Sino-Global's Chief Executive Officer Cao Lei Sends Letter To Shareholders
BEIJING, Nov. 1, 2013
BEIJING, Nov. 1, 2013 /PRNewswire/ --Sino-Global Shipping America, Ltd.
(Nasdaq: SINO), an international provider of shipping agency services, today
announced, Cao Lei, CEO of Sino-Global Shipping America, Ltd. issued a letter
To the Shareholders of Sino-Global Shipping America, Ltd.:
This year promises to be a year of change for Sino-Global, and I am happy to
write on behalf of management to explain our current status, as well as our
hopes and plans for the future. We have weathered a challenging several years
and expect turbulence for a few more quarters; however, we are ultimately
optimistic about our longer-term prospects.
First, our long time Chief Financial Officer Mr. Zhang Mingwei, has recently
retired from our company, and we have appointed Mr. Anthony S. Chan as our
acting Chief Financial Officer to help guide the company in the future. We are
grateful for Mingwei's guidance over the years. We are equally excited to have
Anthony, a seasoned CPA with over 20 years of experience with auditing, SEC
reporting, mergers and acquisitions and cross-border transactions, fraud risk
management and internal controls compliance. In addition, Anthony is fluent in
English, Mandarin and Cantonese, all of which are crucial to our international
Before getting into our future plans, I would like to discuss a little bit of
our results for 2013 that may be less clear simply by reading the financial
statements of the company. There are certainly good and bad points to 2013.
First, the bad news:
oOur revenues decreased year over year. As we mentioned in our annual
report, revenues decreased by 48.85% to $17.3 million in 2013.
oThe most significant driver of this decrease was our evolving relationship
with Beijing Shourong Forwarding Service Co., Ltd., an affiliate of
Capital Steel in Beijing. Shourong has historically been our single
largest customer. We have not provided agency services to Shourong since
July 1, 2013, and we have no present plans to do so.
oWe provided services to fewer ships in 2013 than in 2012, and we saw a
shift in the sort of services we provided from higher revenue per-ship
loading and discharging services to lower revenue per-ship protective
oWe continued to have net losses in 2013. Although our losses were lower
than they were in 2012, the continued losses have reduced our cash and
cash equivalents from $4.4 million at the end of 2012 to $3.0 million at
the end of 2013, even taking into consideration the investment of $3
million that occurred on April 19, 2013.
Not all of the news from 2013 is bad. Indeed, we succeeded in a few ways in
2013 that we believe will benefit our company in the future:
oWhile our revenues shifted to lower revenue per-ship protective services,
these services feature higher margins than our loading and discharging
services. While the per-ship revenues are lower, we expect the revenues we
do receive to be more profitable to our company.
oWe reduced our overhead significantly by 25.9%, or $1.4 million, in 2013.
We accomplished this by reducing office rent, business promotion and
travel expenses, public listing-related expenses, and salaries. These
efforts have made our company a more streamlined company and resulted in a
higher gross margin. We expect this change will benefit our company moving
forward, particularly as we increase our revenues while controlling these
oWe received a strategic investment from an investor, Zhang Zhong, who saw
an opportunity not only in purchasing our common stock but also in
directing his related business, Tianjing Zhiyuan Investment Group Ltd
("Zhiyuan"), to our company for shipping agency services. As a result, we
believe our company benefitted twice: first by issuing shares for cash at
a very modest 5% discount and second by being well-positioned to provide
shipping agency and logistic services to Zhiyuan.
With those highlights from 2013 in mind, I want to talk a bit about what we
see in Sino-Global's future. Since our initial public offering, we have
focused on conservative operating strategies, recognizing that exchange rates
were becoming less favorable to companies like ours that receive US dollars
and pay Renminbi and that shifting development policies in China were changing
the landscape of our industry. This strategy allowed us to conserve our
resources and continue to operate our business in the face of net losses for
the last five years.
This year, however, we believe conditions are ripe to update our operational
strategy to focus on strategic growth. In particular, we believe we have built
an attractive operating platform, and we see opportunities to cooperate with
compatible agents internationally to grow our network. In addition, we have
received an important investment from a shareholder who has already begun to
direct business to our company.
First, we are growing our agency network by partnering with experienced and
reputable shipping agents located around the world. By extending the breadth
and depth of our network, we expect to benefit from greater revenues
associated with referrals of business within our network. We have built a
strong local agent platform that we will be rolling out over this year. Our
goal will be to appoint select regional agents to serve in our network. We
expect that these new network members will drive revenues and net income to
our company, both initially and on an ongoing basis.
In addition to growing our network, we are also deepening our ties with Zhang
Zhong. As we mentioned when we asked shareholders to approve the issuance of
1.8 million shares of common stock to Zhang Zhong, the purchase price for the
restricted shares was only a 5% discount to the 10-day trading average for our
stock on the day we signed the purchase agreement, and it was paid in cash. In
addition, however, Zhang Zhong agreed to direct Zhiyuan to use Sino-Global for
its shipping needs. This agreement to direct business to us – above and beyond
the cash value of the stock – will result in additional revenues to our
company. Indeed, I want to share a bit of good news with you. The first
Zhiyuan ship has already arrived in China, and from this one shipment, we
recognized revenues of approximately $1.8 million, with net profit of
approximately $0.6 million. Please note that these figures are preliminary and
represent just this shipment and not the quarter as a whole. While we cannot
predict what the future of this relationship will bring to our company, we
believe it has already begun to show promise.
In connection with these new initiatives, we have been evaluating the
compensation structures for management and the directors of the company. Our
Compensation Committee and Board of Directors have recently approved an
adjustment to our compensation structure to more clearly tie our operating
results to management compensation. In particular, while the new compensation
structure retains a cash component, we have included an equity-based
compensation component that is tied to the profitability of our company. To
the extent our company has net profit, our management would receive an
incentive-based bonus paid in common stock. While we have had net losses for
the last five straight years, our management is bullish on the future and
pleased to link their compensation directly to the company's bottom-line
In summary, we are excited about the future of Sino-Global. This should not
distract from the fact that we have a lot of work to do to achieve these goals
and that the next few quarters will continue to be challenging. We thank you
for your faith in our vision in the past, and we look forward to your
/s/ Cao Lei
Mr. Cao Lei
Chief Executive Officer
About Sino-Global Shipping America, Ltd.
Registered in the United States in 2001, Sino-Global provides high-quality
shipping agency services internationally, with a particular strength in
serving international shipments to and from Chinese ports. With local branches
in most of China's main ports and contractual arrangements in all those where
it does not have branch offices, Sino-Global is able to offer efficient,
high-quality shipping agency services to shipping companies entering Chinese
ports. With contractual relationships with local shipping agencies in
Australia, India, Hong Kong and South Africa, Sino-Global provides complete
shipping agent services to companies involved in trades ports in the USA and
Sino-Global provides ship owners, operators and charters with comprehensive
yet customized shipping agency services including intelligence, planning,
real-time analysis and on-the-ground implementation and logistics support.
Sino-Global has achieved both ISO9001 and UKAS certifications.
Forward Looking Statements
No statement made in this press release should be interpreted as an offer to
purchase any security. Such an offer can only be made in accordance with the
Securities Act of 1933, as amended, and applicable state securities laws. Any
statements contained in this release that relate to future plans, events or
performance are forward-looking statements that involve risks and
uncertainties as identified in Sino-Global's filings with the Securities and
Exchange Commission. Actual results, events or performance may differ
materially. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as the date hereof. Sino-Global
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect the events or
circumstances after the date hereof or to reflect the occurrence of
Michael Huang, Chief Operating Officer Stephen D. Axelrod, CFA
Sino-Global, Beijing Wolfe Axelrod Weinberger Assoc. LLC
+86-10-6439-1888 Tel. (212) 370-4500 Fax (212) 370-4505
SOURCE Sino-Global Shipping America, Ltd.
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