CHINA PRECISION STEEL is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel produces high precision ultra-thin high strength (7.5 mm to 0.05 mm) cold- rolled steel products primarily for automotive components food packaging materials saw blades and textile needle manufacturing companies in the People's Republic of China. China Precision Steel Inc. has a market cap of $130.38 million; its shares were traded at around $2.8 with a P/E ratio of 9.33 and P/S ratio of 1.49.
Highlight of Business Operations:Except as otherwise indicated by the context, all references in this Quarterly Report to: “Blessford International” are to PSHL s subsidiary Blessford International Limited, a BVI company; “Chengtong” are to PSHL s subsidiary Shanghai Chengtong Precision Strip Co., Limited, a PRC company; “China” and “PRC” are to the People s Republic of China; the “Company,” the “Group,” “we,” “us” or “our” are to China Precision Steel, Inc., a Delaware corporation, and its direct and indirect subsidiaries; “Exchange Act” means the Securities Exchange Act of 1934, as amended; “PSHL” are to our subsidiary Partner Success Holdings Limited, a BVI company; “RMB” are to Renminbi, the legal currency of China; “Securities Act” are to the Securities Act of 1933, as amended; “Shanghai Blessford” are to Blessford International s subsidiary Shanghai Blessford Alloy Company Limited, a PRC company; “Tuorong” are to PSHL s subsidiary Shanghai Tuorong Precision Strip Company Limited, a PRC company; “U.S. dollar,” “$” and “US$” are to the legal currency of the United States; and “BVI” are to the British Virgin Islands.
For the three months ended March 31, 2009, we sold a total of 11,000 tons of products, a decrease of 13,273 tons from 24,273 tons same period a year ago, due to slower demands and reduced orders on hand. Management believes that such decrease was caused by various factors including decrease in product orders from auto components manufacturers and from the Chinese auto industry that is experiencing weak demand and excess capacity; decrease in low-carbon cold rolled products, our exported products, due to the current credit crisis and the need to reduce exposure in the exporting business, and reduced orders in subcontracting income due to slower demand from customers during a downward economy and trending uncertainties of the industry. Lower sales and high raw material costs have led to a gross loss of $1,982,043 and a net loss of $3,518,453 for the three months ended March 31, 2009.
Sales Revenues. Sales volume decreased by 13,273 tons, or 54.7%, period-on-period to 11,000 tons for the three months ended March 31, 2009 from 24,273 tons for the three months ended March 31, 2008. As a result, sales revenues decreased by $11,150,295, or 59.4%, period-on-period to $7,623,209 for the three months ended March 31, 2009 from $18,773,504 for the three months ended March 31, 2008. The decrease in sales and sales revenues are a result of decrease in demand across all product categories and lower average selling prices during the quarter ended March 31, 2009 caused by the global slowdown and a downturn of the steel industry, as discussed in third quarter financial performance highlights above.
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