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China Linen's revenues increase 82% to $16 mn

16 Aug '11

5 min read

Operating expenses increased 140% to $2.3 million in the six months ended June 30, 2011 from $1.0 million in the same period of 2010, mainly due to an increase in sales expenses, research and development costs, and depreciation and amortization in connection with the increase of fixed assets.

Operating income increased 106% to $9.2 million for the first six months of 2011 from $4.5 million in the same period of 2010, while operating margins increased 361 basis points to 29.0%.

Net income was $6.6 million for the six months ended June 30, 2011 as compared to $4.0 million for the six months ended June 30, 2010, representing an increase of approximately 65%, representing diluted earnings per share of $0.97, compared to $0.70 in the same period of 2010, an increase of 39%.

Balance Sheet and Cash Flow

As of June 30, 2011, the Company had cash and cash equivalents of $0.6 million, compared to $4.2 million at December 31, 2010. The company borrowed $1.4M short term loan and paid back $3.6M in the first half year of 2011. Inventory increased from $9.9 million as of December 31, 2010 to $21.4 million as of June 30, 2011, as the Company purchased a significant amount of raw materials during the first half year of 2011 to meet increasing demand and to reduce the impact of increasing unit purchase prices in the future. Accounts receivable balance was approximately $12.6 million on June 30, 2011, compared to approximately $13.3 million on December 31, 2010. Days sales outstanding (DSO) for the first six months of 2011 were approximately 75 days, compared to 112 days for the same period in 2010, mainly due to increased collection efforts.

Working capital as of June 30, 2011 totaled $30.2 million. The Company had total stockholders' equity of $39.7 million at June 30, 2011, with total assets of $56.6 million versus total liabilities of $16.9 million, compared to total stockholders' equity of $32.2 million at December 31, 2010, with total assets of $51.6 million versus total liabilities of $19.5 million. The book value of net assets per diluted share was approximately $5.55 as of June 30, 2011.

For the six months ended June 30, 2011, the Company's cash used in operations was $1.2 million, with the divergence to net income mainly coming from an increase in cash used for inventory.

China Linen Textile Industry Ltd

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