China YTC Announces Big Increase in Latest Quarter

Jan.28.09 | About: China YCT (CYIG)

China YCT International Group (OTCQB:CYIG) reported a 60% upsurge in Q3 (ended December 31) revenues to $8.6 million. Net income rose even more: it climbed 126% to $2.2 million. All figures are preliminary estimates. Through its subsidiary Shandong Spring Pharmaceutical Co., China YCT International manufactures and distributes ginkgo based products in China.

China YCT and Shandong Spring began operations in January 2007, selling 38 ginkgo products that are manufactured by Shandong Yong Chun Tang Bioengineering Co., a company owned by Yan Tinghe, the Chairman of Shandong Spring Pharmaceutical. Shandong Spring is also building its own manufacturing facility.

Last year, Shandong Spring and Yong Chun Tang Bioengineering signed an Entrusted Management Agreement under which Shandong Spring will manage the operations of Shandong Yong Chun Tang in exchange for all of the latter’s net profits. Also, the two companies signed a Purchase Option, under which Shandong Spring has the right to purchase Shandong Yong Chun Tang at a fair value, which will be determined when the option is exercised.

China YTC’s nine-month numbers also show very strong growth. Revenues are up 107% at $11.3 million, and earnings equaled $6.4 million, an increase of 186%. The company attributed its growth to advertising, which it plans to increase.

China YTC feels its results show its business is not affected by the worldwide economic downturn. It expects to continue its pattern of growth through fiscal 2010.

Using modern biological technology, Shandong Spring Pharmaceutical integrates research and development, production and sales of ginkgo healthcare products, ginkgo cosmetics, daily-use chemical products, ginkgo glycoside products and biological medicines.

China YTC is trading at 45 cents per share on the Bulletin Board Exchange. The company has a market capitalization of just $18 million.

Disclosure: none.