Sunwah International Reports Profit for Q1 FY2013

TORONTO, Nov. 14, 2012 /CNW/ - Sunwah International Limited, TSX: SWH (the "Company"), an Asian based financial services firm, today released its financial results, reporting a small profit for the first quarter ended September 30, 2012.  All figures quoted are in U.S. dollars unless otherwise specified.

The Group (Sunwah International and its subsidiaries) recorded a net profit of $0.2 million for the first three months of Fiscal 2013, marking a solid improvement over recent periods as well as last year's comparable quarter (Q1 FY2012: $7.7 million loss). The Company's improved financial performance over last year reflects mark-to-market gains in its proprietary investment portfolio of $1.2 million during the quarter, which compares with a loss of $12.4 million in the first three months of Fiscal 2012.

Total revenues rose considerably in comparison with recent periods to $4.8 million, contrasting year-over-year with negative revenues of $7.5 million.  Commission and fee income, while down significantly from $4.0 million in last year's first quarter, remained stable relative to the past three quarters at $1.9 million amid ongoing flat IPO and share placement markets in Hong Kong where the Group is primarily focused. General and administrative expenses totaled $4.3 million, down from $6.4 million in Q1 FY2012, as a result of the implementation of cost saving measures amid uncertain markets and decreased commission expenses over last year's comparable period.

The quarter's enhanced earnings are primarily attributable to the overall improvement in equity market conditions in Hong Kong and worldwide during the period as well as the Company's short-term strategy of streamlining costs and focusing on its core competencies while implementing measures to stabilize earnings.

Financial highlights for Q1 Fiscal 2013 include:

• Profit of $0.2 million (Q1 FY2012: $7.7 million loss).
• Gain before tax of $0.6 million (Q1 FY2012: $11.1 million loss).
• Net increase of $1.2 million on the disposal and mark-to-market gains of financial assets/liabilities, compared to a net loss of $12.4 million.
• Commission and fee income of $1.9 million (Q1 FY2012: $4.0 million).
• Total revenues of $4.8 million (Q1 FY2012: $7.5 million loss).
• A 33% decrease in general and administrative expenses to $4.3 million (FY2012: $6.4 million).
• Total equity attributable to owners of the Company increased to $47.6 million (September 30, 2012) from $47.3 million (June 30, 2012).

"Overall, given current markets, we are satisfied with this quarter's results as they demonstrate the practicality of the short-term strategies we have in place to weather uncertain times and remain competitive amid fluctuating markets.  In terms of the medium to long term, we are pursuing a variety of means of enhancing and differentiating our revenue channels so as to continue to improve our financial performance in the future," said Douglas C. Betts, President and Chief Executive Officer of Sunwah International. "In addition to a strategic decision to target resources within our Capital Markets Group, which has resulted in a notable improvement in corporate finance activity that is expected to benefit future periods, our Strategic Investment Group continues to actively uncover and structure opportunities in line with our specialized focus and expertise."

Sunwah International's growth strategy focuses on China and parts of Southeast Asia.  Specifically, the Company is positioning itself to capitalize on China's continued long-term potential and anticipated solid growth in the industries affected most by its development, particularly natural resources and infrastructure, where Sunwah International offers unique and targeted expertise.  The Company is also focused on Malaysia, Vietnam and the Philippines, countries that are increasing in strength in addition to being abundant in the resources China needs most.

For more information on Sunwah International's third quarter operating results, please see the Management's Discussion and Analysis (MD&A), which is filed on SEDAR and is also available on the Company's website at www.sunwahinternational.com

Dividends

The Company did not propose any final dividend for the year ended 2012.

Outlook for FY2013

The Company believes that China and South East Asia will continue to be a major factor for growth in the World's economy, not simply as an exporter of low cost goods, but increasingly as a consumer.  The Company believes that its focus on natural resources - in particular mining and energy - will help position it to benefit from continuing growth in China and Southeast Asia.  Accordingly, the Company expects China's continuing demand for resources to drive growth in the resource sectors, in particular both mining and energy.  Increasingly, we expect the Chinese Renminbi to play a larger role in international currency transactions driven by China's increased global stature as an international investor and the growing weakness of the US Dollar.

We believe that significant flows of investment capital from Europe (both Western and Eastern Europe), North America and the Middle East towards Asia will increase, particularly in China and South East Asia.  The Group continues to position itself as a financial services provider participating in these flows of capital.  As a consequence, we will continue to focus on the development of our asset and fund management capabilities to enhance our participation in this flow. We believe that by adding fund and asset management capabilities, we will stabilize the revenue base for our Group, thereby enhancing shareholder value.

Notwithstanding the continuing political divergence of American politics, we believe there will be a gradual improvement in the United States economy over the next 12-24 month period, with a consequent improvement in demand for Chinese exports. This in turn will trigger increased consumption of raw materials, including energy and natural resources. In addition, the Chinese economy appears to have avoided a 'hard landing' and appears to be responding to further government stimulus.  China's growth will continue to be tempered by policies of the Chinese authorities, which while designed to stimulate are also intended to ensure moderate growth and to minimize the impact of  inflation.  Nonetheless, the balance of FY2013 will continue to be difficult for investors as capital markets worldwide (including Hong Kong) respond to the continuing difficulties in the ECM and the structural issues facing the US economy. The United States' anticipated slow recovery and China's expected moderate growth, referred to above, will take time to impact capital markets.

About Sunwah International Limited

Sunwah International, is a strategically positioned asset-based financial services provider, linking the global investment community with China's high growth economy.  Leveraging a 20-year track record and significant relationships throughout Asia, Sunwah International is now positioned into three integrated divisions: Capital Markets Group, consisting of brokerage and financial services, including investment banking; Strategic Investment Group, a merchant bank focused on mining and natural resources; and our Asset Management Group specializing in private equity funds.  The organization's primary subsidiary, Sunwah Kingsway Capital Holdings Limited is based in Hong Kong and listed on The Stock Exchange of Hong Kong.  The Sunwah Kingsway group of companies comprises Sunwah International's primary operating subsidiaries and is licensed to provide a range of financial services.  Sunwah International operates from six offices located in Hong Kong, Beijing, Shanghai, Shenzhen, Macau and Toronto. 

China is widely recognized as an increasingly important player on the world's financial stage.  As the country continues to grow, its greatest needs will lie in energy and resources.  Following a recent restructuring, the Company is positioned as a middle tier provider of financial services in these sectors and an opportunistic investor in these and related sectors.  Sunwah International's strategy is to use investment activities strategically to generate advisory services revenue while creating value for its shareholders through asset accumulation. 

Founded in 1990, the Company is listed on the main board of the Toronto Stock Exchange under the symbol SWH. 

Forward-Looking Statements  

This press release contains forward-looking statements that are based on the beliefs of Management and reflect the Group's current expectations.  In certain cases, forward-looking information can be identified by the use of words such as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may", "should", "will", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information.  There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, investors should not place undue reliance on forward-looking information.  Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

SOURCE: Sunwah International Limited

Kristen Humphrey, Sunwah International Group, [phone],
[email protected]