Kingold Jewelery (NASDAQ:KGJI)

WUHAN, China, May 29, 2012 /PRNewswire-Asia/ --Kingold Jewelry, Inc. (NASDAQ: KGJI), one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced that it has entered into a gold-processing agreement with Shenzhen TongXin Jewelry Ltd. ("Shenzhen TongXin"), a large Shenzhen-based wholesaler of jewelry products. Shenzhen TongXin is a leading integrated company in jewelry and precious metal production, processing, wholesaling and refining in Mainland China since 1965. Shenzhen Tongxin is one of the "Famous TradeMarks of China", and its products have been distributed to more than 20 provinces, municipalities and autonomous regions, and have been exported to the United States, South Korea, Russia, France, Germany, Great Britain, Italy and other countries, with annual sales volume of over 40 tons.

Pursuant to the agreement, Kingold will exclusively process a variety of 24-karat gold jewelry products (rings, necklaces, bracelets) for Shenzhen TongXin beginning June 1, 2012 until May 31, 2013. Kingold expects to process at least 104 kilograms, or approximately 3668 ounces, of jewelry products per month until the expiration date of the agreement. Kingold's revenue from this agreement will be derived from its sales price of goods sold upon delivery to Shenzhen TongXin along with its service fees. While pricing is subject to change, based on a current spot price of gold on the date the agreement was executed of approximately US$1,568 per ounce, this would equate to revenues to Kingold of approximately US$5.8 million per month (excluding additional revenues from processing fees). The actual pricing of jewelry products produced under the agreement will be finalized at the time of sale. Pursuant to the terms of the agreement, Kingold holds the right to increase its processing fee if the then-current price of gold falls.

Mr. Zhi Hong Jia, Chairman and Chief Executive Officer of Kingold Jewelry stated, "This agreement is the culmination of a long-process in our discussions with Shenzhen TongXin. The company approached Kingold over two years ago, and began a thorough screening process in evaluating Kingold's processing capabilities, customer service, and quality of product. We are very confident that our quality and reputation within the industry helped greatly in securing this agreement. We are looking forward to working with Shenzhen TongXin, and as always are working towards broadening our base of major distributors and wholesalers."

2012 First Quarter Operational and Financial Review

• In the first quarter of 2012, Kingold processed approximately 8.84 metric tons [one metric ton = 35,274 ounces] of 24-karat gold products, an increase of 17.6% over the 7.52 metric tons processed in the first quarter of 2011. In the first quarter Kingold processed approximately 970,000 pieces of jewelry, gold bars and coins, with the majority being necklaces and rings (roughly 250,000 pieces for each category).
• The Company reported revenues for the 2012 first quarter of $225.0 million, an increase of 42.6% from$157.7 million in the first quarter of 2011. The increase in net sales was primarily driven by increased branded production as well as by the increase in the price of gold. Of the $67.3 million increase in net sales, approximately $35.3 million was attributable to increased branded production and approximately $25.2 million to the increase in the price of gold and the remaining is due to the gain from exchange rate fluctuations.
• The Company expects a higher percent of its revenue in future quarters to be derived from its investment gold business, which generated incremental $9.9 million of revenue in the first quarter of 2012. The Company's investment gold consists of products such as gold coins, bars and certain gold gift products, which are sold to individual branch locations under that bank's specific brand. The Company typically expects a higher margin from its investment gold products than its branded jewelry and ornament production.
• Gross profit for the 2012 first quarter was $11.6 million, an increase of 29.0% from $9.0 million in the prior-year period. The Company's gross margin for the period was 5.1% compared to 5.7% from the prior year period. Gross margin was lower for the period primarily because gold prices increased nearly 9% while the Company could not raise its processing fee proportionally. However, Kingold's gross margin improved over the gross margin of 4.1% reported in the fourth quarter of 2011. The fourth quarter gross margin was affected by a shift in product mix (more branded production) and initial costs involved with ramping up the Company's investment gold business.
• The Company reported net income attributable to Kingold shareholders for the first quarter of 2012 of $7.3 million, or $0.13 per diluted share based on 54.4 million weighted average diluted shares outstanding, compared to net income of $5.3 million, or $0.11 per dilute

Mr. Zhihong Jia, Chairman and CEO of Kingold, stated, "We continued to see strong growth in our sales volume during the first quarter of 2012, particularly from our investment gold business. We continue to gradually shift resources to support demand from our bank partners, and were pleased that this has helped serve as a new driver for sales. We are now distributing products from the investment gold business to several provinces and municipal locations throughout China, including Beijing, Hubei, Jiangsu, Jiangxi, Liaoning, Zhejiang, Henan and Sichuan. In our jewelry business, we have continued to build upon and expand our customer base over the past year, with new clients including Harbin Hengyuan Gold Corp, Hangzhou Xingya Jewelry, Wuxi Yinglou and Datong Jintai Jewelry. We were also pleased to receive a AAA credit rating from the Gems & Jewelry Trade Association of China, which we feel is a testament to our reputation in China's jewelry industry and strong financial position. We feel that the long-term demand drivers in the jewelry business, such as a rising middle class, growing disposable income and culture (weddings and child births) will continue to provide stable growth for the Company."

Market and Business Outlook

Despite the fluctuation in gold prices, China's gold consumption remained very strong in the first quarter of 2012. According to statistics from the Hong Kong Census and Statistics Department from May 2012, in the first quarter Hong Kong alone exported 135.5 metric tons of gold into mainland China, five times more than in the same period from last year. China is widely expected to overtake India as the world's largest gold market in 2012.

The Company reaffirms its 2012 guidance that sales volume will be approximately 35 tons. This guidance is based solely on our current organic growth projections. Kingold expects its second quarter sales volume to continue the momentum and growth seen in the first quarter.

Chairman Jia concluded, "We have been very pleased with the development over the past six months, as we have begun to shift our resources towards growing the investment gold business. We expect this segment to continue to grow as a percentage of our revenues in coming periods. We continue to closely monitor gold price fluctuations globally, but were pleased to see stable pricing throughout the first quarter. We continue to feel that population growth, a rising middle class, and a trend towards risk-averse investment in gold will continue to drive China's gold demand for the immediate and long-term future to the benefit of Kingold. We remain confident about the long-term growth prospects for the investment gold market and 24-karat gold jewelry in China and look forward to continuing to develop our new products and distribution abilities throughout the country. We have maintained a healthy balance sheet, are debt-free, and remain wholly focused on expanding our operations."

WUHAN CITY, China, March 17, 2012 /PRNewswire-Asia/ -- Kingold Jewelry, Inc. (NASDAQ: KGJI) announced today that Kingold once again won the confidence vote by the World Gold Council (WGC) and was awarded by WGC as the Designated Dealer for wedding gold products in China.

Kingold has been authorized this title for the second consecutive year, and is one out of only three China-based gold manufacturers to capture this title. The other two companies are Gold Leaf Jewelry and Yue Hao Jewelry.

Kingold will operate and produce its wedding products under the Kingold brand as well as the M-Gold brand which are Kingold's premium line of wedding products targeting high-end customers. "By leveraging this partnership, we have launched several campaigns in Sichuan, Chongqing, Guizhou, Guangxi and Yunnan area and received very positive feedback from the local distributors." Stated by Mr. Zhao Bin, General Manager of Kingold, "This partnership further reinforces and enhances our position as one of the leading manufacturers and designers of high quality 24-karat gold jewelry and ornaments. "

"Gold consumption in China has been spurred by wedding demand. We have been striving to develop middle to high-end wedding gold products in the past few years. The strategic partnerships with World Gold Council will help us to stimulate customers' potential purchasing power and significantly enhance our brand recognition." Added Mr. Zhihong Jia, Chairman and CEO of Kingold, "As one of the first gold manufacturers to be certified and recommended by the World Gold Council to promote wedding products, our distributors have helped us to develop more than 500 franchise stores/counters nationwide by the end of 2011, in which over 400 were franchised under the brand name M-Gold, and approximately 100 were franchised under the brand name Kingold. We anticipate the total number of our franchise stores may exceed 1,000 by the end of this year."

WUHAN, China, February 23, 2012 /PRNewswire-Asia/ -- Kingold Jewelry, Inc (NASDAQ: KGJI), one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced that it has entered into a definitive agreement with Shanghai Oriental CJ Company for selling investment-oriented products, such as gold bar, on Shanghai Oriental CJ's TV shopping channel.

Shanghai Oriental CJ Company is a joint venture between Shanghai Media Group and South Korea's CJ Home Shopping Company operates one of the first, largest and most influential TV home shopping channels in China. The channel broadcasts 24 hours a day, and 7 days a week. It has reached over RMB 5 billion (about US$ 793 million) in sales in 2010 by offering a wide range of consumer products to Chinese consumers, particularly the most affluent population in coastal area and Southeastern China.

Under the terms of the agreement, Kingold Jewelry will start selling its investment-oriented products, such as gold bars and coins on Oriental CJ channel and Oriental CJ's B2C online platform in the first half of 2012.

"This is another new initiative for us to expand our current sales channel to more direct B2C model. TV home shopping sector in China, while is in the early stage, has been experiencing explosive growth in both revenue and customer base, and it is estimated to reach total revenue of RMB 100 billion (approximately US$15.8 billion) by 2015. We believe this partnership with Oriental CJ will not only allow us to generate incremental revenue and profit with less upfront cost, but also benefit the company by building its brand awareness among Chinese consumers," commented by Mr. Zhihong Jia, Chairman and CEO of Kingold. "We will continuously leverage Oriental CJ's platform and its high-end customer base by introducing more of our branded gold products such as jewelry and household ornaments in the future. We are in a right direction to gradually shift our focus into retail market directly targeting end users from the traditional wholesale market. We are confident that our ultimate goal to build Kingold as a major national brand of 24 karat gold products in China will be achieved."

Third Quarter 2011 Results

On August 8, 2011, the Company increased its full year 2011 revenue guidance to a range of between $800 million and $850 million, up from prior guidance of between $720 million and $780 million. The Company also raised its full year 2011 net income guidance to a range of between $32 million and $34 million, up from prior guidance of between of $30 million and $32 million. Based on management's estimate of weighted average diluted share count for 2011, the guidance corresponds to earnings per diluted share of $0.63 to $0.67.  

The Company's guidance assumes, among other things, relatively stable gold prices for the remainder of the year, no additional capital raises in 2011, and meaningful contribution from its new line of investment-oriented gold products in the second half of 2011.    

Fourth Quarter Results:

• Revenue increased 216.6% to $184.9 million from $58.4 million in fourth quarter 2009    
• Gross profit rose 55.8% to $9.5 million from $6.1 million in fourth quarter 2009
• Net income attributable to common stockholders grew 83.6% to $5.3 million, or $0.12 per diluted share, from $2.9 million, or $0.09 per diluted share, in fourth quarter 2009.

"We are very pleased to report record fourth quarter revenue and earnings, capping off an excellent year for Kingold Jewelry. In 2010, our first full year as a publicly traded company, we launched a successful line of proprietary branded jewelry, MGold, up-listed our shares to NASDAQ, accomplished robust earnings growth, and positioned the company for continued success in 2011," said Mr. Zhihong Jia, Kingold's Chairman and CEO.

In 2011, the Company anticipates revenue of between $720 million and $780 million and net income of between $30 million and $32 million. The Company's guidance assumes, among other things, relatively stable gold prices for the remainder of the year, no additional capital raises in 2011, and meaningful contribution from its new line of financially-oriented gold products starting in the second half of 2011.  

WUHAN CITY, China, March 17, 2011 /PRNewswire-Asia/ -- Kingold Jewelry, Inc. ("Kingold" or the "Company") (Nasdaq: KGJI), one of China's leading manufacturers and designers of 24-Karat gold jewelry and ornaments, today announced selected estimated unaudited financial results for the year ended December 31, 2010.

The Company expects 2010 revenue to be approximately $523 million, or more than double 2009 reported revenue of $250.5 million. 2010 net income attributable to common stockholders is expected to be approximately $18 million, or more than double the prior year number of $8.7 million.

"We are pleased to announce strong preliminary 2010 results, including robust top and bottom line growth, driven by solid demand for our high quality 24-K gold jewelry and ornaments," said Mr. Zhihong Jia, Kingold's Chairman and CEO.

Separately, the Company announced that it has filed Form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission, which will give the Company until March 31, 2011 to file its annual report on Form 10-K for the year ended December 31, 2010 (the "Form 10-K"). Upon filing on or before March 31, 2011, the Company's Form 10-K will be deemed to be timely filed. The additional time required to file the Form 10-K is a direct result of the additional requirements of Section 404 of the Sarbanes-Oxley Act of 2002, to which the Company became subject to for the first time with respect to its Form 10-K for the year ended December 31, 2010.

The increase in revenue was mainly attributable to the following factors: (1) for the three months ended September 30, 2009, we were still privately held, had relatively lower brand name recognition than we currently do, and our market coverage was smaller than is currently the case, which is in direct contract to the fact that for the three months ended September 30, 2010, we were a public company in the US, and have experienced greater brand recognition, which, in turn, has helped us to enhance our market coverage and attract more customers; (2) our increased working capital has allowed us to take advantage of the increase in demand for the items that we manufacture; (3) we have expanded our business operations into additional geographic areas which, in turn, has broadened sales opportunities, thus allowing us to gain market share in new geographical areas by securing relationships with regional jewelry wholesalers and distributors, such as Shenyang Xinglong Jewelry, Fuzhou Xingfulong Jewelry and Hangzhou Junhao Jewelry; and. (4) we have also made efforts to grow our business in the 24K gold ornament market.