Harbin, China--(Newsfile Corp. - February 14, 2020) - China Health Industries Holdings, Inc. (OTCQB: CHHE) ("China Health Industries", the "Company" or "Us"), a holding company with the operations in its subsidiaries in China, specializing in research & development, production, marketing and distribution of hemp derivative products, medicines and health supplement products, today announced the financial results for its second quarter ended December 31, 2019.
Mr. Xin Sun, Chief Executive Officer and Chairman of China Health Industries, commented, "We are pleased to report our financial results for the second quarter of our 2020 fiscal year. Our revenue increased by 26.08% for the three months ended December 31, 2019 compared to the same period of the previous year as we continue to develop, manufacture and distribute new hemp derivative products. We have successfully stepped into and become a pioneer in the market of hemp derivative products. Our hemp derivative products are well welcomed by our customers and our brand has been promoted. We plan to launch more hemp derivative products into the market."
Second Quarter of Fiscal 2020 Selected Financial Results
For the Three Months Ended December 31, 2019:
December 31,
December 31,
2019
2018
Variance
%
Revenues
$
3,421,988
$
2,714,157
$
707,831
26.08
%
Humankind
3,413,094
2,684,885
728,209
27.12
%
HLJ Huimeijia
8,894
29,272
(20,378
)
(69.62
)%
Cost of Goods Sold
$
686,510
$
688,076
$
(1,566
)
(0.23
)%
Humankind
681,982
653,157
28,825
4.41
%
HLJ Huimeijia
4,528
34,919
(30,391
)
(87.03
)%
Gross Profit
$
2,735,478
$
2,026,081
$
709,397
35.01
%
Humankind
2,731,112
2,031,728
699,384
34.42
%
HLJ Huimeijia
4,366
(5,647
)
10,013
(177.32
)%
Net Income
$
1,426,584
1,117,267
$
309,317
27.69
%
Net Income Per Share
0.0218
0.0170
0.0048
28.24
%
Revenue
Total revenues increased by $707,831 or 26.08% for the three months ended December 31, 2019, as compared to the same period in 2018. The increase in revenues was primarily due to an increase of $728,209 or 27.12% in Humankind's revenues mainly due to the increasing demand of Hemp Polypeptide and Hemp Protein Powder for the three months ended December 31, 2019 compared with the same period in 2018.
Cost of Goods Sold
Our total cost of sales decreased by $1,566 or 0.23% for the three months ended December 31, 2019 as compared to the same period in 2018. The decrease in the cost of the main business was mainly due to two reasons. Firstly, the revenue in Humankind increased by $28,825 or 4.41% which was consistent with the change of sales for the three months ended December 31, 2019 as compared to the same period in 2018. However, the growth ratio of cost was lower than that of the revenue because the unit cost of Hemp Polypeptide and Hemp Protein Powder was lower than the other two hemp products for the three months ended December 31, 2019 compared with the same period in 2018. Secondly, the decrease in HLJ Huimeijia's cost of sales was consistent with the change of revenue.
Gross Profit
Our gross margin increased by $709,397 or 35.01% for the three months ended December 31, 2019 as compared to the same period in 2018. This change was consistent with the change of sales and costs in Humankind. The gross margin of HLJ Huimeijia increased by $10,013 or 177.32% for the three months ended December 31, 2019 as compared to the same period in 2018. The increase was primarily due to that HLJ Huimeijia completed a processing transaction for drying raw materials of traditional Chinese medicine of which the gross margin was higher during the three months ended December 31, 2019.
Net Income and Net Income Per Share
Net income was $1,426,584 for the three months ended December 31, 2019, as compared to $1,117,267 for the three months ended December 31, 2018. This increase of $309,317 in net profit was primarily attributable to an increase of gross margin.
Net income per share was $0.0218 for the three months ended December 31, 2019 and $0.0170 for the three months ended December 31, 2018, respectively. This increase was primarily a result of the aforementioned increase in net profit.
For the Six Months Ended December 31, 2019:
December 31,
December 31,
2019
2018
Variance
%
Revenues
$
5,475,912
$
4,855,982
$
619,930
12.77
%
Humankind
5,440,083
4,810,393
629,690
13.09
%
HLJ Huimeijia
35,829
45,589
(9,760
)
(21.41
)%
Cost of Goods Sold
$
1,195,406
$
1,161,817
$
33,589
2.89
%
Humankind
1,155,870
1,106,433
49,437
4.47
%
HLJ Huimeijia
39,536
55,384
(15,848
)
(28.61
)%
Gross Profit
$
4,280,506
$
3,694,165
$
586,341
15.87
%
Humankind
4,284,213
3,703,960
580,253
15.67
%
HLJ Huimeijia
(3,707
)
(9,795
)
6,088
(62.15
)%
Net Income
$
2,183,158
1,749,481
$
433,677
24.79
%
Net Income Per Share
0.0333
0.0267
0.0066
24.72
%
Revenue
Total revenues increased by $619,930 or 12.77% for the six months ended December 31, 2019, as compared to the same period in 2018. The increase in revenues was primarily due to an increase of $629,690 or 13.09% in Humankind's revenues, mainly due to the increasing demand of Hemp Polypeptide and Hemp Protein Powder for the six months ended December 31, 2019 as compared to the same period in 2018,
Cost of Goods Sold
Our total cost of sales increased by $33,589 or 2.89% for the six months ended December 31, 2019 as compared to the same period in 2018. The increased cost of the main business was mainly due to that the revenue increased for the six months ended December 31, 2019 as compared to the same period in 2018. However, the growth ratio of cost was lower than that of the revenue because the unit cost of Hemp Polypeptide and Hemp Protein Powder was lower than the other two hemp products for the six months ended December 31, 2019 compared with the same period in 2018.
Gross Profit
Our gross margin increased by $586,341 or 15.87% for the six months ended December 31, 2019 as compared to the same period in 2018. This change was consistent with the change of sales and costs in Humankind.
Net Income and Net Income Per Share
Net income was $2,183,158 for the six months ended December 31, 2019, as compared to $1,749,481 for the six months ended December 31, 2018. This increase of $433,677 in net profit was primarily attributable to an increase of gross margin.
Net income per share was $0.0333 for the six months ended December 31, 2019 and $0.0267 for the six months ended December 31, 2018, respectively. This increase was primarily a result of the aforementioned increase in net profit.
Liquidity and Capital Resources
The following table summarizes our cash and cash equivalents positions, our working capital, and our cash flow activities as of December 31, 2019 and June 30, 2019 and for the six months ended December 31, 2019 and 2018:
December 31, 2019
June 30, 2019
Cash and cash equivalents
$
36,675,831
$
35,507,535
Working capital
$
31,915,518
$
29,832,774
Inventories
$
843,076
$
857,239
For the Six Months ended December 31,
2019
2018
Cash provided by (used in):
Operating activities
$
1,728,466
$
1,550,548
Investing activities
$
(149,845
)
$
(194,764
)
Financing activities
$
-
$
-
Our working capital at December 31, 2019 was $31,915,518, compared to our working capital of $29,832,774 at June 30, 2019. This increase of $2,082,744 or 6.98% was primarily attributable to the increase of cash and cash equivalents and accounts receivable in the amount of $1,168,296 and $1,269,754, respectively in the six months ended December 31, 2019.
About Us
China Health Industries Holdings, Inc. is a holding company with the operations in its subsidiaries in China, specializing in research & development, production, marketing and distribution of hemp derivative products, medicines and health supplement products.
China Health Industries owns GMP certified plants and facilities, manufactures 21 CFDA approved medicines and 14 health supplement products covering five kinds of dosage forms, including soft capsule, hard capsule, tablet, granule and oral liquid. Our product series cover hemp derivative foods, hemp derivative medicines, externally used medicines and health foods. For more information about the Company, please visit www.chinahealthindustries.com. The Company routinely posts important information on its website.
Safe Harbor Statement
This press release contains certain statements that may include "forward-looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes", "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties; thus, these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission ("SEC") and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Contact: Company: Melody Zhang IR Contact: China Health Industries Holdings, Inc. Tel: 86-451-87170800 ext. 8869 Email: ir@chinahealthindustries.com
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, 2019
June 30, 2019
ASSETS
Current assets
Cash and cash equivalents
$
36,675,831
$
35,507,535
Accounts receivable, net
3,257,259
1,987,505
Inventory
843,076
857,239
Other receivables, net
28,105
28,435
Advances to suppliers
221,863
8,619
Prepayments
-
15,868
Total current assets
41,026,134
38,405,201
Property, plants and equipment, net
3,923,779
3,719,424
Intangible assets, net
2,513,928
2,782,869
Construction in progress
517,201
835,452
Prepayments - Non-Current
-
9,709
Deferred tax assets
2,206
2,235
Total assets
$
47,983,248
$
45,754,890
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
465,556
$
497,084
Other payables
22,616
74,121
Advances from customers
181,319
153,613
Related party debts
7,209,075
6,962,520
Wages payable
353,950
265,686
Taxes payable
878,100
619,403
Total current liabilities
9,110,616
8,572,427
Equity
Common stock, ($0.0001 par value per share, 300,000,000 shares authorized, 65,539,737 and 65,539,737 shares issued and outstanding as of December 31, 2019 and June 30, 2019, respectively)
6,554
6,554
Additional paid-in capital
521,987
521,987
Accumulated other comprehensive income
(1,086,643
)
(593,654
)
Statutory reserves
38,679
38,679
Retained earnings
39,392,055
37,208,897
Total stockholders' equity
38,872,632
37,182,463
Total liabilities and equity
$
47,983,248
$
45,754,890
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
For the three Months
For the Six Months
Ended
Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
REVENUE
$
3,421,988
$
2,714,157
$
5,475,912
$
4,855,982
COST OF GOODS SOLD
(686,510
)
(688,076
)
(1,195,406
)
(1,161,817
)
GROSS PROFIT
2,735,478
2,026,081
4,280,506
3,694,165
OPERATING EXPENSES
Selling, general and administrative expenses
633,303
406,303
1,000,291
1,020,295
Depreciation and amortization expenses
150,752
142,758
289,916
284,280
Total operating expenses
(784,055
)
(549,061
)
(1,290,207
)
(1,304,575
)
INCOME (LOSS) FROM OPERATIONS
1,951,423
1,477,020
2,990,299
2,389,590
OTHER INCOME/(EXPENSES)
Interest income
31,293
26,590
62,041
54,716
Interest expense
-
(1
)
(1
)
(3
)
Other income/(expenses), net
1
15,973
(416
)
15,597
Bank charges
(237
)
(274
)
(362
)
(709
)
Total other income, net
31,057
42,288
61,262
69,601
INCOME/(LOSS) BEFORE INCOME TAXES
1,982,480
1,519,308
3,051,561
2,459,191
)
Provision for income taxes
(555,896
)
(402,041
)
(868,403
)
(709,710
)
NET INCOME (LOSS)
1,426,584
1,117,267
2,183,158
1,749,481
Foreign currency translation gain (loss)
1,000,316
(44,931
)
(492,989
)
(1,343,058
)
COMPREHENSIVE INCOME
2,426,900
1,072,336
1,690,169
406,423
Basic & diluted income (loss) per share
$
0.0218
$
0.0170
$
0.0333
$
0.0267
Weighted average shares outstanding:
Basic & diluted weighted average shares outstanding
65,539,737
65,539,737
65,539,737
65,539,737
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2019 AND 2018 (Unaudited)
Common Shares
Additional Paid-in
Retained
Statutory
Accumulated Other Comprehensive
Total Stockholders'
Shares
Amount
Capital
Earnings
Reserve
Income (loss)
Equity
Balance, June 30, 2018
65,539,737
$
6,554
$
521,987
$
33,901,858
$
38,679
$
775,302
$
35,244,380
Net income
-
-
-
1,749,481
-
-
1,749,481
Other comprehensive loss - Translation adjustment
(1,343,058
)
(1,343,058
)
Balance, December 31, 2018
65,539,737
6,554
521,987
35,651,339
38,679
(567,756
)
35,650,803
Balance, June 30, 2019
65,539,737
6,554
521,987
37,208,897
38,679
(593,654
)
37,182,463
Net income
-
-
-
2,183,158
-
-
2,183,158
Other comprehensive loss - Translation adjustment
-
-
-
-
-
(492,989
)
(492,989
)
Balance, December 31, 2019
65,539,737
$
6,554
$
521,987
$
39,392,055
$
38,679
$
(1,086,643
)
$
38,872,632
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(Unaudited)
Common Shares
Additional Paid-in
Retained
Statutory
Accumulated Other Comprehensive
Total Stockholders'
Shares
Amount
Capital
Earnings
Reserve
Income (loss)
Equity
Balance, September 30, 2018
65,539,737
$
6,554
$
521,987
$
34,534,072
$
38,679
$
(522,825
)
$
34,578,467
Net income
-
-
-
1,117,267
-
-
1,117,267
Other comprehensive loss - Translation adjustment
(44,931
)
(44,931
)
Balance, December 31, 2018
65,539,737
6,554
521,987
35,651,339
38,679
(567,756
)
35,650,803
Balance, September 30
65,539,737
$
6,554
$
521,987
$
37,965,471
$
38,679
$
(2,086,959
)
$
36,445,732
Net income
-
-
-
1,426,584
-
-
1,426,584
Other comprehensive loss - Translation adjustment
-
-
-
-
-
1,000,316
1,000,316
Balance, December 31, 2019
65,539,737
$
6,554
$
521,987
$
39,392,055
$
38,679
$
(1,086,643
)
$
38,872,632
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended
December 31,
December 31,
2019
2018
Cash Flows from Operating Activities
Net income (loss) from operations
$
2,183,158
$
1,749,481
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expenses
389,647
388,576
Provisions for doubtful accounts
(35,925
)
13
Provision for inventories
(154,767
)
Deferred taxes loss/(gain)
(1
)
(337
)
Changes in operating assets and liabilities,
Accounts receivable
(1,253,232
)
(1,279,100
)
Other receivables
(58
)
2,079
Inventory
2,447
(231,096
)
Advances to suppliers and prepaid expenses
(186,707
)
54,401
Accounts payables and accrued expenses
(24,592
)
115,066
Advances from customers and other payables
(20,534
)
231,888
Amounts due to related parties
332,431
248,961
Wages payable
91,193
64,401
Taxes payable
250,639
360,982
Net cash provided by operating activities
1,728,466
1,550,548
Cash Flows from Investing Activities
Purchases of property, plants and equipment
(24,713
)
(112,055
)
Expenditures in construction in progress
(130,964
)
(82,709
)
Disposal of property, plant and equipment
5,832
-
Net cash provided by (used in) investing activities
(149,845
)
(194,764
)
Cash Flows from Financing Activities
Proceeds from related party debts
-
-
Net cash provided by financing activities
-
-
Effect of exchange rate changes on cash and cash equivalents
(410,325
)
(1,221,789
)
Net decrease in cash and cash equivalents
1,168,296
133,995
Cash and cash equivalents, beginning balance
35,507,535
32,614,910
Cash and cash equivalents, ending balance
36,675,831
32,748,905
Supplemental cash flow information
Cash paid for income taxes
$
654,004
$
420,968
Cash paid for interest expenses
$
-
$
-
Non-cash activities:
Loan from related party for the construction of a facility
