China Xiniya's brand remains vibrant; generates solid results

17 Jun '11

6 min read

China Xiniya Fashion Limited, a leading provider of men's business casual apparel in China, reported financial results for the first quarter of 2011. The financial statements and other financial information included in this press release have been prepared in conformity with International Financial Reporting Standards.

The Company publishes its financial statements in Renminbi.

First Quarter 2011 Highlights

• Total revenue in the first quarter of 2011 increased by 30.1% to RMB159.3 million - at the high-end of prior guidance of 29%-30% - as compared to RMB122.4 million in the first quarter of 2010.
• Gross margin was 33.6% in the first quarter of 2011, compared to 32.5% in the first quarter of 2010; a 19.2% increase in average selling price ("ASP") fully offset the increase in materials and labor costs.
• Profit before taxation in the first quarter of 2011 increased by 16.9% to RMB42.9 million as compared to RMB36.7 million in the first quarter of 2010.
• Net profit in the first quarter of 2011 increased by 1.5% to RMB32.1 million. The magnitude of this growth was adversely impacted by the increase in the Company's tax rate to 25% in 2011 from an effective tax rate of 12.6% in 2010, due to the expiration of the Company's preferential PRC tax treatment at the end of 2010.
• Earnings per ADS were $0.08 in the first quarter of 2011, which was within the range of the prior guidance of $0.08-$0.09 per ADS.
• Xiniya's network of authorized retailers added 42 new retail outlets in the first quarter of 2011, as compared to 35 new retail outlets added in the first quarter of 2010. In 2010, 39% of the new stores for the year were opened in the first half of the year, while 61% of the new stores were opened in the second half.

Guidance

• The Company reiterates its guidance for the first half of 2011. Revenue in RMB is expected to increase by 27%-30%, and gross margin is expected to be in the range of 32%-33%, compared with 31.9% in the first half of 2010.
• Following a successful bi-annual sales fair held in April 2011, revenue in RMB in the second half of 2011 is expected to increase by 24%-29%, and gross margin is expected to be in the range of 34%-35%, compared with 35.5% in the second half of 2010.
• For the full year of 2011, revenue in RMB is expected to increase by 24%-29%, and gross margin is expected to be in the range of 34%-35%, compared with 34.5% for the full year of 2010.
• Earnings per ADS in the second quarter of 2011 are expected to be in the range of $0.07-$0.09 compared to $0.10 in the second quarter of 2010, due to the expiration of the Company's preferential PRC tax treatment at the end of 2010. Xiniya's tax rate increased to 25% beginning in 2011 versus an effective tax rate of 12.6% in 2010. If earnings per ADS for the second quarter of 2010 were subject to a 25% tax rate, the earnings per ADS would have been $0.08.
• As previously reported, Xiniya plans to increase the total number of retail outlets managed or authorized by its distributors by approximately 180 to 220 in 2011.

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