China Sun Group's shares surge as Q3 profits grow 21%, revenues soar
China Sun Group High-Tech (OTCBB:CSGH.OB ) saw its shares climb more than 16% on Thursday after reporting that third quarter profits rose 21% as demand for the company's products increased.
For the three months ending February 28, the company, which supplies anode materials for rechargeable lithium-ion batteries in China, posted net income of $2.66 million, or $0.05 per share. This compares with $2.20 million in profits, or $0.04 per share, in the year ago period.
Revenue for the third quarter jumped 24% to $13.4 million, driven by a 177% increase in sales of the company's new lithium iron phosphate (LIP) product. The sharp growth in LIP sales was primarily due to a deal signed with Henan Huanyu Si Er New Energy Technology, under which China Sun agreed to supply a minimum of 470 tons of lithium iron phosphate to Huanyu during 2011.
The new product accounted for 88% of the total revenue increase, the company said.
"China Sun Group's sales and earnings continue to benefit from the increasing demand for our new higher margin product, lithium iron phosphate, and the continued surge in demand for lithium batteries," said CEO Guosheng Fu.
Third quarter gross margin was 34.5%, compared to 31.3% a year earlier. Total operating expenses climbed to $0.94 million from $0.43 million in the year-ago period.
China Sun said it would look to upgrade its manufacturing system to maximize production capabilities and efficiencies in the future.
"We ended the third quarter with three production lines for our LIP product, and seven for producing our cobaltosic and lithium oxide products," added Mr. Fu.
The company's shares rallied by nearly 17% on Thursday to trade at $0.69 as of 2:33pm EST.
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