China Yida Announces First Quarter 2012 Results

FUZHOU, China, May 11, 2012 /PRNewswire-Asia-FirstCall/ --  China Yida Holding Company (Nasdaq: CNYD) ("China Yida" or the "Company"), a diversified tourism and entertainment enterprise in China, today announced financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Results

• Total net revenue was $7.7 million, a decrease of 34.4% compared to $11.8 million in the
  year-ago period
• Net revenue from the tourism business was $1.5 million, a decrease of 19.8% year over year, with a gross margin of 17.5%
• Net revenue from the media business was $6.2 million, a decrease of 37.2% year over year, with a gross margin of 74.8%
• Gross profit was $4.9 million, a decrease of 40.6% compared to $8.3 million in the year-ago period
• Operating income was $2.5 million, a decline of 59.5% compared to $6.1 million in 2011.
• Net income attributable to China Yida Holding Company was $1.2 million, a decrease of 70.5% compared to $4.0 million in  the year-ago period
• Fully diluted EPS was $0.06 per share, compared to $0.20 in the year-ago period.

"In the first quarter of 2012, we continue to face challenges in our tourism and media businesses.  However, we are confident that our business model is sound and we remain committed to the dynamic tourism market in China," commented Dr. Chen Minhua, Chairman and Chief Executive Officer of China Yida. "Although road access issues continue to hinder visitor traffic to Great Golden Lake, we have forged ahead and plan to develop guest cottages that will accommodate overnight guests at Yunding Park, which has also benefited from enhanced marketing resulting in much improved tourist traffic.  We have also developed a new pricing strategy at the Hua'An Tulou cluster to counter competitive pressures.  We expect an increase in tourist traffic to all of our destinations as we enter the warm weather tourist season."

"Our media segment continued to feel the impact of restrictions imposed by domestic media authorities," Dr. Chen continued. "Despite the continued volatility of our media segment, our focused growth strategy remains the development of unique and attractive tourist destinations to meet the growing domestic demand for tourism in China. With the addition of three new properties in development, we foresee a strategic mix of six operating properties with the potential to generate a diversified income stream that will enhance shareholder value in the long run," concluded Dr. Chen.

First Quarter 2012 results

Total consolidated net revenue for the Company's two business segments, Tourism and Media, was $7.7 million in the first quarter of 2012, a decrease of 34.4% as compared to $11.8 million in the year-ago quarter. A review of each business segment follows.

Tourism Business

Net revenue from the tourism business was $1.5 million, a decrease of 19.8% as compared to $1.9 million in net revenue in the first quarter of 2011. The decrease was primarily due to a decrease in the number of tourists visiting Hua'an Tulou amid strong competition from similar-type nearby Tulou tourism destinations.

Gross margin from the tourism business was 17.5% for the first quarter of 2012, compared to 43.1% in the year-ago quarter. The year-over-year decrease was due to higher depreciation expenses attributable to the addition of property and equipment associated with Phase II projects at Yunding Park to the balance sheet.

The total number of visitors that entered the Great Golden Lake during the first quarter of 2012 was approximated 37,000, compared to 53,000 in the same period of last year. The site generated approximately $0.5 million in revenue in the first quarter, down 3.1% from the comparable year-ago quarter. The Hua'An Tulou tourist destination received approximately 38,000 visitors, compared to 55,000 visitors in the comparable year-ago quarter, and remained at approximately the same attendance level as occurred in the fourth quarter of 2011. The year-over-year decrease was mainly due to tough market competition from two nearby Tulou clusters in Fujian Province. Hua'An Tulou generated approximately $0.5 million in revenue in the first quarter of 2012, a decrease of 42.2% from the comparable year-ago quarter. Yunding Recreational Park attracted 23,000 visitors in the first quarter of 2012, a strong recovery from 12,000 visitors in the first quarter of 2011 and a marked increase from the 14,000 visitors in the fourth quarter of 2011.  The site generated approximately $0.5 million in revenue in the first quarter of 2012, double the amount generated in the comparable year-ago quarter, and also improved sequentially from $0.3 million generated in the fourth quarter of 2011. The increase in visitors and revenue at Yunding for the quarter is primarily attributable to enhanced marketing efforts of the Company's travel agency.

Media Business

Net revenue from the media business in the first quarter of 2012 was $6.2 million, a decrease of 37.2% from the $9.9 million posted in the comparable period a year ago. Fujian Education Television Channel ("FETV") experienced a 9.3% fall in revenue in the quarter year over year to an estimated $6.1 million due to actions by domestic media authorities restricting the broadcasting manner and content of TV advertising. Revenue from the Company's train media business was an estimated $140,000 for the first quarter of 2012, as compared to $1.8 million for the first quarter of 2011, as a majority of advertising clients terminated their purchases due to the absence of an automatic broadcasting and monitoring system.

Gross margin for the media business was 74.8% for the first quarter of 2012, as compared to 75.3% in the comparable year-ago quarter. The slight decrease in gross margin was primarily attributable to the fall-off in revenue generated from the railway media broadcasts as well as the increase in contracting costs associated with FETV's commercial airtime.

Consolidated Operating Results

Gross profit for China Yida's consolidated operations was $4.9 million in the first quarter of 2012, representing a gross profit margin of 63.4%, compared to gross profit of $8.3 million and a gross margin of 70.1% for the comparable period of 2011.

Total operating expenses increased by 13.7% to $2.4 million in the first quarter of 2012, compared with $2.1 million in the first quarter of 2011. This increase was primarily attributable to a 32.3% jump in selling expenses, which increased from $0.9 million to $1.1 million, due to higher marketing and operating expenses at Yunding Park compared to the same period last year. Operating income decreased by 59.5% to $2.5 million, compared with $6.1 million in the year ago quarter.

Net income attributable to China Yida Holding Company for the first quarter of 2012 was $1.2 million, or $0.06 per diluted share, as compared with $4.0 million, or $0.20 per diluted share, for the first quarter of 2011.

Financial Condition

As of March 31, 2012, the Company had $4.1 million in cash and cash equivalents. Working capital was $4.7 million with a current ratio of 1.4. As of March 31, 2012, the Company had total debt of $36.5 million.  Shareholders' equity was $160.2 million at the end of the first quarter of 2012 as compared to $157.9 million at the end of 2011.

China Yida generated $1.8 million in cash flow from operating activities in the first quarter of 2012 and spent $7.7 million on investing activities, of which $1.4 million constituted additions to intangible assets including land use rights. The Company received $6.1 million in proceeds from long term bank loans in the first quarter of 2012 to fund the development of its tourism destinations.

Business Update

As indicated previously, due to strict regulations on certain types of TV advertising, Management expects that FETV's advertising revenue may continue to decline further in the quarters ahead.  Beginning on January 1, 2012, the State Administration of Radio Film and Television (SARFT) disallowed any commercial advertisements that are inserted in the midst of certain TV programming with the result that ad time is now minimized and only able to be inserted at a program's end.

The decrease in tourism segment revenue was primarily due to the revenue decrease at the Hua'An Tulou tourism destination, attributable to strong competition among the  homogeneous tourism destinations, Nanjing Tulou Cluster and Yongding Tulou Cluster.  However, the Company has increased its ticket discounts at Hua'An Tulou and hopes to increase visitor traffic.  The Company plans upon utilizing its travel agency to promote the site as well as offer more promotions in Xiamen City.

The natural view and tourism facilities at the Great Golden Lake destination have almost recovered, though tourist traffic has not yet returned to normal levels. As the local government is currently rebuilding the road to Shangqing River, tourists who seek to visit Great Golden Lake must now travel on a rougher, more demanding road. Therefore, the tourist traffic to Great Golden Lake is likely to be constrained when it is anticipated that the road construction will be completed in 2013.

Since its grand opening on September 28, 2010, Yunding Recreational Park had admitted over one million visitors as of March 31, 2012. The recent quarter saw an increase in visitors to Yunding for the quarter attributable to enhanced marketing efforts of the Company's travel agency.  Nonetheless, tourist traffic has been much lower than that the site's designed capacity due to the poor condition of roads that connect to the site. The new expressway connecting Fuzhou to Yongtai Town being built by the local government is expected to be completed by the end of 2012.  Management will continue to ramp up its marketing efforts as well as develop second-stage entertainment attractions so as to directly engage tourists. The Company recently designed a guest cottage prototype for overnight stays and now plans for the development of  guest cottages at Yunding in the second quarter.

As of March 31, 2012, China Yida has made significant progress in the development of its three new tourism destinations in Anhui and Jiangxi Provinces, the Ming Dynasty Entertainment World in Bengbu City, Anhui province, the China Yang-sheng (Nourishing Life) Paradise in Zhangshu City, Jiangxi province, and the City of Caves in Fenyi City, Jiangxi province.  The development and construction of these new tourist destinations are in line with the Company's schedule. In the first quarter of 2012, the Company invested approximately $5.0 million in the acquisition of land use rights and approximately $2.7 million in the construction of tourism facilities.

As of March 31, 2012, the total estimated costs in contract progressing to complete China Yang-sheng (Nourishing Life) Paradise are approximately $14.3 million, of which the Company has completed and paid for approximately $13.4 million. The Company believes that the remaining balance will be completed and paid for by the end of 2012.

As of March 31, 2012, the total estimated costs in contract progressing to complete City of Caves are approximately $12.9 million, of which the Company has completed and paid for approximately $12.2 million. The Company believes that the remaining balance will be completed and paid for by the end of 2012.

Management believes that it can finance all of its ongoing capital expenditures from cash on hand, cash from operations and bank loans secured against its land bank. Entering 2012, new construction and development was adversely affected by more-than-normal rainy days. However, Management will undertake its best efforts to complete Phase I construction of these new projects and commence operation of the new tourist destinations by the end of 2012.

Conference Call

China Yida will conduct a conference call at 9:00 a.m. Eastern Time (ET) on Friday, May 11, 2012, to discuss its financial results for the quarter ended March 31, 2012. To participate in the live conference call, please dial any of the following numbers five to ten minutes prior to the scheduled conference call time: 866-395-5819. International callers may dial +1-706-643-6986. The Conference ID for this call is 78092385. If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Friday, May 11, 2012 at 12:00 p.m. ET. To access the replay, dial 855-859-2056 or 404-537-3406, international callers dial +1-800-585-8367. The Conference ID is 78092385.

About China Yida

China Yida is a leading tourism and media enterprise focused on China's fast-growing leisure industry and headquartered in Fuzhou City, Fujian province of China.  The Company provides tourism management services and specializes in the development, management and operation of natural, cultural and historic scenic sites. 

China Yida currently operates the Great Golden Lake tourist destination (Global Geopark), Hua'An Tulou tourist destination (World Culture Heritage) and China Yunding Park (National Park).  China Yida is also developing three additional tourism projects, Ming Dynasty Entertainment World, China Yang-sheng (Nourishing Life) Tourism Project and the City of Caves.

The Company's media business provides operations management services including content and advertising management for the Fujian Education Television Station ("FETV"), and "Journey through China on the Train", an advertisement-embedded travel program. 

For further information, please contact the Company directly, or visit its Web site at http://www.yidacn.net.

Forward-Looking Statements

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "anticipate, "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of China Yida Holding Co., Inc. (the "Company") to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement; (ii) the Company's ability to build and maintain the management and human resources and infrastructure necessary to support the anticipated growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission, which are available for review at www.sec.gov.

FINANCIAL TABLES FOLLOW

The notes in the Company's 2012 10-Q are an integral part of these consolidated financial statements.

Contact:
China Yida Holding
Jocelyn Chen
Phone: +86 591 28082230
Email: [email protected]

CCG Investor Relations
Crocker Coulson, President
Phone: + (1) 646-213-1915
Email: [email protected]  

SOURCE China Yida Holding Company