China: China Yida Holding Company (Nasdaq: CNYD) (“China Yida” or the “Company”), a leading diversified entertainment and media enterprise in China, has announced record financial results for the quarter ended June 30, 2010.
“We are pleased to report record results for the second quarter of 2010. During the quarter we reached important milestones in the development of our strategy as we signed three new tourism projects outside Fujian Province to further expand our geographic footprint and take advantage of the rapidly growing tourism and leisure market opportunity in China. These agreements have all been structured so as to provide China Yida with 40-year operating contracts for the tourism assets that we will be developing, as well as providing us with substantial land banks surrounding the attractions that we can either develop or monetize so as to generate value for our shareholders. We were also very pleased to renew our contract to operate the Fujian Educational Television Channel (FETV) for an additional five years, which secures an important vehicle for promoting our tourism assets and enhances visibility on future cash flows to support our growth,” Dr. Chen Minhua, Chairman and Chief Executive Officer of China Yida stated.
“We have recently announced several senior level, highly experienced additions to our management team as we embark on the development plan for our new tourism projects. As we look to the future, another immediate priority is to strengthen our finance team with additional qualified personnel, and to engage a highly qualified consulting firm to help us to further strengthen our internal controls and ensure that we meet our obligations as a U.S. publicly listed company.”
Total net revenue increased by 27.0% to $16.4 million, compared with $12.9 million in the second quarter of 2009.Net revenue from the media business grew 18.2% to $9.3 million, compared with $7.9 million in the same period of last year.
Advertising revenue from FETV during the second quarter of 2010 was $7.9 million, approximately the same level as last year. The “Journey through China on the Train” infomercial program generated $1.4 million in revenue for the quarter, compared to no revenue in the second quarter of 2009 when the project was in development stage.
Net revenue from the tourism business increased 40.9% to $7.0 million, compared to $5.0 million in the second quarter of 2009.
For the second quarter of 2010, the Great Golden Lake generated $5.4 million in revenues up from $5.0 million in the same period in 2009. The number of visitors to the Great Golden Lake in the quarter was up 11% year over year to around 200,000. Attendance at the Great Golden Lake was impacted by severe flash flooding on June 18th, which resulted in lost revenues of approximately $0.6 million during the second quarter.
Hua’An Tulou contributed revenue of $1.7 million in this quarter. There was no revenue from Hua’An Tulou during the second quarter of 2009. The number of visitors to Hua’An Tulou in the quarter was 85,000.
Gross profit for China Yida’s consolidated operations was $13.3 million in the second quarter of 2010, up 27.4% from $10.4 million in the same period in 2009. Gross margin for the quarter was 81.0%, compared to 80.7% in the same period of 2009.
Total operating expense increased by 22.5% to $2.3 million in the second quarter of 2010, compared with $1.9 million in the second quarter of 2009. Higher operating expenses were driven primarily by the increase in selling expenses to support the launch of our new businesses, including “Journey through China on the Train”, Hua’An Tulou and Yunding.
Operating income increased by 27.5% to $11.0 million, compared with $8.6 million a year ago. Operating margin for the second quarter of 2010 was 67.1%, compared with 66.3% for the second quarter of 2009.
Net income for the second quarter of 2010 was $8.1 million, or $0.41 per diluted share, an increase of 16.7%, compared with a net income of $7.0 million, or $0.39 per diluted share, in the second quarter of 2009. The fully diluted weighted average shares outstanding increased to approximately 20 million, up from approximately 17.8 million in the prior year period, reflecting the company’s stock offering of 2,489,721 shares in January of 2010.
Total net revenue increased by 37.3% to $31.2 million, compared with $22.7 million for the six months ended June 30, 2009. Net revenue from advertising increased by 24.9% to $18.1 million, compared with $14.5 million for the six months ended June 30, 2009. Net revenue from the tourism business increased by 58.9% to $13.1 million, compared with $8.2 million for the six months ended June 30, 2009.
Gross profit for the first six months of 2010 increased 39.7% year over year to $25.1 million, with gross margin of 80.6%. Operating income increased by 35.2% to $20.6 million, compared with $15.2 million in the first six months of 2009.
Net income for the six months ended June 30, 2010 was $15.2 million, or $0.77 per fully diluted share, an increase of 22.9% compared with a net income of $12.4 million, or $0.71 per share, for the comparable period of 2009.
As of June 30, 2010, the Company reported $30.4 million in cash and cash equivalents. Working capital was $30.5 million with a current ratio of 6.1. As of June 30, 2010, the Company had $125.8 million in shareholders’ equity compared to $77.7 million at the end of 2009.
China Yida generated $18.3 million in cash flow from operating activities for the first six months of 2010 and incurred capital expenditures of $20.5 million, which were primarily due to the construction of entertainment facilities at Yunding Park and Hua’An Tulou. The Company also expects to spend a total of approximately $63 million for the construction of the first phases of its three new projects in Anhui and Jiangxi provinces mostly to be spent in 2011 and 2012. Management believes the current cash and operating cash flow during the next two years will be sufficient to fund the company’s ongoing projects and growth strategy.