Diguang International Development (DGNG.OB) Posts Q3 Results, Anticipations for Future Growth

QualityStocks would like to highlight Diguang International Development (OTCBB: DGNG). Through its subsidiaries, the company develops and produces CCFL and LED backlights for a wide range of TFT-LCD products. A backlight is the typical light source of a liquid crystal display (LCD), with applications spanning televisions, computer monitors, cellular phones, digital cameras, DVDs, and other home appliances. Leveraging its LED expertise, the company also creates and markets energy-saving technologies and solutions for rapidly growing markets, such as LED backlight monitors and LED general lighting.

In the company’s news yesterday,

Diguang International announced its financial results for the third quarter of fiscal year 2010 ended September 30, 2010.

For the third quarter 2010, the company posted net revenue at $19.1 million, an increase of 41.0 percent from $13.5 million reported for the comparable period in 2009. The company attributes the increase to improved demand for traditional and newly developed backlight products, as well as the improving economic conditions, which adversely affected sales in the previous year.

Gross profit for the third quarter of 2010 totaled $1.5 million, or 8.0 percent of net revenue, compared to $0.9 million, or 7 percent of net revenue, for the comparable quarter of 2009. Diguang’s overall gross margin for the third quarter of 2010 was 8 percent, a 1 percent increase compared with 7 percent for the same period of 2009. The company attributes the overall increase mainly to its efforts on adjusting product mix and enhanced control on raw materials.

Diguang’s net loss attributable to common shares during the third quarter of 2010 was $0.9 million, an improvement from a net loss of $1.2 million attributable to common shares for the same period in 2009. Loss per basic and diluted share were ($0.04) for the third quarter of 2010, improved from losses per basic and diluted share of ($0.06) for the same period of 2009.

As of September 30, 2010, Diguang had $5.0 million in cash and cash equivalents and $3.0 million in restricted cash. The company increased its working capital to approximately $4.2 million compared to $2.8 million at the end of 2009. As of the third quarter 2010, the company reported $7.7 million in short-term bank loans and $8.6 million in long-term bank loans. Shareholders’ equity was $19.2 million as of September 30, 2010.

Diguang said it expects increasing demand to drive company growth, and that its new production facility in Shenzhen is on track for completion in the fourth quarter of 2010, with production to launch in the first quarter of 2011.

“And in the third quarter of 2010, the total revenue was US$5.1 million, which accounted for 27 percent of the total sales volume in the third quarter, but the gross margin was only 4 percent. However, the company is now focusing more on sales of LED BLU for large-size backlights (18′ to 32′ inch), which has a higher gross margin (approximately 20 percent),” Song Yi, Diguang president and CEO stated in the press release. “As Diguang Technology’s revenue for LED BLU products is US$3.8 million, with a gross margin of 22 percent, and the Wuhan factory’s revenue is US$0.8 million, with a gross margin of 10 percent, the company anticipates that the growth of this new business line at Diguang Technology will provide profit growth in the future.”

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Forward-Looking Statement:
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.