BEIJING, Oct. 29 /PRNewswire-Asia/ -- Qiao Xing Mobile Communication Co., Ltd. (NYSE: QXM) ("QXM" or the "Company"), a domestic manufacturer of mobile handsets in China, today announced its unaudited second quarter financial results for the three months ended June 30, 2009.
Second Quarter 2009 Results
-- Revenues were RMB578.9 million (US$84.8 million) compared to RMB383.7
million in 2Q08.
-- Handset shipments were 658,000 units compared to 566,000 units in 2Q08.
-- Gross margin was 22.9% compared to 34.7% in 2Q08.
-- Operating income was RMB81.3 million (US$11.9 million) compared to
RMB76.1 million in 2Q08.
-- Net loss attributable to holders of ordinary shares was RMB68.4 million
(US$10.0 million) in 2Q09, which resulted mainly due to significant
non-cash charges relating to the accounting for the convertible notes
issued by the Company in May 2008.
Revenues for the second quarter of 2009 were RMB578.9 million (US$84.8 million), compared with RMB383.7 million in the same period of 2008. The increase from the second quarter of 2008 was primarily due to higher unit shipments and an increase in the average selling price ("ASP") of products sold in the second quarter of 2009.
Total handset shipment in the second quarter of 2009 was 658,000 units, compared with 566,000 units in the same period of 2008. The increase in handset shipments compared to the same period of last year was primarily due to the launch of new VEVA handset models and more aggressive pricing to drive sales in a deteriorated uncertain economic environment. In addition, shipment in the second quarter of 2008 was also negatively impacted by the earthquake that took place in Sichuan province in May 2008.
The ASP of handset products increased to RMB872 (US$128) in the second quarter of 2009, as compared to RMB663 in the second quarter of 2008. The higher ASP compared to the same period last year was primarily due to the sale of a greater mix of the high-end VEVA series handset models. Shipment of VEVA series products accounted for 91.0% of total shipment in the second quarter of 2009, compared with 16.7% in the same period of 2008.
Gross profit in the second quarter of 2009 was RMB132.6 million (US$19.4 million), compared with RMB133.0 million in the same period of 2008. Gross margin was 22.9% in the second quarter of 2009, compared with 34.7% in the same period of 2008. The year-over-year decline in gross margin resulted primarily due to more aggressive product pricing and a decline in the use of the TV infomercial arrangement under which handsets were sold to infomercial companies at a higher price, but in return, the Company bore the airtime and logistic costs.
Selling and distribution ("S&D") expenses in the second quarter of 2009 were RMB31.7 million (US$4.6 million), compared with RMB33.2 million in the same period of 2008. Airtime costs incurred on TV infomercial sales were RMB23.0 million in the second quarter of 2009, compared to RMB31.6 million in the second quarter of 2008. The decrease in airtime costs was however offset by higher payroll costs and other advertising and promotion expenses.
General and administrative ("G&A") expenses were RMB11.9 million (US$1.7 million), compared with RMB12.7 million in the same period of 2008. Share-based compensation expenses recognized in G&A were RMB2.8 million (US$0.4 million) in the second quarter of 2009, compared to RMB2.9 million in the second quarter of 2008.
Research and development ("R&D") expenses were RMB6.5 million (US$0.9 million), compared to RMB8.0 million in the same period of 2008. The lower R&D expenses comparing with the same period of last year was primarily due to lower purchases of materials used for R&D activities.
Total share-based compensation expenses, which have been allocated to S&D, G&A and R&D expenses, decreased to RMB3.3 million (US$0.5 million) in the second quarter of 2009 from RMB3.6 million in the same period of 2008.
Operating income in the second quarter of 2009 was RMB81.3 million (US$11.9 million), compared to RMB76.1 million in the second quarter of 2008.
Net loss attributable to holders of ordinary shares in the second quarter of 2009 was RMB68.4 million (US$10.0 million), compared to an income of RMB133.4 million in the same period of 2008. The net loss in the second quarter of 2009 resulted mainly due to the following non-cash charges that arose on the accounting for the convertible notes issued by the Company in May 2008:
Three months ended
June 30, March 31, June 30,
2008 2009 2009
RMB RMB RMB
Non-cash interest expense (13,057) (48,980) (67,265)
Non-cash gain (loss) on remeasurement
of embedded derivatives 113,730 42,137 (51,635)
Net non-cash gain (loss) 100,673 (6,843) (118,900)
Basic and diluted loss per share were both RMB1.44 (US$0.21) in the second quarter of 2009. For the second quarter of 2008, basic income per share was RMB2.82 and diluted income per share was RMB0.82.
Foreign Exchange Rate Used
The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from Renminbi (RMB) into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.8302 on June 30, 2009 in The City of New York for the cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on June 30, 2009, or at any other certain date. The percentages stated are calculated based on RMB.
About Qiao Xing Mobile Communication Co., Ltd.
Qiao Xing Mobile Communication Co., Ltd. is a domestic manufacturer of mobile handsets in China. The Company manufactures and sells mobile handsets based primarily on GSM, TD-SCDMA, and WCDMA. It operates its business primarily through CEC Telecom Co., Ltd., or CECT, its 96.6%-owned subsidiary in China. In 2008, Qiao Xing Mobile introduced the VEVA series mobile phones and began to open its own retail stores to target the mid income consumers in major cities throughout China. Through its manufacturing facility in Huizhou, Guangdong Province, China, and two research and development centers in Huizhou and Beijing, the Company develops, produces and markets a wide range of mobile handsets, with increasing focus on differentiated products that generally generate higher profit margins. For more information, please visit http://www.qxmc.com .
Safe Harbor Statement
This announcement contains forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words or phrases such as "aim," "anticipate," "believe," "continue," "estimate," "expect," "intend," "is /are likely to," "may," "plan," "potential," "will" or other similar expressions. Statements that are not historical facts, including statements about QXM's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Information regarding these factors is included in our filings with the Securities and Exchange Commission. QXM does not undertake any obligation to update any forward-looking statement, except as required under applicable laws. All information provided in this press release is as of October 29, 2009, and QXM undertakes no duty to update such information, except as required under applicable laws.
For further information, please contact:
Lucy Wang
Qiao Xing Mobile Communication Co., Ltd.
Tel: +86-10-8219-3883
Email: wangjinglu@cectelecom.com
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands)
December 31, June 30,
2008 2009
RMB RMB
Assets
Cash 2,907,148 2,891,479
Restricted cash 136,299 120,967
Accounts receivable, net 462,282 567,500
Bills receivable 43,516 4,410
Inventories 183,169 168,393
Prepayments to suppliers 363,907 372,004
Prepaid expenses and other current assets 38,996 34,356
Deferred income taxes 6,994 9,336
Deferred debt issuance costs, net 34,689 19,224
Total current assets 4,177,000 4,187,669
Property, machinery and equipment, net 167,233 162,050
Land use rights 35,304 34,902
Equity investment 7,803 7,803
Goodwill 112,814 112,814
Other intangible assets, net 22,766 20,386
Total assets 4,522,920 4,525,624
Liabilities and equity
Short-term borrowings 983,950 864,500
Accounts payable 52,047 93,677
Prepayments from customers 42,551 29,568
Accrued liabilities 50,014 84,059
Amounts due to related parties 11,155 17,319
Other payables and current liabilities 7,227 16,830
Income taxes payable 38,462 25,064
Embedded derivative liability 124,130 133,768
Convertible notes 206,211 306,701
Total current liabilities 1,515,747 1,571,486
Deferred income taxes 320 190
Total liabilities 1,516,067 1,571,676
Equity
Shareholders' equity 2,914,788 2,858,973
Noncontrolling interests 92,065 94,975
Total equity 3,006,853 2,953,948
Total liabilities and equity 4,522,920 4,525,624
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
Three months ended
June 30, March 31, June 30,
2008 2009 2009
RMB RMB RMB
Revenues 383,689 460,756 578,884
Cost of goods sold (250,666) (378,498) (446,306)
Gross profit 133,023 82,258 132,578
Selling and distribution
expenses (33,153) (20,740) (31,727)
General and administrative
expenses (12,680) (11,988) (11,922)
Research and development
expenses (7,963) (6,992) (6,487)
Amortization of intangible
assets (3,158) (1,190) (1,190)
Operating income 76,069 41,348 81,252
Interest income 6,589 4,185 2,789
Interest expense (35,635) (68,724) (82,770)
Foreign exchange (loss) gain,
net (2,502) 654 (172)
Gain (loss) on remeasurement of
embedded derivatives 113,730 42,137 (51,635)
Other (loss) income, net (3,975) 136 (198)
Income (loss) before income tax
expense 154,276 19,736 (50,734)
Income tax expense (19,005) (12,665) (15,488)
Net income (loss) 135,271 7,071 (66,222)
Net income attributable to
noncontrolling interests (1,863) (756) (2,155)
Net income(loss) attributable to
holders of ordinary
shares 133,408 6,315 (68,377)
Income (loss) per ordinary share:
Basic 2.46 0.10 (1.44)
Diluted 0.82 0.10 (1.44)
Weighted average number of
shares outstanding:
Basic 49,467,000 47,610,000 47,610,000
Diluted 54,333,000 47,610,000 47,610,000
