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China Auto Logistics, Inc.: China Auto Logistics Reports 2008 Revenues Climbed 24.47% to Nearly $190 Million; Full Year Net Inc

^{Published on 2009-03-31 05:15:05, Last Modified on 2009-03-31 05:17:43 - Market Wire}
 

TIANJIN CITY, CHINA--(Marketwire - March 31, 2009) - China Auto Logistics Inc. (OTCBB: [ CALG ]) (the "Company"), one of China's leading automobile importers of luxury vehicles, originator of two of China's leading automobile websites, and a top provider of one-stop auto related logistics and dealer financing, reported today that it achieved record results in sales and net income for the year ended December 31, 2008.

In 2008, while focused on building its highly profitable web portals and auto-related services, the Company said revenues from its core luxury imported auto business continued to advance rapidly, resulting in a 24.47% full year increase in revenues to $189,737,077, compared with $152,430,674 in the year ended December 31, 2007. While revenue growth came almost entirely from imported auto sales, the Company said its much smaller auto-related services and website segments contributed nearly 40% of the Company's gross profit, which increased 68% over the previous year to approximately $8.7 million, while pre-tax operating income increased approximately 65% to $6.15 million. The gain in 2008 net income was smaller than this, principally because the tax exemption for one of the Company's subsidiaries ended at the start of the year. With taxes applicable for all subsidiaries, 2008 net income increased 25.65% to $3,987,361, compared with $3,173,375 last year.

On a per share basis, 2008 net income (which excludes comprehensive income of $1,248,146 attributable to currency gains) was $0.32 on 12,629,315 weighted average shares outstanding. This compared with 2007 earnings per share of $0.27 on a smaller number of weighted average common shares of 11,700,000. Additionally, 2007 earnings per share included $0.02 per share in extraordinary gains.

Mr. Tong Shiping, CEO and President of the Company, commented, "The results in 2008 demonstrate the soundness of our strategy as we move forward in transforming our Company from a traditional auto trader to a leader in bringing new web-based tools and techniques to China's young and vibrant auto industry."

Contributions to Growth

The Company reported that sales of imported automobiles in 2008 reached $186.3 million, and contributed 98.2% of total revenues during the year. It explained that the number of autos it sold during the year advanced modestly to 2,523, but the average price per vehicle grew nearly 22% from 2007 to $73,786.

While the Company's sales of imported vehicles typically produce low profit margins, in 2008, the Company reported that profit margins sharply expanded from the prior year, actually more than doubling from 1.26% to 2.83%, due to efforts by the Company to achieve higher profits through improved relationships with suppliers to obtain more favorable terms and discounts of various kinds.

With respect to the Company's auto-related servicing and website subsidiaries, during 2008, financing services and web-based advertising each grew more than 20%, while revenues from auto import value added services declined from $1.08 million in 2007 to $731,600. Each of these services, however, generated excellent profits based on well above average profit margins.

The Company reported that with its web business in an expansion mode, it had brought in many more customers than reflected in the gain in advertising revenue, which points strongly to future growth potential. In many instances the Company said it has provided initial discounts on subscriptions and ads and even some free advertising to build relationships.

Additionally, the Company said that growth in its financing business and value added auto services business was hampered in mid-year by preparations being made for the Summer Olympics in China, which resulted in a closing of the port in Tianjin for nearly 1 1/2 months. In late fall, business also was disrupted by the surprise burst of news on the world financial crisis, which initially curbed auto sales fairly dramatically, as well as auto related services. The Company added that as 2009 began, activity returned to the market and, in February, auto sales in China climbed over 25%. As the import market moves toward "normalcy," as anticipated by the Company, growth comparisons in 2009 should benefit from comparison with the more unusual and eventful prior year.

Domestic Auto Website Expansion to 11 Cities

On the heels of the strong success of the Company's website for imported autos, [ www.at188.com ], which has more than 1 million viewers a day in Tianjin, more than 120 enterprise subscribers, and provides more than 1100 daily quotations -- and the initial success in Tianjin of its website for domestic cars, [ www.car.tj.com ] -- the Company launched a national expansion of its domestic auto website in November. As of March, 2009, the Company has now successfully expanded the domestic auto site to 11 cities throughout China, and shortly expects to announce a twelfth city, followed by details on the start-up of a national website. It believes this will be the first national auto website in China offering significant online information benefits to consumers and dealers alike. Further, it sees the domestic auto website as a growing source of profit from new advertising and subscriptions and, over time, a variety of new web-based auto-related services.

Outlook

The Company's principal goal in 2009 is to expand its website business from the small, but fast growing imported auto market, to the much larger domestic auto market, together with expansion of its other high margin auto related logistical services and financing business.

Mr. Shiping commented, "In 2009, we will not be taking overt steps to expand our imported auto sales business which typically has grown around 30% a year. Therefore, we anticipate that the rate of growth of this business will not be as high as it has been traditionally, although we fully expect to maintain our leading position in Tianjin. We instead will look to improve the margins we can achieve in this business, through activities such as mass purchasing and discounts. Our primary focus will be on developing our other higher margin businesses -- websites, financing and auto related services. As an increasingly larger part of our revenues and net income -- these newer businesses should permit us to maintain bottom line growth in the same range as we have seen it in recent years."

"We do not foresee the economic environment having much effect on our high end imported auto sales where demand from China's growing wealthy class for luxury autos such as SUVs, should continue relatively unabated. This, in turn, should permit further expansion of our services related to this market," Mr. Shiping added.

"With respect to domestic auto sales, we think the government has every intention of maintaining growth at the highest possible level. With the lowest auto ownership penetration rate among the world's industrial leaders, the opportunity for the first nationwide mover into China's domestic auto web space will be quite enormous, with multiple avenues for profitable revenue development," he stated.

Mr. Shiping concluded, "We look forward to another year of great success in pursuing our growth strategy."

Description of China Auto Logistics Inc.

Founded in 1995, with profitable sales in 2008 of approximately $190 million, the Company has grown to become one of the top importers and sellers of luxury vehicles in China. Imported luxury automobiles, accounting for more than 10% of all Chinese automobile sales revenues, are the fastest growing segment of the still young Chinese automobile industry, now the largest in the world. The Company has grown sales and profits by becoming one of China's top logistical servicing and financing companies for automobile importers. Additionally, it is a leader in providing accurate pricing and other automobile-related information with its two web portals, [ www.at188.com ], aimed at the import market, and [ www.1365car.tj.cn ], which it is expanding throughout China to reach the much larger market of domestically manufactured automobile purchasers and dealers. Following completion of a successful reverse merger on November 10, 2008, the Company is trading as a fully reporting company in the U.S. with the stock symbol CALG.OB. For additional information, please visit [ www.chinaautologisticsinc.com ].

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

 CHINA AUTO LOGISTICS INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Year Ended December 31, ---------------------------- 2008 2007 ------------- ------------- Net revenue $ 189,737,077 $ 152,430,674 Cost of revenue 181,065,563 147,270,951 ------------- ------------- Gross profit 8,671,514 5,159,723 ------------- ------------- Operating expenses: Selling and marketing 1,118,442 949,219 General and administrative 1,399,210 475,803 ------------- ------------- Total operating expenses 2,517,652 1,425,022 ------------- ------------- Income from operations 6,153,862 3,734,701 ------------- ------------- Other income (expenses): Interest income 85,100 154,437 Interest expense (294,589) (207,271) Investment income (loss) - 4,943 ------------- ------------- Total other expenses (209,489) (47,891) ------------- ------------- Income before provision for income taxes, minority interests and extraordinary item 5,944,373 3,686,810 Provision for income taxes 1,530,386 244,911 ------------- ------------- Income before earnings in minority interests and extraordinary item 4,413,987 3,441,899 Minority interests in net income of consolidated subsidiaries (426,624) (520,335) ------------- ------------- Income before extraordinary item 3,987,363 2,921,564 Extraordinary item - gain on acquisition of controlling interest in Zhengji (less applicable income tax expense of $0) - 251,811 ------------- ------------- Net income 3,987,363 3,173,375 Other comprehensive income 1,248,146 887,391 ------------- ------------- Comprehensive income $ 5,235,509 $ 4,060,766 ============= ============= Earnings per share of common stock - basic and diluted: Income from continuing operations $ 0.32 $ 0.25 Extraordinary item - 0.02 Net income $ 0.32 $ 0.27 Weighted average number of common shares outstanding - basic and diluted 12,629,315 11,700,000 ============= =============