Cannabis

China Health Industries Holdings, Inc. Reports Financial Results for the Third Quarter Ended March 31, 2020

Published

4 years ago

May 15, 2020

Harbin, China–(Newsfile Corp. – May 15, 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 third quarter ended March 31, 2020.

Mr. Xin Sun, Chief Executive Officer and Chairman of China Health Industries, commented, “We are pleased to report our financial results for the third quarter of our 2020 fiscal year. Our revenue increased by 10.03% for the three months ended March 31, 2020 compared to the same period of the previous year as the increased demand of hemp polypeptide and hemp protein powder by the market. Affected by COVID-19, the company ceased production in February 2020, and the company has obtained government approval for reinstatement in early March. In the short term, our business could be adversely affected by the effects of COVID-19, and the company’s sales revenue growth would be affected, but in the medium to long term it has no impact on sales revenue. Because the company sells products such as hemp protein powder and hemp polypeptide, as the understanding of COVID-19 continues to deepen, consumers will realize that strengthening their own immunity and resistance is the effective way to fight COVID-19, and the consumers will pay attention to strengthen of physical fitness, the consumption of protein powder, protein peptides and other health foods, and our products will be more popular with customers.”

Third Quarter of Fiscal 2020 Selected Financial Results

For the Three Months Ended March 31, 2020:

	March 31,		March 31,
	2020		2019			Variance			%
Revenues	$	2,423,720	$	2,202,739		$	220,981			10.03	%
Humankind		2,421,935	$	2,192,680		$	229,255			10.46	%
HLJ Huimeijia		1,785		10,059			(8,274	)		(82.25	)%
Cost of Goods Sold	$	566,692	$	506,623		$	60,069			11.86	%
Humankind		565,409	$	492,569		$	72,840			14.79	%
HLJ Huimeijia		1,283		14,054			(12,771	)		(90.87	)%
Gross Profit	$	1,857,028	$	1,696,116		$	160,912			9.49	%
Humankind		1,856,526		1,700,111			156,415			9.20	%
HLJ Huimeijia		502		(3,995	)		4,497			112.57	%
Net Income	$	992,722	$	767,929			224,793			29.27	%
Net Income Per Share		0.0151		0.0117			0.0034			29.06	%

Revenue

Total revenues increased by $220,981 or 10.03% for the three months ended March 31, 2020, as compared to the same period in 2019. The increase in revenues was primarily due to an increase of $229,255 or 10.55% in Humankind’s revenues for the three months ended March 31, 2020, as compared to the same period in 2019. The increase in Humankind’s sales revenues was primarily due to the increased demand of Hemp Polypeptide and Hemp Protein Powder.

Cost of Goods Sold

Our total cost of sales increased by $60,069 or 11.86% for the three months ended March 31, 2020 as compared to the same period in 2019. The increase in the overall cost of sales was attributed to the decrease of $72,840 or 14.79% Humankind’s cost of sales for the three months ended March 31, 2020 as compared to the same period in 2019. This increase aligned with the increase in sales volume of products sold by Humankind. The growth ratio of cost of goods sold was consistent with the figure of sales for the three months ended March 31, 2020 as compared to the same period in 2019.

Gross Profit

Our gross margin increased by $160,912 or 9.49% for the three months ended March 31, 2020 as compared to the same period in 2019. This change was consistent with the change of sales and costs in Humankind. The gross margin of HLJ Huimeijia increased by $4,497 or 112.57% for the three months ended March 31, 2020 as compared to the same period in 2019. 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 March 31, 2020.

Net Income and Net Income Per Share

Net income was $992,722 for the three months ended March 31, 2020, as compared to $767,929 for the three months ended March 31, 2019. This increase of $224,793 in net income was primarily attributable to an increase of gross margin.

Net income per share was $0.0151 for the three months ended March 31, 2020, and net income per share was $0.0117 for the three months ended March 31, 2019, respectively. This increase was primarily a result of the aforementioned increase in net profit.

For the Nine Months Ended March 31, 2020:

	March 31,			March 31,
	2020			2019			Variance			%
Revenues	$	7,899,632		$	7,058,721		$	840,911			11.91	%
Humankind		7,862,018		$	7,003,073		$	858,945			12.27	%
HLJ Huimeijia		37,614			55,648			(18,034	)		(32.41	)%
Cost of Goods Sold	$	1,762,098		$	1,668,440		$	93,658			5.61	%
Humankind		1,721,279		$	1,599,002		$	122,277			7.65	%
HLJ Huimeijia		40,819			69,438			(28,619	)		(41.22	)%
Gross Profit	$	6,137,534		$	5,390,281		$	747,253			13.86	%
Humankind		6,140,739			5,404,071			736,668			13.63	%
HLJ Huimeijia		(3,205	)		(13,790	)		10,585			76.76	%
Net Income	$	3,175,880			2,517,410			685,470			27.23%
Net Income Per Share		0.0485			0.0384			0.0101			26.30%

Revenue

Total revenues increased by $849,811 or 11.91% for the nine months ended March 31, 2020, as compared to the same period in 2019. The increase in revenues was primarily due to an increase of $858,945 or 12.27% in Humankind’s revenues, which was primarily due to the increased demand of Hemp Polypeptide and Hemp Protein Powder.

Cost of Goods Sold

Our total cost of sales increased by $93,658 or 5.61% for the nine months ended March 31, 2020, as compared to the same period in 2019. The increase in the overall cost of sales was mainly due to the cost of sales of Humankind increased by$122,277 or 7.65%, which was consistent with the growth of sales for the nine months ended March 31, 2020 as compared to the same period in 2019.

Gross Profit

Our gross margin increased by $747,253, from $5,390,281 for the nine months ended March 31, 2019 to $6,137,534 for the nine months ended March 31, 2020. This growth was consistent with the increase of sales and costs in Humankind. The gross margin of HLJ Huimeijia increased by $10,585 or 76.76% for the nine months ended March 31, 2020 as compared to the same period in 2019. 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 nine months ended March 31, 2020.

Net Income (Loss) and Net Income (Loss) Per Share

Net income was $3,175,880 for the nine months ended March 31, 2020, as compared to $2,517,410 for the nine months ended March 31, 2019. This increase of $685,470 was primarily attributable to an increase of gross margin.

Net income per share was $0.0485 for the nine months ended March 31, 2020 and $0.0384 for the nine months ended March 31, 2019. This increase was primarily a result of the above-mentioned increase in net income.

Liquidity and Capital Resources

The following table summarizes our cash and cash equivalents positions, our working capital, and our cash flow activities as of March 31, 2020 and June 30, 2019 and for the nine months ended March 31, 2020 and 2019:

	March 31, 2020			June 30, 2019
Cash and cash equivalents	$	36,593,609		$	35,219,487
Working capital	$	32,539,427		$	29,595,941
Inventories	$	840,597		$	954,019

	2020			2019
For the nine months ended March 31:
Cash provided by (used in):
Operating activities	$	2,044,984		$	3,206,439
Investing activities	$	(152,362	)	$	(208,581	)
Financing activities	$	–		$	–

Our working capital as of March 31, 2020 was $32,539,427, compared to working capital of $29,595,941 as of June 30, 2019. This increase of $2,943,486 or 9.95% was primarily attributable to the increase of cash and cash equivalents and accounts receivable in the amount of $1,374,122 and $1,614,178, respectively in the nine months ended March 31, 2020.

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: [email protected]

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	March 31, 2020				June 30, 2019
ASSETS

Current assets
Cash and cash equivalents	$	36,593,609		$	35,507,535
Accounts receivable, net		3,601,683			1,987,505
Inventory		840,597			857,239
Other receivables, net		31,183			28,435
Advances to suppliers		205,386			8,619
Prepayments		–			15,868
Total current assets		41,272,458			38,405,201

Property, plants and equipment, net		3,774,844			3,719,424
Intangible assets, net		2,361,198			2,782,869
Construction in progress		510,522			835,452
Prepayments – Non-Current		–			9,709
Deferred tax assets		2,169			2,235
Total assets	$	47,921,191		$	45,754,890

LIABILITIES AND EQUITY

Current liabilities
Accounts payable and accrued expenses		394,530			497,084
Other payables		26,690			74,121
Advances from customers		178,272			153,613
Related party debts		7,241,166			6,962,520
Wages payable		276,488			265,686
Taxes payable		615,885			619,403
Total current liabilities		8,733,031			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 March 31, 2020 and June 30, 2019, respectively)		6,554			6,554
Additional paid-in capital		521,987			521,987
Accumulated other comprehensive income		(1,763,837	)		(593,654	)
Statutory reserves		38,679			38,679
Retained earnings		40,384,777			37,208,897
Total stockholders’ equity		39,188,160			37,182,463
Total equity		39,188,160			37,182,463

Total liabilities and equity	$	47,921,191		$	45,754,890

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	March 31, 2020			March 31, 2019			March 31, 2020			March 31, 2019

REVENUE	$	2,423,720		$	2,202,739		$	7,899,632		$	7,058,721

COST OF GOODS SOLD		566,692			506,623			1,762,098			1,668,440

GROSS PROFIT		1,857,028			1,696,116			6,137,534			5,390,281

OPERATING EXPENSES
Selling, general and administrative expenses		389,009			449,177			1,389,300			1,469,472
Depreciation and amortization expenses		145,817			180,166			435,733			464,446
Total operating expenses		534,826			629,243			1,825,033			1,933,918

INCOME FROM OPERATIONS		1,322,202			1,066,773			4,312,501			3,456,343

OTHER INCOME/(EXPENSES)
Interest income		31,801			28,815			93,842			83,531
Interest expense			–		(2	)		(1	)		(5	)
Other income/(expenses), net		(1	)		84			(417	)		15,681
Bank charges		(186	)		(205	)		(548	)		(914	)
Total other income, net		31,614			28,692			92,876			98,293

INCOME BEFORE INCOME TAXES		1,353,816			1,095,465			4,405,377			3,554,656	)

Provision for income taxes		(361,094	)		(327,536	)		(1,229,497	)		(1,037,246	)

NET INCOME		992,722			767,929			3,175,880			2,517,410

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation loss		(677,194	)		895,253			(1,170,183	)		(447,807	)

COMPREHENSIVE INCOME		315,528			1,663,182			2,005,697			2,069,603
Basic & diluted income per share	$	0.0151		$	0.0117		$	0.0485		$	0.0384

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 NINE MONTHS ENDED MARCH 31, 2020 AND 2019
(UNAUDITED)

	Common Shares
	Shares		Amount		Additional Paid-in Capital	Retained Earnings	Statutory Reserve	Accumulated Other Comprehensive Income (loss)		Total Stockholders’ Equity		Non-controlling Interest		Total Equity

Balance, June 30, 2018	65,539,737	$	6,554	$	521,987	33,901,858	38,679	775,302		35,244,380		–		35,244,380
Net income	–		–		–	2,517,410	–	–		2,517,410		–	$	2,517,410	)
Other comprehensive loss – Translation adjustment	–		–		–	–	–	(447,807	)	(447,807	)	–		(447,807
Balance, March 31, 2019	65,539,737	$	6,554	$	521,987	36,419,268	38,679	327,495		37,313,983		–		37,313,983
Balance, June 30, 2019	65,539,737		6,554		521,987	37,208,897	38,679	(593,654	)	37,182,463		–		37,182,463
Net income	–		–		–	3,175,880	–	–		3,175,880		–	$	3,175,880
Other comprehensive loss – Translation adjustment	–		–		–	–	–	(1,170,183	)	(1,170,183	)	–		(1,170,183	)
Balance, March 31, 2020	65,539,737	$	6,554	$	521,987	40,384,777	38,679	(1,763,837	)	39,188,160		–		39,188,160

The accompanying notes are an integral part of these condensed consolidated financial statements.

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019
(UNAUDITED)

											Accumulated
					Additional						Other			Total			Non-
	Common Shares				Paid-in		Retained		Statutory		Comprehensive			Stockholders’			controlling		Total
	Shares		Amount		Capital		Earnings		Reserve		Income (loss)			Equity			Interest		Equity

Balance, December 31, 2018		65,539,737	$	6,554	$	521,987		35,651,339		38,679		(567,758	)		35,650,801			–		35,650,801
Net income		–		–		–		767,929		–		–			767,929			–	$	767,929
Other comprehensive loss – Translation adjustment		–		–		–		–		–		895,253			895,253			–		895,253
Balance, March 31, 2019		65,539,737	$	6,554	$	521,987		36,419,268		38,679		327,495			37,313,983			–		37,313,983
Balance, December 31, 2019		65,539,737	$	6,554	$	521,987	$	39,392,055	$	38,679	$	(1,086,643	)	$	38,872,632			–		38,872,632
Net income		–		–		–		992,722							992,722					992,722
Other comprehensive loss – Translation adjustment		–		–		–		–		–		(677,194	)		(677,194	)		–		(677,194	)
Balance, March 31, 2020		65,539,737	$	6,554	$	521,987		40,384,777		38,679		(1,763,837	)		39,188,160			–		39,188,160

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the Nine Months Ended
	March 31,			March 31,
	2020			2019
Cash Flows from Operating Activities
Net income from operations	$	3,175,880		$	2,517,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expenses		568,074			619,788
Provision for doubtful accounts		(35,936	)		82
Provision for inventories		–			(155,601	)
Deferred taxes loss		(1	)		(339	)
Changes in operating assets and liabilities,
Accounts receivable		(1,656,659	)		(562,752	)
Other receivables		(3,642	)		1,969
Inventory		(9,356	)		(343,902	)
Advance to suppliers and prepaid expenses		(173,894	)		62,142
Accounts payables and accrued expenses		(88,458	)		96,497
Advance from customers and other payables		(16,074	)		232,195
Amounts due to related parties		478,665			445,204
Wages payable		19,014			40,142
Taxes payable		(3,845	)		253,604
Net cash provided by operating activities		2,253,768			3,206,439

Cash Flows from Investing Activities
Withdraw of short term investment		–			–
Purchases of property, plant and equipment		(24,773	)		(189,106	)
Expenditure in construction in progress		(133,436	)		(19,475	)
Disposal of property, plant and equipment		5,846			–
Proceeds from disposal of subsidiaries					–
Net cash used in investing activities		(152,363	)		(208,581	)

Cash Flows from Financing Activities
Proceeds from related party debts		–			–
Payment of short term loans		–			–
Net cash provided by financing activities		–			–

Effect of exchange rate changes on cash and cash equivalents		(1,015,331	)		(393,281	)

Net increase/(decrease) in cash and cash equivalents from continuing operations		1,086,074			2,604,577

Cash and cash equivalents, beginning balance		35,507,535			32,614,910

Cash and cash equivalents, ending balance	$	36,593,609		$	35,219,487

Supplemental cash flow information
Cash paid for income taxes	$	1,226,331		$	829,119
Cash paid for interest expense	$	–		$	–

Non-cash activities:
Loan from related party for the construction of a facility	$	729,669		$	587,296