Xinyinhai Tech (PINK:XNYH)

HARBIN, China, November 28, 2011 /PRNewswire-Asia/ -- Xinyinhai Technology, Ltd. (OTC Bulletin Board: XNYH), a market leader in China's fast-growing financial documents printing industry today announced Harbin Golden Sea Technology Printing Co, Ltd., a subsidiary of Xinyinhai Technology, Ltd, with excellent reputation and product quality and solid strength, won a bid from the Department of Finance of Heilongjiang province standing out of many bidders. The company is expected to sign a sales contract at the end of 2011 with the Department of Finance of Heilongjiang Province and establish a long-term cooperation with it, which will help the company enlarge market share and increase sales figures. Sales are expected up 12%, enhancing the company's overall strength and visibility.

Excerpts from Xinyinhai's 2010 first quarter filing:

Business segment near-term outlook is mixed:

The recent global recession reduced demand for capital goods in China. Since late 2008, this situation has had a negative impact on both of our business segments. In the first quarter of 2010, which ended on March 31, 2010, the effect of the recession was most dramatic in our equipment distribution business, where revenues declined by 73% to $147,168.  The decline in equipment distribution reflected delays in the construction of new manufacturing facilities in China, as potential customers wait to see whether demand for their products is revived. The decline reversed a surge in equipment sales that we had experienced in 2008, and reduced this business segment to a 7% contribution to our overall revenue during the first quarter of 2010, a level below even the 13% level we experienced in 2007 and 2006. The future of this business segment will depend, in part, on the success of the economic stimulus initiated by the Government of China.

Revenue from our printing business, on the other hand, was modestly higher, increasing by 9% to $2,027,210.  The printing segment of our business had declined in 2008 and 2009, in part due to the weakening of the Chinese banking industry, as many of our customers were conserving cash pending stabilization of the international credit markets. The decline also occurred because we moved our entire production operation to a larger facility at the end of 2008. The move necessitated delays in production, while our equipment was in transit, which in turn interfered with our sales effort, as our customers delayed orders until we could demonstrate that our facilities were up and running. Today, however, our new facility is fully operational, and we expect the traditional growth of our printing business to be renewed.

Over the longer term, the continued revenue growth in our printing services business will require further capital investment. As China’s banking industry rapidly modernizes, our customers demand additional product offerings similar to those available to the banking industry in Europe and the U.S. Our ability to meet that demand will determine the long term growth of our business. Immediately, the development of these new products will require substantial capital investment. For that purpose, we secured a $2.9 million collateralized loan during the third quarter of 2009, and applied $748,379 to improvements in our plant and equipment during the second half of the year. The growth in first quarter printing revenue indicates a first step toward realizing the benefit of that investment. In addition, our backlog of firm orders at March 31, 2010 for 2010 delivery was approximately double the backlog level at March 31, 2009, indicating that we should be able to sustain growth for the remainder of the current year.

Dilution seems to be a low risk event:

With the proceeds of our bank loan, we held $2.0 million in cash and equivalents at March 31, 2010. We will have no debt payment obligations until the bank line comes due in the third quarter. And, in accordance with customary banking practice in China, we expect that the bank loan will be extended when it reaches maturity, provided that our financial results are satisfactory to the bank. For that reason, we expect our liquidity will be sufficient in the next year to fund our ongoing operations as well as our near-term growth.