realfast95
12 years ago
EDS questioned for massively overstating scale, drops 26pc
It was quite strange that when Exceed Company Ltd. (NASDAQ:EDS), the owner and operator of Xidelong, one of the leading domestic sportswear brands in China, announced on June 5 Q1 financial results in accordance with analysts’ expectations, the stock price fell 26.56pc to $2.24 and trading volume tripled from the average level.
Revenue increased by 19.0 percent, from 751.4 million yuan in Q1 2011 to 894.6 million yuan ($142.1 million) in Q1 2012. “The increase in revenue was primarily driven by the increased demand for our products and the continuous expansion of the Xidelong retail network by our distributors in China,” the company said.
According to the company, the number of Xidelong retail locations, which are operated either by the company’s distributors or by authorized third party retailers, increased by 464 from 4,458 as of March 31, 2011 to 4,922 as of March 31, 2012.
Operating profit and net profit were 147.3 million yuan ($23.4 million) and 128 million yuan ($20.3 million), respectively, representing a 14.8 percent and 3.1 percent year-on-year increase.
However, Michael Joseph, who runs a research firm focused on Chinese due diligence called D.B. Research, believes the scale of EDS’s retail network has been massively overstated. After interviewing all of EDS’s major distributors, he wrote that the majority of stores claimed by the company do not exist.
Details on the purchase of 600 acres land to construct new production facility are also disputed.
It is reported that in December 2011, the company entered into a contract with the municipal government of Ruichang city for the investment and construction of a manufacturing base. The total consideration for the land is 198 million yuan.
The company spent 330,000 yuan per acre for the land in Jiangxi province, one of the poorest places in China. But officials at Ruichang Industrial Park told researchers sent by D.B. Research that land is priced at the national benchmark 80,000 yuan per acre, or less than a quarter of the price the company reportedly paid.
http://morningwhistle.21cbh.com/html/2012/China_Stocks_0606/212541.html
realfast95
12 years ago
EDS - part II - guidance (crash and burn)
As a result of the foregoing, Exceed expects to generate net revenues in the range of RMB482.0 million to RMB519.0 million in the second quarter of 2012, representing an approximate year-over-year decrease of 30% to 35%, as compared with RMB 741.5 million in the same period of 2011. For the full year 2012, the Company currently expects a year-over-year decline in net revenue of approximately 20%, as a result of the lower wholesale order activity at its 2012 sales fairs. This represents the Company’s preliminary estimates, and is subject to change.
realfast95
12 years ago
Financial Highlights – First quarter ended March 31, 2012 (1)
· Revenue was RMB894.6 million (US$ 142.1 million), representing a 19.0% year-over-year increase.
· Gross profit was RMB259.8 million (US$41.3 million), representing a 11.7% year-over-year increase. Gross margin was 29.0% representing a 2.0 percentage point decrease as compared to 31.0% for the first quarter of 2011.
· Operating profit was RMB147.3 million (US$23.4 million), representing a 14.8% year-over-year increase.
· Net profit was RMB128.0 million (US$20.3 million), representing a 3.1% year-over-year increase.
Shuipan Lin, Exceed’s founder, Chairman and CEO, commented, “We delivered healthy results for the first quarter with revenues exceeding our guidance, supported by especially strong growth in footwear sales. Overall consumer demand remained stable during the first quarter, and we continue to benefit from the prudent expansion of our distribution network and our ongoing marketing and branding efforts. We are pleased to see that our “happy lifestyle” branding theme continues to resonate with younger generations who are seeking fashionable and functional products at a good value. We will continue to focus our marketing and branding initiatives, including the ongoing refurbishments and upgrades to the retail selling locations operated by our distributors and authorized third-party retailers and our promotional initiatives to gain a further share of the growing sportswear market in China.
“Looking ahead, we expect to face increasing headwinds as our distributors have adopted a more conservative approach given the uncertain macroeconomic environment in China and abroad. As a result, we have revised our estimate for the total value of the wholesale orders placed during the Spring/Summer and Autumn collection sales fairs which has consequently impacted our outlook for the full year 2012. Nevertheless, we remain committed to our strategy to strengthen our brand equity through effective marketing and expansion of our distribution network. In addition, we are continuing to execute our operational plan to maximize our growth potential in the evolving PRC domestic sportswear market. We believe our plan is a critical element of our long-term growth strategy, as increasing internal manufacturing capacity will allow us improve our bargaining power and provide more stability to our supply chain, which we believe will ultimately allow us to drive gross margin expansion over the long term. We believe that our ongoing strategic and tactical initiatives, coupled with the execution of our share repurchase program, will position us to deliver increasing value to our shareholders over time.”
realfast95
12 years ago
Stockpicker (The Street.com) mentioned EDS on Friday
http://www.stockpickr.com/4-stocks-under-5-making-big-moves.html?puc=yahoo&cm_ven=YAHOO
Exceed
Exceed (EDS) designs, develops and wholesales footwear, apparel and accessories under the Xidelong brand name. This stock is trading up 7.2% to $2.67 in recent trading.
Today’s Range: $2.40-$2.81
52-Week Range: $1.80-$6.02
Volume: 84,000
Three-Month Average Volume: 64,916
From a technical perspective, EDS is continuing to see upside momentum here, after the stock closed back above its 50-day moving average of $2.35 on Thursday. As long as EDS continues to trend above its 50-day with strong upside volume flows, then this stock has a great chance of heading much higher.
I would consider any upside volume day that registers near or above 64,916 shares as bullish. At last check, EDS has hit an intraday high of $2.81 and volume is above its three-month average with over 84,000 shares traded. Some potential upside targets are resistance at $3, or its 200-day moving average of $3.72. Keep in mind that a high-volume move or close over $3 will increase the probability of $3.72 getting hit soon.
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