers, textile factories and pharmaceutical factories located in eastern China. The company’s products are used in the production of a various finished products, such as paint, glue, plastics, textiles, leather goods, as well as medical products