HARBIN, China, Nov. 5, 2018 /PRNewswire/ -- China XD Plastics
Company Limited (NASDAQ: CXDC) ("China XD Plastics" or the
"Company"), one of China's leading
specialty chemical companies engaged in the development,
manufacture and sale of polymer composite materials primarily for
automotive applications, today announced signing of deleveraging
investment framework agreement (the "Agreement") by and among its
subsidiary, Heilongjiang Xinda Enterprise Group Company Limited
("Xinda Group"), CCB Financial Asset Investment Co., Ltd. ("CCB
Financial"), and China Construction Bank Heilongjiang Branch ("CCB
HLJ"), both of which are wholy owned subsidiaries of China
Construction Bank ("CCB").
On, October 31, 2018, management
from both the Company and CCB signed the Agreement at the
conference center of the Company's Northeast Production Base. CCB
Financial and CCB HLJ are planning to provide estimated
2 billion RMB (approximately
US$289 million) capital to Xinda
Group and or its affiliated entities in debt, equity or other
forms, mainly to repay Xinda Group's interest bearing loans, to
facilitate the Company to diversify and develop its business and to
improve corporate management, subject to the parties entering into
one or more definitive agreements. The definitive agreements will
be subject to satisfactory due diligence by CCB Financial and CCB
HLJ, business arrangement, legal viability, and completion and
satisfaction of other standard and customary conditions. The
Company will make its best effort to assist CCB Financial and CCB
HLK but does not provide timing estimate or make promise of signing
of any definitive agreement.
"We are very pleased to welcome CCB Financial as an important
strategic and long-term partner of Xinda. Once materialized, the
cooperation under this Agreement will not only help our company
deleverage its balance sheet and improve its capital structure, but
assist the Company to solidify its long term position in its
industry," said Jie Han, Chairman of the Board of Directors and
Chief Executive Officer. "As the second largest bank in the world
by assets, CCB is very selective especially to non-state-owned
enterprises in China. The signing
of the Agreement reflects CCB's trust to our company after decades
of cooperation reaching a new high level and unweavering support to
high quality enterprises with focus on long term innovation by the
government under the leadership of President Xi.
Business Update
Since the beginning of this third quarter, China auto market has experienced an
unexpected and unprecedent turn with both numbers of car produced
and sold plummeted. The results from China Auto Industry
Association came drastically under its early expectation.
China auto sales dropped 4%, 3.8%
and 11.6% in this July, August and September, respectively,
compared to the same periods in 2017. It has a ripple effect and
impact throughout China auto
supply chain, including the Company. In light of the foregoing
changing market condition and the macro economic environment in
China, the Company is updating its
financial guidance for fiscal 2018 to range between $1 and $1.2 billion
in revenue and net income to range between $70 and $80
million. It assumes the average exchange rate of the US
dollar to RMB at 6.9. This financial guidance reflects the
Company's current view of its business outlook for fiscal 2018 and
is subject to revision based on changing market conditions at any
time.
The Company's Dubai production
base has completed trial production successfully and official
commencement is scheduled on November 11,
2018 with 11.25 thousand metric tons annual capacity in
2019. Dubai Xinda primarily offers long chain nylon alloy and other
high-end engineering plastics and has developed and completed
product trials with a number of customers overseas from
Spain, Itily, UAE, Malysia, and
India etc.
About China XD Plastics Company
Limited
China XD Plastics Company Limited, through its wholly-owned
subsidiaries, develops, manufactures and sells polymer composites
materials, primarily for automotive applications. The Company's
products are used in the exterior and interior trim and in the
functional components of 31 automobile brands manufactured in
China, including without
limitation, Audi, Mercedes Benz,
BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei
and VW Passat, Golf, Jetta, etc. The Company's wholly-owned
research center is dedicated to the research and development of
polymer composites materials and benefits from its cooperation with
well-known scientists from prestigious universities in China. As of September
30, 2018, 476 of the Company's products have been certified
for use by one or more of the automobile manufacturers in
China. For more information,
please visit the Company's English website at
http://chinaxd.irpass.com/, and the Chinese website at
http://www.xdholding.com.
CCB Financial Financial Asset Investment Co., Ltd
CCB Financial Financial Asset Investment Co., Ltd is the first
market-based debt-to-equity swap institution approved by the China
Banking Regulatory Commission. It was incorporated on July 26, 2017 and is a wholly-owned subsidiary of
China Construction Bank with a registered capital of RMB 12 billion. It is by far the largest
registered capital of CCB Group, with a management fund of over
RMB 140 billion, and its business
scale is in the leading position in the industry.
About China Constructin Bank Heilongjiang Branch
China Construction Bank's main business areas include corporate
banking, personal banking and treasury operations, providing
customers with comprehensive financial services. China Construction
Bank ranked second in the world's leading magazine, the British
"Banker" in 2018 and the World's Top 1000 Banks. China Construction
Bank Heilongjiang Branch was established in Harbin on July 20,
1986. It is a tier-one branch under the jurisdiction of CCB.
Its main business areas include corporate banking, personal banking
and treasury operations, and is dominated by China's economic strategic industries. The
company maintains close cooperation with a large number of high-end
customers to provide comprehensive financial services to
customers.
Safe Harbor Statement
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, including but not limited to, the Company's growth
potential in international markets; the effectiveness and
profitability of the Company's product diversification strategy;
the impact of the Company's product mix shift to more advanced
products and related pricing policies; the effectiveness,
profitability, and the marketability of its the ongoing mix shift
to more advanced products; the prospects of the Company's
Dubai facility, and the associated
expansion into Middle East,
Europe and other parts of
Asia; the prospects of the
Company's Sichuan facility, and
its penetration into Southwest
China; the prospects of the Company's Harbin facility, and its penetration into
Northeast China; the Company's
projections of its revenues for performance in fiscal 2018.
These forward-looking statements can be identified by terminology
such as "will," "expect," "project," "anticipate," "forecast,"
"plan," "believe," "estimate" and similar statements.
Forward-looking statements involve inherent risks and uncertainties
and are based on current expectations, assumptions, estimates and
projections about the Company and the industry. A number of
important factors could cause actual results to differ materially
from those contained in any forward-looking statement. Potential
risks and uncertainties include, but are not limited to, the global
economic uncertainty which could further impair the automotive
industry and limit demand for our products; fluctuations in
automotive sales and production which could have a material adverse
effect on our results of operations and liquidity; our financial
performance which may be affected by the prospect of our
Dubai facility and the associated
expansion into Middle East,
Europe and other parts of
Asia; the withdrawal of
preferential government policies, the tightening control over the
Chinese automotive industry, automobile purchase restrictions
imposed in certain major cities which may limit market demand for
our products; the slowing of Chinese automotive industry's growth;
the concentration of our distributors, customers and suppliers; and
other risks detailed in the Company's filings with the Securities
and Exchange Commission and available on its website at
http://www.sec.gov. The Company undertakes no obligation to update
forward-looking statements to reflect subsequent occurring events
or circumstances, or to 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 its expectations will turn
out to be correct, and investors are cautioned that actual results
may differ materially from the anticipated results.
The following table shows a reconciliation of cash, cash
equivalents and restricted cash on the condensed consolidated
balance sheets to that presented in the above condensed
consolidated statements of cash flows.
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2018
|
|
2017
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
72,721,460
|
|
190,392,211
|
Restricted
cash
|
|
263,254,352
|
|
129,699,454
|
Time
deposits
|
|
113,351,268
|
|
288,023,017
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
308,622,962
|
|
298,868,984
|
Inventories
|
|
549,782,095
|
|
421,736,682
|
Prepaid expenses and
other current assets
|
|
85,211,205
|
|
144,326,151
|
Total current
assets
|
|
1,392,943,342
|
|
1,473,046,499
|
Property, plant and
equipment, net
|
|
813,775,162
|
|
835,561,739
|
Land use rights,
net
|
|
31,226,580
|
|
31,943,652
|
Long-term prepayments
to equipment and construction suppliers
|
|
507,306,748
|
|
190,627,514
|
Other non-current
assets
|
|
16,102,868
|
|
12,924,279
|
Total
assets
|
|
2,761,354,700
|
|
2,544,103,683
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Short-term loans,
including current portion of long-term bank loans
|
|
635,504,864
|
|
775,396,929
|
Bills
payable
|
|
519,466,191
|
|
252,768,510
|
Accounts
payable
|
|
166,693,789
|
|
227,993,140
|
Amounts due to a
related party
|
|
75,567,512
|
|
-
|
Income taxes
payable
|
|
16,612,181
|
|
17,710,217
|
Accrued expenses and
other current liabilities
|
|
153,355,737
|
|
138,605,509
|
Total current
liabilities
|
|
1,567,200,274
|
|
1,412,474,305
|
Long-term bank loans,
excluding current portion
|
|
132,304,205
|
|
114,208,319
|
Deferred
income
|
|
105,746,194
|
|
99,168,276
|
Other non-current
liabilities
|
|
106,440,118
|
|
107,898,318
|
Total
liabilities
|
|
1,911,690,791
|
|
1,733,749,218
|
|
|
|
|
|
Redeemable Series
D convertible preferred stock (redemption amount of
US$252,601,000
and US$244,044,200 as of June 30, 2018 and December 31, 2017,
respectively)
|
|
97,576,465
|
|
97,576,465
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Series B preferred
stock
|
|
100
|
|
100
|
Common stock,
US$0.0001 par value, 500,000,000 shares authorized, 50,308,731
shares and
|
|
5,031
|
|
4,975
|
49,748,731 shares issued, 50,287,731 shares and 49,727,731
shares outstanding as of
|
|
|
|
|
June 30, 2018 and December 31, 2017, respectively
|
|
|
|
|
Treasury stock,
21,000 shares at cost
|
|
(92,694)
|
|
(92,694)
|
Additional paid-in
capital
|
|
85,789,902
|
|
83,159,893
|
Retained
earnings
|
|
695,114,448
|
|
648,790,469
|
Accumulated other
comprehensive loss
|
|
(28,729,343)
|
|
(19,084,743)
|
Total stockholders'
equity
|
|
752,087,444
|
|
712,778,000
|
Commitments and
contingencies
|
|
-
|
|
-
|
Total liabilities,
redeemable convertible preferred stock and stockholders'
equity
|
|
2,761,354,700
|
|
2,544,103,683
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
Three-Month Period
Ended
June 30,
|
|
Six-Month Period
Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
317,329,520
|
|
313,555,663
|
|
627,782,553
|
|
551,395,860
|
Cost of
revenues
|
|
(261,175,654)
|
|
(250,446,461)
|
|
(517,761,231)
|
|
(453,514,488)
|
Gross
profit
|
|
56,153,866
|
|
63,109,202
|
|
110,021,322
|
|
97,881,372
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
(3,562,711)
|
|
(705,337)
|
|
(4,613,720)
|
|
(1,224,150)
|
General and
administrative expenses
|
|
(11,348,767)
|
|
(8,844,582)
|
|
(20,223,776)
|
|
(15,898,253)
|
Research and
development expenses
|
|
(5,288,636)
|
|
(9,546,922)
|
|
(10,338,534)
|
|
(15,398,022)
|
Total operating
expenses
|
|
(20,200,114)
|
|
(19,096,841)
|
|
(35,176,030)
|
|
(32,520,425)
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
35,953,752
|
|
44,012,361
|
|
74,845,292
|
|
65,360,947
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
1,029,675
|
|
970,293
|
|
3,342,298
|
|
2,133,552
|
Interest
expense
|
|
(11,274,575)
|
|
(11,951,851)
|
|
(24,168,780)
|
|
(21,973,827)
|
Foreign currency
exchange gains (losses)
|
|
5,632,970
|
|
(1,870,977)
|
|
1,677,162
|
|
(2,347,062)
|
Losses on foreign
currency option contracts
|
|
-
|
|
-
|
|
(520,981)
|
|
-
|
Government
grant
|
|
1,378,484
|
|
1,023,922
|
|
2,856,043
|
|
2,463,453
|
Total non-operating
expense, net
|
|
(3,233,446)
|
|
(11,828,613)
|
|
(16,814,258)
|
|
(19,723,884)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
32,720,306
|
|
32,183,748
|
|
58,031,034
|
|
45,637,063
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(5,496,228)
|
|
(4,119,756)
|
|
(11,707,055)
|
|
(7,672,082)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
27,224,078
|
|
28,063,992
|
|
46,323,979
|
|
37,964,981
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
0.41
|
|
0.43
|
|
0.70
|
|
0.58
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
27,224,078
|
|
28,063,992
|
|
46,323,979
|
|
37,964,981
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
|
(39,306,010)
|
|
13,751,361
|
|
(9,644,600)
|
|
17,669,664
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
(12,081,932)
|
|
41,815,353
|
|
36,679,379
|
|
55,634,645
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
Six-Month Period
Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
US$
|
|
US$
|
Cash flows from
operating activities:
|
|
|
|
|
Net cash provided
by operating activities
|
|
228,168,429
|
|
166,636,423
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Proceeds from
maturity of time deposits
|
|
388,105,630
|
|
244,825,478
|
Purchase of time
deposits
|
|
(210,380,884)
|
|
(215,714,244)
|
Purchase of land use
rights
|
|
-
|
|
(6,214,207)
|
Purchase of and
deposits for property, plant and equipment
|
|
(334,739,673)
|
|
(281,550,529)
|
Refund of deposit
from an equipment supplier
|
|
60,054,417
|
|
75,197,802
|
Deposits for
acquisition of equity
|
|
(3,640,688)
|
|
-
|
Government grant
related to the construction projects
|
|
10,558,608
|
|
7,136,482
|
Net cash used in
investing activities
|
|
(90,042,590)
|
|
(176,319,218)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from bank
borrowings
|
|
470,494,396
|
|
441,425,024
|
Repayments of bank
borrowings
|
|
(587,236,484)
|
|
(311,342,509)
|
Net cash (used in)
provided by financing activities
|
|
(116,742,088)
|
|
130,082,515
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash, cash equivalents and
restricted cash
|
|
(5,499,604)
|
|
7,995,135
|
Net increase in
cash, cash equivalents and restricted cash
|
|
15,884,147
|
|
128,394,855
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
|
320,091,665
|
|
271,575,847
|
Cash, cash
equivalents and restricted cash at end of period
|
|
335,975,812
|
|
399,970,702
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Interest paid, net of
capitalized interest
|
|
23,267,235
|
|
17,323,875
|
Income taxes
paid
|
|
12,906,780
|
|
7,353,371
|
Non-cash investing
and financing activities:
|
|
|
|
|
Accrual for purchase
of equipment and construction included in accrued expenses and
other
current liabilities
|
|
6,057,014
|
|
5,379,730
|
|
|
The following table
shows a reconciliation of cash, cash equivalents and restricted
cash on the condensed consolidated
|
balance sheets to
that presented in the above condensed consolidated statements of
cash flows.
|
|
|
|
June
30,
|
|
|
2018
|
|
2017
|
|
|
US$
|
|
US$
|
|
|
|
|
|
Cash and cash
equivalents
|
|
72,721,460
|
|
279,825,075
|
Restricted
cash
|
|
263,254,352
|
|
120,145,627
|
Total cash, cash
equivalents, and restricted cash shown in the statement of cash
flows
|
|
335,975,812
|
|
339,970,702
|
CHINA XD PLASTICS
COMPANY LIMITED
|
Reconcilation of
Net Income to EBITDA
|
(Amounts expressed
in United States Dollars)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June
30,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Net income
|
|
$27,224,078
|
|
$28,063,992
|
Interest
expense
|
|
11,274,575
|
|
11,951,851
|
Provision for income
taxes
|
|
5,496,228
|
|
4,119,756
|
Depreciation and
amortization expense
|
|
11,348,832
|
|
10,585,602
|
EBITDA
|
|
55,343,713
|
|
54,721,201
|
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SOURCE China XD Plastics Company Limited