Qilian International Holding Group Limited Reports Financial Results for the First Six Months of Fiscal Year 2021

Qilian International Holding Group Limited Reports Financial Results for the First Six Months of Fiscal Year 2021




Qilian International Holding Group Limited Reports Financial Results for the First Six Months of Fiscal Year 2021

Jiuquan, China, Sept. 16, 2021 (GLOBE NEWSWIRE) — Qilian International Holding Group Limited (Nasdaq: QLI) (the “Company”), a China-based pharmaceutical and chemical products manufacturer, today announced its unaudited financial results for the first six months of fiscal year 2021 ended March 31, 2021.

Mr. Zhanchang Xin, Chairman and CEO of the Company, commented, “We are pleased with our financial results for the first six months of fiscal year 2021. Our revenue increased by 8% to $29.9 million, which we believe demonstrates our continuous growth potential.”

“Looking forward, we believe our heparin product will benefit from the current market trend. Driven by the increasing demand for clinical anticoagulants globally, the export price of raw material medicine heparin soared, rising by nearly 269% year-on-year in June 2021, setting a record high. The production volume of heparin raw materials in China ranks first in the world, and the supply of heparin raw materials from producers in China accounts for about 50% of global demand. After our new pig by-product processing facility is built and put into operations, it will further boost our production capability of heparin sodium preparations. We expect to seize market opportunities and continue expanding our capabilities as we see some return to normalcy in our everyday lives. We remain focused on driving momentum in our business that will strive to achieve sustainable development and create long term value for our shareholders, ” Mr. Xin added.

Financial Highlights for the Six Months Ended March 31, 2021

    For the Six Months Ended
March 31,
 
($’000, except per share data)   2021     2020     % Change  
Revenue   $ 29,939     $ 27,759       8 %
Gross profit   $ 4,091     $ 6,228       (34 )%
Gross margin     13.7 %     22.4 %     (9 )%
Income from operations   $ 2,272     $ 4,793       (53 )%
Net income   $ 2,245     $ 4,183       (46 )%
Net Income attributable to Qilian International Holding Group Limited (“Qilian International”)   $ 2,351     $ 3,858       (39 )%
Basic and diluted earnings per share   $ 0.07     $ 0.13       (46 )%

  Revenue increased by 8% year-over-year to $29.9 million for the six months ended March 31, 2021 from $27.8 million for the same period of the prior fiscal year. The increase in revenue is primarily attributable to the increased revenue from the sales of oxytetracycline products and the appreciation Renminbi (“RMB”) against U.S. dollars (“USD”).
     
  Gross profit decreased by 34% to $4.1 million for the six months ended March 31, 2021 from $6.2 million for the same period of the prior fiscal year. Gross margins were 13.7% and 22.4% for the six months ended March 31, 2021 and 2020, respectively. The decreased gross profit was mainly due to decreased gross margin from licorice products, the selling price of which has decreased significantly compared to the six months ended March 31, 2020.
     
  Income from operations was $2.3 million for the six months ended March 31, 2021, compared to income from operations of $4.8 million for the same period of the prior fiscal year, due to the decrease of gross profit.
     
  Net income was $2.2 million for the six months ended March 31, 2021, compared to net income of $4.2 million for the same period of the prior fiscal year mainly due to the decreased gross margin described above.
     
  Net income attributable to Qilian International was $2.4 million or earnings per share of $0.07 for the six months ended March 31, 2021, compared to net income attributable to Qilian International of $3.9 million, or earnings per share of $0.13, for the same period of the prior fiscal year. 


Unaudited Financial Results for the Six months ended March 31, 2021

Revenue

For the six months ended March 31, 2021, revenue increased by $2.1 million, or 8%, to $29.9 million from $27.8 million for the same period of the prior fiscal year. The increase was mainly due to the sales increase from oxytetracycline products, licorice products and traditional Chinese medicine derivatives (“TCMD”), as well as the appreciation of RMB to USD, from 1 USD = 7.0126 RMB for the six months ended March 31, 2020.

For the six months ended March 31, 2021, revenue from oxytetracycline products, licorice products and traditional Chinese medicine derivatives (“TCMD”) increased by $2.8 million. The increase was primarily due to an increase of oxytetracycline products sold. The increase in oxytetracycline products revenues was due to the four newly added customers which contributed $1.6 million in the six months ended March 31, 2021. In addition, the sales quantity increased due to the recovery of the market from the impact of the COVID-19 pandemic. For the six months ended March 31, 2020, due to the outbreak of COVID-19 in China, the Company’s sales were affected by the lock down of the economy.

For the six months ended March 31, 2021, revenue from heparin products, sausage casings and fertilizer decreased by $0.6 million, which is normal fluctuation in the Company’s business operations.

Cost of revenue

Cost of revenue increased by $4.3 million, or 20%, to $25.8 million for the six months ended March 31, 2021 from $21.5 million for the same period of the prior fiscal year. The increase in overall cost of revenue was mainly due to the following reasons: (1) increase of sales from oxytetracycline products, licorice products and TCMD, which increased cost of revenue by $3.8 million; and (2) appreciation of RMB against USD, from an average exchange rate of 1 USD = 7.0126 RMB for the six months ended March 31, 2020 to an average exchange rate of 1 USD = 6.5541 for the six months ended March 31, 2021.

Gross profit

Gross profit decreased by $2.1 million, or 34%, to $4.1 million for the six months ended March 31, 2021 from $6.2 million for the same period of the prior fiscal year. As a result, gross margin percentage decreased to 13.7% for the six months ended March 31, 2021 from 22.4% for the same period of the prior fiscal year.

Gross profit margin for oxytetracycline products, licorice products and TCMD decreased by 9.2% for the six months ended March 31, 2021 as a result of the decreased selling price for licorice products in the current year, compared to the same period of prior year, as the price went up last year due to the shortage of supply and restraint from logistics as affected by the COVID-19 pandemic. For the six months ended March 31, 2021, the Company lowered the selling price by almost 10%, with only 4% drop of the cost per unit sold, compared to the same period of last year. In addition, gross margin for heparin and sausage casing products decreased by 8.8% for the six months ended March 31, 2021 compared to the same period of prior year. As the demand for these products was not as strong as the Company expected, in order to increase the cash flow as well as decrease inventory close to shelf life, the Company sold its heparin and sausage casing products at lower prices.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $1.8 million for the six months ended March 31, 2021, representing an increase of approximately $0.4 million, or 27%, from $1.4 million for six months ended March 31, 2020. The increase was mainly attributable to increased salary paid to board of directors of approximately $0.2 million.

Income before income taxes

Income before income taxes was $2.5 million for the six months ended March 31, 2021, compared to income before income taxes of $4.9 million for the same period of the prior fiscal year.

Net income and net income attributable to Qilian International

Net income was $2.2 million for the six months ended March 31, 2021, compared to net income of $4.2 million for the same period of the prior fiscal year. After deducting non-controlling interests, net income attributable to Qilian International was $2.4 million for the six months ended March 31, 2021, compared to net income attributable to Qilian International of $3.9 million for the same period of the prior fiscal year.

Earnings per share-basic and diluted

After deducting non-controlling interests, earnings per share attributable to the Company was $0.07 per basic and diluted share, for the six months ended March 31, 2021, compared to earnings per share of $0.13 per basic and diluted share, for the same period of the prior fiscal year.

Weighted average number of shares outstanding was 32,428,571 for the six months ended March 31, 2021, compared to 30,000,000 for the same period of last fiscal year.

Financial Condition

As of March 31, 2021, the Company had cash of $20.3 million, compared to $11.9 million as of September 30, 2020. Total working capital was $45.3 million as of March 31, 2021, compared to $19.1 million as of September 30, 2020.

Net cash provided by operating activities was $9.7 million for the six months ended March 31, 2021, compared to net cash provided by operating activities of $5.3 million for the same period last year. Despite the decrease of net income, the net cash provided by operating activities increased due to the $6.1 million increase of cash from bank acceptance notes receivable.

Net cash used in investing activities was $21.1 million for the six months ended March 31, 2021, compared to net cash used in investing activities $0.1 million for the same period last year. The increase was due to $20 million cash used in investment made for marketable securities.

Net cash provided by financing activities was $19.4 million for the six months ended March 31, 2021, compared to net cash provided by financing activities $2.1 million for the same period of last year. The increase was mainly due to the cash of $24.0 million received from ordinary shares issued in the Company’s initial public offering, offset by $4.6 million decrease of net cash provided from bank loans.

About Qilian International Holding Group Limited

Qilian International Holding Group Limited, headquartered in Gansu, China, is a pharmaceutical and chemical products manufacturer in China. It focuses on the development, manufacture, marketing and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivatives product, heparin product, sausage casings, and fertilizers. The Company’s products are sold in more than 20 provinces in China. For more information, visit the company’s website at http://ir.qlsyy.net/.

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, financial needs and the successful construction of the pig by-product processing project facility. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and in its other filings with the SEC.

For more information, please contact:

Qilian International Holding Group Limited
Email: ir@qlsyy.net

Ascent Investors Relations LLC
Tina Xiao
President
Phone: 917-609-0333
Email: tina.xiao@ascent-ir.com

  

Qilian International Holding Group Limited and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
       
    As of  
    March 31,     September 30,  
    2021     2020  
             
ASSETS                
CURRENT ASSETS:                
Cash and cash equivalent   $ 20,312,619     $ 11,867,130  
Accounts receivable, net     170,495       1,118,476  
Short term investment     20,000,000        
Bank acceptance notes receivable     3,875,350       11,498,075  
Inventories, net     12,810,203       11,994,471  
Advances to suppliers, net     1,106,428       491,827  
Other current assets     230,511       547,443  
TOTAL CURRENT ASSETS     58,505,606       37,517,422  
                 
Property and equipment, net     8,189,517       7,419,028  
Intangible assets, net     1,925,967       1,881,722  
Long term investment     596,988       540,517  
Operating lease right of use assets     211,772       243,874  
Deferred tax assets     410,925       361,250  
Security deposit     200,859       179,325  
TOTAL ASSETS   $ 70,041,634     $ 48,143,138  

             
CURRENT LIABILITIES:                
Bank loans   $ 3,050,408     $ 7,349,375  
Accounts payable     5,368,120       4,377,712  
Advance from customers     2,702,266       3,511,198  
Advance from customers – related parties     18,302       33,152  
Deferred government grants – current     380,603       384,802  
Taxes payable     1,085,894       1,383,182  
Operating lease liabilities, current     118,457       82,468  
Accrued expenses and other payables     520,878       1,301,882  
TOTAL CURRENT LIABILITIES     13,244,928       18,423,771  
                 
LONG TERM LIABILITIES                
Operating lease liabilities, noncurrent     101,755       155,723  
Deferred government grants – noncurrent     553,680       722,137  
                 
TOTAL LIABILITIES     13,900,363       19,301,631  
                 
Commitments and contingencies                
                 
EQUITY:                
Ordinary Shares, $0.00166667 par value, 100,000,000 shares authorized, 35,750,000 and 30,000,000 Ordinary Shares issued and outstanding as of
March 31, 2021 and September 30, 2020 , respectively
    59,583       50,000  
Additional paid-in capital     36,621,050       12,252,077  
Statutory Reserve     2,816,692       2,200,786  
Retained earnings     13,932,050       12,197,372  
Accumulated other comprehensive loss     390,076       (602,001 )
Total shareholders’ equity attributable to Qilian International     53,819,451       26,098,234  
Noncontrolling interests     2,321,820       2,743,273  
TOTAL EQUITY     56,141,271       28,841,507  
TOTAL LIABILITIES AND EQUITY   $ 70,041,634     $ 48,143,138  

Qilian International Holding Group Limited and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income (unaudited)
       
    For the six months ended March 31,  
    2021     2020  
             
NET REVENUE   $ 29,939,173     $ 27,758,814  
                 
COST OF REVENUE     25,848,510       21,530,973  
                 
GROSS PROFIT     4,090,663       6,227,841  
                 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     1,818,722       1,434,898  
                 
INCOME FROM OPERATIONS     2,271,941       4,792,943  
                 
Other Income (Expenses)                
Interest expense     (80,387 )     (110,251 )
Other income     330,290       215,788  
Total Other income (expense)     249,903       105,537  
                 
INCOME BEFORE INCOME TAX PROVISION     2,521,844       4,898,480  
                 
PROVISION FOR INCOME TAXES     276,517       715,101  
                 
NET INCOME     2,245,327       4,183,379  
                 
Less: net income (loss) attributable to non-controlling interest     (105,257 )     325,249  
                 
NET INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED   $ 2,350,584     $ 3,858,130  
                 
OTHER COMPREHENSIVE INCOME                
Foreign currency translation adjustment     1,084,823       110,067  
COMPREHENSIVE INCOME     3,330,150       4,293,446  
Less: comprehensive income (loss) attributable to non-controlling interests     (12,511 )     340,536  
COMPREHENSIVE INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED   $ 3,342,661     $ 3,952,910  
                 
                 
Earnings per common share – basic and diluted   $ 0.07     $ 0.13  
Weighted average shares – basic and diluted     32,428,571       30,000,000  

Qilian International Holding Group Limited and Subsidiaries
Condensed Consolidated Statements of Cash flows (unaudited)
 
    For the six months ended March 31  
    2021     2020  
             
Cash flows from operating activities:            
Net Income   $ 2,245,327       4,183,379  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Amortization of the Right-of-use assets     62,410        
Depreciation and amortization     590,489       577,860  
Provision of doubtful accounts     (21,357 )     26,796  
Inventory reserve     350,186       (36,210 )
Deferred tax expense     (36,090 )     32,811  
Investment income     (5,768 )     531  
Changes in operating assets and liabilities:                
Accounts receivable     1,009,208       (2,390,190 )
Bank acceptance notes receivable     8,058,486       1,948,153  
Inventories     (714,555 )     2,195,464  
Advances to suppliers     (596,309 )     (771,020 )
Other current assets     325,467       (138,014 )
Accounts payable     827,898       13,778  
Advance from customers     (941,445 )     (1,698,831 )
Advance from customers – related parties     (16,103 )     (2,210 )
Deferred revenue     (214,402 )     (200,740 )
Tax payables     (349,482 )     1,563,764  
Accrued expenses and other payables     (830,314 )     (12,038 )
Operating lease liabilities     (48,068 )      
Net cash provided by operating activities     9,695,578       5,293,283  
                 
Cash flows from investing activities:                
Purchase of property and equipment     (1,053,496 )     (215,696 )
Purchase of intangible assets     (1,798 )     (8,791 )
Proceeds from (Payment made for) long term investment     (30,369 )     57,041  
Investment made for marketable securities     (20,000,000 )      
Net cash used in investing activities     (21,085,663 )     (167,446 )
                 
Cash flows from financing activities:                
Proceeds from bank loans     7,628,812       2,139,007  
Repayment of bank loans     (12,206,100 )      
Cash receipts from equity issuance, net of issuance cost     23,967,441          
Net cash provided by financing activities     19,390,153       2,139,007  
                 

             
Effect of exchange rate change on Cash     445,421       (47,347 )
                 
Net increase (decrease) in cash and cash equivalents     8,445,489       7,217,497  
Cash and cash equivalents at beginning of period     11,867,130       4,594,440  
Cash and cash equivalents at end of period   $ 20,312,619       11,811,937  
                 
                 
Supplemental cash flow information                
Cash paid for interest   $ 147,230     $ 124,955  
Cash paid for income taxes   $ 136,415     $ 149,879  


Qilian International Holding Group Limited and Subsidiaries
Condensed Consolidated Statements of Changes in Equity (unaudited)

    Ordinary Shares     Additional
Paid-in Capital
    Retained
Earnings
    Statutory Reserve     Accumulated Other
Comprehensive
Income
    Shareholders’
Equity
    Non-controlling
Interests
    Total
Equity
 
Balance at September 30, 2019     50,000     $ 12,252,077     $ 7,560,631     $ 1,773,817     $ (1,743,175 )   $ 19,893,350     $ 2,744,576     $ 22,637,926  
Capital contribution from shareholders                                                            
Net income for the year                     3,858,130                       3,858,130       325,249       4,183,379  
Appropriation for statutory reserve                     (426,671 )     426,671                              
Stock dividend appropriation to shareholders                                                            
Cash dividend paid to shareholders                                                            
Foreign currancy translation adjustment                                     94,780       94,780       15,287       110,067  
Balance at March 31, 2020   $ 50,000     $ 12,252,077     $ 10,992,090     $ 2,200,488     $ (1,648,395 )   $ 23,846,260     $ 3,085,112     $ 26,931,372  
                                                                 
Balance at September 30, 2020   $ 50,000     $ 12,252,077     $ 12,197,372     $ 2,200,786     $ (602,001 )   $ 26,098,234     $ 2,743,273     $ 28,841,507  
                                                                 
Common stock issued in initial public offering     9,583       23,960,031                               23,969,614               23,969,614  
Non controlling interest transaction             408,942                               408,942       (408,942 )      
Net income for the year                     2,350,584                       2,350,584       (105,257 )     2,245,327  
Acquisition of Noncontrolling interest                                                              
Appropriation for statutory reserve                     (615,906 )     615,906                                
Foreign currancy translation adjustment                                     992,077       992,077       92,746       1,084,823  
Balance at March 31, 2021   $ 59,583     $ 36,621,050     $ 13,932,050     $ 2,816,692     $ 390,076     $ 53,819,451     $ 2,321,820     $ 56,141,271