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China Health Industries Holdings, Inc. Reports Financial Results for the Second Quarter Ended December 31, 2019

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
$701,623
$584,147

 

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/52436