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Hi guys: Great update today re. the Oct

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viking86   Tuesday, 11/23/10 10:39:28 AM
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Hi guys: Great update today re. the Oct numbers. # of plots sold and ASP both look very strong. We are also heading into their peak selling season. Here is a reprint of a reply to Gorilla I posted today on the CGS board re. some projection for the next 2 Q's:

yes, the October ASP of $7341 is way above the mid-range ASP of $5625 they used for calculating the guidance rev of 40MM for FY'11. Also the # of plots sold for the first 7 months (at 4223 plots) indicates a much stronger annual total than the 7100 total they used for guidance since peak season for them is Oct to Jan as you pointed out. Last year they sold about 60% of annual total in the second half. So I think they will revise guidance upwards with Q3 results.

Notwithstanding that seasonality factor, if I just extrapolate the results of the first 7 months to the fiscal year, I get about 7239 plot sales. Applying the Oct ASP for the second half FY sales, I get a rev estimate of 50.5M vs. guidance 40M. Using a conservative net margin of 40% (compared to 42% for Q2) for Q3 and Q4 and same fd as Q2, I get an eps of 1.54E for FY'11, comapred to their guidance eps of 1.45. This seems to be more in line with the bullish assessment of the PR:

"We have built very positive momentum through the first seven months of our fiscal year," began Mr. Yiyou Ran, Chairman and Chief Executive Officer of China Redstone. "Our customers' strong preference for premium plots reflects an emerging trend for the past few years. As incomes rise and demand for premium products exceed the available supply, sales of cemetery plots should remain robust."


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