China Wind Systems, Inc. (OTCBB: CWSI) recently announced their financial figures for the first quarter ended March 31, 2008. The company operates through their wholly owned subsidiaries and variable entities manufacturing and selling industrial machines for use in the textile and energy-related fields in the People’s Republic of China.
For the first quarter of 2008, net revenue totaled $8.4 million, an increase of 104.6% compared to the same period of last year. The rise of revenue resulted from an increase in both the dyeing and finishing equipment and electric power equipment. Revenues in the electric power equipment sector increased to $3.8 million, up from $3.0 million a year ago, and revenues from dyeing and finishing rose by 20% to $4.7 million. Marketing efforts were made by the company that focused on developing new customers and continuing sales with existing customers.
Gross profit for the first quarter of 2008 was $2.2 million, a significant increase from a year ago when it was reported at $1.1 million. Gross margin saw a slight change at 25.7% for this quarter, as opposed to 25.8% the year prior. Gross profit for dyeing was $1.2 million compared to $1.0 million a year ago, and gross profit for electrical power equipment was $1.0 million for the first quarter 2008, compared to $0.1 the previous year.
Mr. Jianhua Wu, Chairman and CEO of China Wind Systems, said, “Last quarter we made progress in executing our long term strategy, which is to expand our products to offer products and services for the wind power industry. During 2007, we began to generate revenue from the forging of rolled rings, for the wind power and other industries. These activities accounted for $3,204,266, or 37.9% of total revenue for the three months ended March 31, 2008, of which approximately 30% are used for the wind industry. Wind industries revenues accounted for $1,902,916, or 7.8% of revenues for the year ended December 31, 2007.”
Operating expenses were reported at $0.7 million for the first quarter 2008; it was $0.2 million a year ago. Operating income added up to $1.5 million for the first quarter 2008, a 66.6% increase from the prior year. Net loss, which includes non-cash items like interest expense related to amortization of debt discount of $2.3 million and deemed preferred dividend of $2.9 million, was $4.1 million for the first quarter 2008, or $0.11 per fully diluted share.
Looking ahead the company is anticipating $40.0 million in revenues and $7.0 million in net income after a 25% tax rate, or $0.11 per share based on 62.9 million weighted average diluted share count.
“In 2008, we expect to significantly increase our revenues generated from our electric power equipment business and our wind power business. We have been evaluating working relationships with leading wind energy companies in China to supply wind components. We are on track to complete the first phase of our expansion plan and expect to manufacture larger forged rolled rings and shafts at our facilities by October 2008,” added Mr. Jianhua Wu.
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