CY Oriental Holdings Ltd. reports third quarter results



    VANCOUVER, Nov. 20 /CNW/ - CY Oriental Holdings Ltd. (TSX-V: CYO) ("CY
Oriental" or the "Company"), a value-added supplier of apparel and fashion
products to leading international brands and retailers, today announced its
financial results for its third quarter ended September 30, 2007. All figures
are reported in Canadian dollars, unless specified otherwise.
    "During the quarter, we made continued progress toward readying our new
state-of-the-art facility in Tengzhou for regular production," said Ping Chen,
Chairman, President and CEO of the Company. "The test runs at the first two of
four sewing workshops progressed well with quality and production efficiency
meeting management expectations. We are seeking to strengthen our relationship
with VF Corporation, for which we already provide products under their Lee and
Eastpak brands, and we are continuing to work towards opportunities to provide
products for their other brands. To capitalize on these opportunities,
specifically to provide products for their brands, The North Face and Nautica,
we have made the strategic decision to make adjustments to our machinery and
equipment as well as the proposed layout and configuration of the remaining
two sewing workshops at our Tengzhou facility. This decision will result in a
delay of a few months in getting these remaining two sewing workshops
production ready, and as such, our Tengzhou plant will not be fully
operational until the latter part of the first quarter of next year. However,
this decision will allow us to better serve the premium outerwear segment and
is consistent with our strategy to focus on higher end clothing representing
higher average selling prices and higher margins."

    Financial Results for the Three and Nine Months Ended September 30, 2007

    Revenue for the third quarter of fiscal 2007 increased 2.5% to
$11.3 million compared with $11.0 million for the third quarter of fiscal
2006. Revenue for the quarter was down 9.8% when compared to the second
quarter of this year, primarily as a result of the appreciation in the
Canadian dollar decreasing the translated value of the Company's primarily
U.S. dollar denominated revenue. For the nine months ended September 30, 2007,
revenue increased 7.4% to $33.6 million compared with $31.3 million for the
same period last year.
    Gross profit for the quarter was $2.9 million, or 25.7% of sales,
compared with $3.2 million, or 29.4% of sales, for the third quarter of last
year. Gross profit was impacted by the continued appreciation of the Renminbi
and the Canadian dollar against the U.S. dollar. Gross profit for the nine
months ended September 30, 2007 amounted to $9.2 million and was relatively
flat compared to the same period in 2006.
    Income from operations for the quarter was approximately $0.4 million
compared with $1.5 million for the same quarter last year, a decrease of
75.8%. Higher selling and distribution expenses and a larger foreign exchange
loss were partially offset by lower administrative expenses during the
quarter. Income from operations for the nine months ended September 30, 2007
was $3.8 million compared with $5.0 million for the same period last year. The
23.6% decrease was mainly attributable to higher selling and distribution
expenses and administrative expenses, and a larger foreign exchange loss.
    Management has taken proactive steps to mitigate the negative impact of
the strengthening of the Renminbi and the weakening of the US dollar,
including negotiating with customers for exchange adjustments for new orders,
entering into a foreign exchange forward contract and increasing borrowings in
US dollars.
    Net loss for the quarter was approximately $0.7 million, or $0.01 per
common share. The loss was mainly due to the foreign exchange loss resulting
from the appreciation of the Renminbi and Canadian dollar. Increased quota
expenses for shipments to U.S. customers and non-cash share based compensation
expenses also impacted the Company's bottom line for the quarter. Net loss for
the nine months ended September 30, 2007 amounted to $0.1 million, or less
than $0.01 per common share. Earnings per share are based on a weighted
average of 46,864,775 (47,097,583 fully diluted) common shares outstanding
during the quarter and 43,457,474 (43,567,253 fully diluted) common shares
outstanding during the first nine months of the year.

    Other Developments

    The Company also announced today the resignation of Chris Chen from his
position as Vice President, Business Development. Ping Chen, Chairman,
President and CEO of the Company remarked, "Having spent the last few months
developing other business opportunities, Chris Chen has decided to redirect
all of his energies into his other ventures. Chris has proven himself to be a
highly capable business executive with us and on behalf of the Board, we thank
him for his service to our Company."

    Outlook

    "We remain confident that our expansion projects will provide the
capacity needed to capitalize on the explosive growth in the Chinese apparel
export industry, and more specifically, the strong demand from our blue-chip
customer base," said Mr. Chen. "Progress on the factory audits at Tengzhou has
been encouraging. With VF Corporation having completed its production and
social compliance audits in October, we expect this customer to place its
first purchase with the Tengzhou facility towards the end of November or early
December 2007. Once fully operational, the Tengzhou facility will
significantly expand our production capacity, adding another eight million
pieces of apparel that can potentially be manufactured per year."
    Mr. Chen continued, "We continue in our efforts to further build and
expand our customer base, with the further exploration of the European market
expected to help diminish our economic reliance on the U.S. market. We have
received test orders for high-value clothing items with an average selling
price of over $35 from new customers including Swaxx Corporation and Diagomoda
in Europe. And, subsequent to quarter end, our merchandising team is scheduled
to hold initial meetings with buyers for Spanish fashion brands Zara and Pepe
Jeans, broadening our sales and marketing channels as we continue to target
higher end customers."

    Notice of Conference Call

    CY Oriental Holdings Ltd. will host a conference call on Wednesday,
November 21, 2007 at 9:00 a.m. (ET) to discuss its third quarter fiscal 2007
financial results. To access the conference call by telephone, dial
416-644-3419 or 1-800-595-8550. Please connect approximately fifteen minutes
prior to the beginning of the call to ensure participation. The conference
call will be archived for replay until Wednesday, November 28, 2007 at
midnight. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter the reservation number 21253567, followed by the
number sign.

    Financial Statements

    For convenience, this news release includes the Company's Fiscal 2007
Third Quarter Consolidated Balance Sheets, Statements of Operations,
Statements of Comprehensive Income, Statements of Changes in Shareholders'
Equity and Statements of Cash Flows.

    About CY Oriental Holdings Ltd.

    CY Oriental is a Canadian incorporated, China-based manufacturer and
value-added supplier of apparel and fashion products to leading international
brands and retailers, including department stores. CY Oriental owns and
operates a manufacturing facility in Shanghai, China, and is readying its
newly constructed facility in the city of Tengzhou, China, for regular
commercial production. The Company's ready-made products include a broad range
of high-quality garments, including woven casual wear, woven formal wear,
denim and knit junior sportswear. More information may be found online by
visiting: www.cyoriental.com.

    This news release has been reviewed by the Company's Audit Committee and
has been approved by the Board of Directors.

    Forward-Looking Statements

    This news release contains "forward-looking" statements that are subject
to important risks, uncertainties and assumptions relating to the Company and
the environment in which it operates, which are based on the Company's
operations and management's estimates, forecasts and projections. A
forward-looking statement may contain words such as "anticipates that,"
"believes," "can impact," "continue to," "estimates," "expects to," "intends,"
"may," "plans," "potential," "projects," "to be," "will be," "will continue to
be," "continuing," "ongoing," or the negative thereof or other comparable
terminology regarding beliefs, plans, expectations or intentions regarding the
future. The forward-looking information in this news release describes the
Company's expectations as of the date of this news release.
    Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or achievements
to be materially different from any results, performance or achievements
anticipated or implied by the forward-looking statements. There is no
assurance that forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such statements. Accordingly, investors should not place undue reliance on
forward-looking statements. Such statements reflect management's view of
future events and are subject to certain assumptions, risks and uncertainties.
    Such assumptions include assumptions based on the growth of the apparel
industry and the success of the Company's marketing and expansion plans. The
following factors could cause material differences in results from those
expressed or implied in any forward-looking statements set out herein: changes
in consumer spending patterns; consumer preferences towards product offerings;
reliance on the U.S. market; reliance on major customers; the sustainability
of customers' orders; the Company's ability to develop new merchandise;
general economic conditions and normal business uncertainty; the potential
impact on the retail environment of national and international security and
health concerns; the impact of competition and pricing; competitive conditions
in the industries in which the Company participates; changes in weather
patterns; operating risks; seasonality of the retail industry; political
instability; transportation cost increases; the success or failure of the
Company's business plan; the ability of the Company to successfully execute
its growth strategy and whether such strategic initiatives will yield the
expected benefits; uncertainties related to the Tengzhou facility; the ability
to retain, hire and train key personnel; relationship with suppliers;
fluctuations in foreign currency exchange rates and raw materials prices;
interest rate fluctuations and other changes in borrowing costs; potential
deterioration of the Company's financial position; reliance on banking
facilities; import/export controls and inspection; insurance risks;
environmental protection; conflicts of interest; and changes in laws,
reductions in refunds of value added tax, volatility of quota prices for
certain products, rules and regulations applicable to the Company and other
risks associated with doing business in China (such as state ownership,
government intervention, foreign investment controls, repatriation of profits
and controls over currency conversion, taxes, shareholders' rights and
enforcement of judgments, permits and business licenses, a developing legal
system, acquisition and appropriation of land use rights, inflation, recent
regulations relating to cross-border mergers and acquisitions and relating to
establishment of offshore special purpose companies), as well as the
assumptions and risks set out under "Risk Factors" in the Company's
Management's Discussion & Analysis for the year ended December 31, 2006 as
filed on SEDAR and is available on the SEDAR website at www.sedar.com on
April 30, 2007.
    Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, our actual results could differ
materially from those anticipated in these forward-looking statements.
Although management believes that its expectations are based on reasonable
assumptions there is no assurance that these expectations will materialize.
    The Company does not assume any obligation to update this forward looking
information, except as may be required by law.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.



    
    CY Oriental Holdings Ltd.
    (Formerly MVS Capital Corp.)

                         CONSOLIDATED BALANCE SHEETS

                                  (Unaudited - Expressed in Canadian Dollars)

                                                          As at        As at
                                                   September 30, December 31,
                                                           2007         2006
                                                              $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                           282,827      770,688
    Restricted cash                                     768,809      116,866
    Trade receivables                                22,057,803   18,030,216
    Other receivables                                   238,563      240,117
    Amounts due from related parties                    218,685       27,491
    Loans receivable                                          -    2,559,172
    Inventories                                       2,192,920    1,562,861
    Prepayments                                       1,416,469    1,300,908
    -------------------------------------------------------------------------
    Total current assets                             27,176,076   24,608,319
    -------------------------------------------------------------------------
    Rental property                                   3,167,700    3,756,489
    Property, plant and equipment                     9,231,304    3,421,974
    Construction in progress                         15,824,146   15,993,693
    Deposit for land use right                        3,456,695    3,573,180
    Deposit for machinery                               397,995      149,300
    -------------------------------------------------------------------------
    Total assets                                     59,253,916   51,502,955
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Short-term bank loans                             9,276,052    9,916,880
    Loan payable                                      4,169,374    8,521,370
    Trade payables                                    3,706,472    2,847,987
    Other payables                                      825,872    1,409,414
    Income tax payable                                  483,489            -
    Accrued liabilities                               1,013,890      815,060
    Amounts due to related parties                      478,599      112,639
    -------------------------------------------------------------------------
    Total liabilities                                19,953,748   23,623,350
    -------------------------------------------------------------------------

    Commitments and contingent liabilities

    Shareholders' equity
    Share capital                                    21,525,135    7,713,904
    Accumulated other comprehensive loss             (7,355,977)  (1,500,487)
    Reserves                                          5,303,068    5,303,068
    Retained earnings                                16,252,350   16,363,120
    Contributed surplus                               3,575,592            -
    -------------------------------------------------------------------------
    Total shareholders' equity                       39,300,168   27,879,605
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity       59,253,916   51,502,955
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CY Oriental Holdings Ltd.
    (Formerly MVS Capital Corp.)

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (Unaudited - Expressed in Canadian dollars)

                         Three months Three months  Nine months  Nine months
                                ended        ended        ended        ended
                            September    September    September    September
                             30, 2007     30, 2006     30, 2007     30, 2006
                                    $            $            $            $

    Revenue                11,280,570   11,005,080   33,633,854   31,320,165
    Cost of sales          (8,381,254)  (7,769,826) (24,445,048) (22,156,805)
    -------------------------------------------------------------------------
    Gross profit            2,899,316    3,235,254    9,188,806    9,163,360
    Rental income              97,143      103,822      309,218      301,071
    -------------------------------------------------------------------------
                            2,996,459    3,339,076    9,498,024    9,464,431

    Selling and
     distribution
     expenses                (620,054)    (217,643)  (1,243,003)  (1,089,223)
    Administrative
     expenses              (1,003,539)  (1,107,385)  (3,378,468)  (2,685,560)
    Foreign exchange
     gain (loss)           (1,001,408)    (478,396)  (1,077,291)    (718,707)
    -------------------------------------------------------------------------
    Income from
     operations               371,458    1,535,652    3,799,262    4,970,941

    Borrowing costs          (448,273)    (441,066)  (1,202,207)  (1,107,076)
    Public listing
     expenses                       -            -     (681,011)    (335,000)
    Stock-based
     compensation            (272,614)           -   (1,016,844)           -
    Other income                    -      574,499            -      737,499
    -------------------------------------------------------------------------
    Income (loss)
     before tax              (349,429)   1,669,085      899,200    4,266,364

    Income tax expense       (327,974)           -   (1,009,970)           -
    -------------------------------------------------------------------------
    Net income (loss)        (677,403)   1,669,085     (110,770)   4,266,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss)
     per share
      - basic and fully
        diluted                 (0.01)        0.06            -         0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares outstanding
      - basic              46,864,775   29,593,000   43,457,474   29,593,000
      - fully diluted      47,097,583   29,593,000   43,567,253   29,593,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CY Oriental Holdings Ltd.
    (Formerly MVS Capital Corp.)

                          CONSOLIDATED STATEMENTS OF
                             COMPREHENSIVE INCOME

                                  (Unaudited - Expressed in Canadian dollars)

                         Three months Three months  Nine months  Nine months
                                ended        ended        ended        ended
                            September    September    September    September
                             30, 2007     30, 2006     30, 2007     30, 2006
                                    $            $            $            $
    -------------------------------------------------------------------------

    Net income (loss)        (677,403)   1,669,085     (110,770)   4,266,364
    Other comprehensive
     income (loss)                  -            -            -            -
    Unrealized exchange
     gain (loss) on
     translation of
     self-sustaining
     foreign operations    (1,976,036)     357,692   (5,855,490)    (561,131)
    -------------------------------------------------------------------------
    Comprehensive
     income (loss)         (2,653,439)   2,026,777   (5,966,260)   3,705,233
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CY Oriental Holdings Ltd.
    (Formerly MVS Capital Corp.)


         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                  (Unaudited - Expressed in Canadian dollars)

                         Three months Three months  Nine months  Nine months
                                ended        ended        ended        ended
                            September    September    September    September
                             30, 2007     30, 2006     30, 2007     30, 2006
                                    $            $            $            $
    -------------------------------------------------------------------------

    Share capital
    Balance at beginning
     of period             21,476,287    7,713,904    7,713,904    7,713,904
    Shares issued to MVS
     Capital Corp.                  -            -       46,131            -
    Shares issued from
     exercise of options
     and warrants              48,848            -       48,848            -
    Shares issued for
     cash from private
     placement                      -            -   13,716,252            -
    -------------------------------------------------------------------------
    Balance at end of
     period                21,525,135    7,713,904   21,525,135    7,713,904
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive loss -
     accumulative
     translation
     adjustment
    Balance at beginning
     of period             (5,379,941)  (3,562,479)  (1,500,487)  (2,643,656)
    Other comprehensive
     income (loss)         (1,976,036)     357,692   (5,855,490)    (561,131)
    -------------------------------------------------------------------------
    Balance at end of
     period                (7,355,977)  (3,204,787)  (7,355,977)  (3,204,787)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Reserves
    Balance at beginning
     of period              5,303,068    4,286,716    5,303,068    4,286,716
    Appropriations to
     Statutory Common
     Reserve Fund                   -            -            -            -
    Appropriations to
     Enterprise
     Expansion Fund                 -            -            -            -
    -------------------------------------------------------------------------
    Balance at end of
     period                 5,303,068    4,286,716    5,303,068    4,286,716
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings
    Balance at beginning
     of period             16,929,753   15,499,621   16,363,120   12,902,342
    Net income for the
     period                  (677,403)   1,669,085     (110,770)   4,266,364
    Appropriations to
     Statutory Common
     Reserve Fund                   -            -            -            -
    Appropriations to
     Enterprise
     Expansion Fund                 -            -            -            -
    -------------------------------------------------------------------------
    Balance at end of
     period                16,252,350   17,168,706   16,252,350   17,168,706
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contributed surplus
    Balance at beginning
     of period              3,302,978            -            -            -
    Issuance of common
     share purchase
     warrants                       -            -    2,098,150            -
    Issuance of agents'
     options                        -            -      460,598            -
    Stock-based
     compensation             272,614            -    1,016,844            -
    -------------------------------------------------------------------------
    Balance at end of
     period                 3,575,592            -    3,575,592            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CY Oriental Holdings Ltd.
    (Formerly MVS Capital Corp.)

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited - Expressed in Canadian dollars)

                         Three months Three months  Nine months  Nine months
                                ended        ended        ended        ended
                            September    September    September    September
                             30, 2007     30, 2006     30, 2007     30, 2006
                                    $            $            $            $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) for
     the period              (677,403)   1,669,085     (110,770)   4,266,364
    Items not involving cash:
      Depreciation of
       property, plant and
       equipment and rental
       property               213,738      250,086      563,876      481,252
      Bad debts                     -       85,078            -       85,078
      Stock-based
       compensation           272,614            -    1,016,844            -
    Changes in non-cash
     working capital items:
      Trade receivables    (2,961,201)  (3,521,845)  (6,670,354)   3,155,666
      Inventories            (184,894)   1,563,585     (884,244)     646,450
      Other receivables       581,788     (410,100)   1,066,331     (841,503)
      Prepayments             339,721   (1,050,598)    (290,581)    (640,109)
      Trade payables          772,105     (434,902)   1,210,854   (1,218,450)
      Advances received             -      (24,636)           -     (500,081)
      Other payables         (244,681)     514,031     (350,795)     433,825
      Accrued liabilities     332,768      (90,636)     438,388     (261,167)
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operating
     activities            (1,555,445)  (1,450,852)  (4,010,451)   5,607,325
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Deposit released (paid)         -       18,780            -   (4,063,180)
    Repayment from (advance
     to) related parties       (9,561)    (934,415)    (191,395)   3,932,236
    Repayment from (loan to)
     unrelated parties        397,101      130,658    2,465,084   (2,828,379)
    Acquisition of property,
     plant and equipment            -      (22,875)     (84,073)    (213,013)
    Additions in construction
     in progress             (244,378)    (899,386) (10,738,700)  (3,289,706)
    Deposit for machinery           -            -     (275,028)           -
    -------------------------------------------------------------------------
    Cash provided by
     (used in) investing
     activities               143,162   (1,707,238)  (8,824,112)  (6,462,042)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Advances from banks             -            -    1,058,351    5,491,200
    Repayments to banks             -            -   (1,403,334)  (1,971,200)
    Loans from (repayments
     to) other financial
     institutions             329,529    1,740,893   (2,928,429)   3,728,307
    Advance from related
     parties                        -      905,264            -      905,264
    Distribution to
     shareholders                   -            -            -   (6,212,577)
    Restricted cash          (288,654)           -     (651,943)           -
    Options and warrants
     exercised for cash        48,848            -       48,848            -
    Gross proceeds from
     private placement              -            -   17,500,000            -
    Cash acquired in
     reverse takeover               -            -       46,131            -
    Cash commission to agents       -            -   (1,225,000)           -
    -------------------------------------------------------------------------
    Cash provided by
     financing activities      89,723    2,646,157   12,444,624    1,940,994
    -------------------------------------------------------------------------
    Effect of changes in
     exchange rates on cash    (7,464)    (406,314)     (97,922)    (196,611)
    Increase (decrease)
     in cash and cash
     equivalents           (1,330,024)    (918,247)    (478,861)     889,666
    Cash and cash
     equivalents, beginning
     of period              1,612,851    2,179,795      770,688      371,882
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period                   282,827    1,261,548      282,827    1,261,548
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental disclosure
     of cash flow information
    Cash paid for interest    443,900      407,482      890,538      991,987
    Tax paid                  213,441            -      739,495            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00023392E




For further information:

For further information: Clarence Kwong, Chief Financial Officer, CY
Oriental Holdings Ltd., Tel: (604) 247-0868, Email: ckwong@cyoholdings.com;
Trevor Heisler, Investor Relations, The Equicom Group, Tel: (416) 815-0700 ext
270, Email: theisler@equicomgroup.com

Organization Profile

CY ORIENTAL HOLDINGS LTD.

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