XING great earnings report--Qiao Xing Universal Telephone, Inc. Releases 2007 First Half Consolidated Income Statement and Consolidated Balance Sheet
Wednesday November 14, 7:40 am ET
HUIZHOU, Guangdong, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- Qiao Xing Universal Telephone, Inc. (Nasdaq: XING - News) today released its consolidated income statement for the six months ended June 30, 2007 and consolidated balance sheet as at June 30, 2007.
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Highlights for the First Half of 2007
Compared to the same period last year, net sales, gross profit and income from operations increased respectively 30.9%, 95.4% and 199.6% to reach RMB1,857.6 million (USD 244.0 million), RMB 496.4 million (USD 65.2 million) and RMB 368.1 million (USD 48.4 million) for the first half of 2007.
Gross margin and operating margin increased respectively from 17.9% and 8.7% of revenues for the first half of 2006 to 26.7% and 19.8% for the same period this year.
Basic earnings per share of common stock before and after extraordinary gain was RMB 21.53 (USD 2.83) and RMB 22.03 (USD 2.89) respectively.
Basic earnings per share of common stock would have been RMB 7.06 (USD 0.93), had certain non-cash income and expenses, which, in management's opinion, may not be indicative of the Company's core business operating results, been excluded.
"We had a strong first half of 2007, as all key indicators of financial performance, including gross margin, operating margin and basic earnings per share of common stock, show," said Mr. Wu Rui Lin, Chairman of XING, "Supported by our powerful research and development capabilities, our efforts in innovation have resulted in the launch of a series of differentiated products of relatively high gross margins. We have adopted alternative sales channels including TV direct sales, which help us to compete effectively with our rivals in an increasingly competitive environment in China. We remain confident in our long-term prospects as one of the leading domestic telecommunication terminal players in China and firmly believe in our ability to continuously launch new and differentiated products that will satisfy the needs of consumers in specific market segments."
Financial Review of Operations for the First Half of 2007
Compared to the first half of 2006, net sales increased 30.9% to reach RMB1,857.6 million (USD 244.0 million) for the same period this year. The growth was attributable to the sale of CECT-branded mobile phone handsets. For COSUN-branded mobile phone business, the Company recently completed the transition of product portfolio from full range to lower-end, with necessary adjustments in research and development and distribution channels, which has laid a solid foundation for growth in the second half of 2007 and for the years to come.
Revenues from the sale of CECT-branded mobile phone handsets were RMB 1,549.6 million (USD 203.6 million) in the first half of 2007, an increase of 41.6% compared to the same period a year earlier, primarily due to higher handset shipments.
CECT-branded handset shipments in the first half of 2007 were 1,808,000 units, an increase of 76.0% compared to the same period a year earlier. The growth was primarily driven by the popularity of the CECT-branded ultra-long standby handset models. These ultra-long standby handsets can last up to 2 months in standby mode without a recharge. Additionally, the distribution channel of CECT-branded handsets was effectively broadened towards the end of 2006 when infomercials were first used to market and sell handsets directly to consumers.
Compared to the first half of 2006, gross profit increased 95.4% to reach RMB 496.4 million (USD 65.2 million) for the same period this year. Gross margin increased from 17.9% of revenues for the first half of 2006 to 26.7% for the same period this year. The increase in gross profit and the improvement in gross margin were attributable to the gross profit contribution from the sale of CECT-branded mobile phone handsets.
Gross profit from the sale of CECT-branded mobile phone handsets were RMB 445.9 million (USD 58.6 million) in the first half of 2007, an increase of 128.6% compared to the same period a year earlier. Gross margin increased from 17.8% of revenues for the first half of 2006 to 28.8% for the same period this year. The increase in gross profit and the improvement in gross margin were primarily due to the increase in sales of higher-margin CECT-branded handset products. In addition, the sale of the new CECT-branded C2000 model handsets through a new TV infomercial arrangement also contributed to the increase in gross profit. Under this new arrangement, the handsets are sold to the infomercial company at a higher price, but in return, the seller bears the airtime and logistics costs.
Net income after extraordinary gain was arrived at after crediting/charging certain non-cash income/expenses listed in the chart below with their amounts, which, in management's opinion, may not be indicative of the Company's core business operating results
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