Qiao Xing Mobile Reports Third Quarter 2010 Financial Results

Dec 07, 2010, 08:20 ET from Qiao Xing Mobile Communication Co., Ltd.

BEIJING, Dec. 7, 2010 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Mobile Communication Co., Ltd. (NYSE: QXM) (''QXM'' or the "Company''), a domestic manufacturer of mobile handsets in China, today announced its unaudited financial results for the three months ended September 30, 2010.

Third Quarter 2010 Results

  • Revenues were RMB286.0 million (US$42.8 million) compared to RMB410.7 million in 3Q09.
  • Handset shipments were 370,000 units compared to 406,000 units in 3Q09.
  • Gross margin was 3.2 % compared to 15.5% in 3Q09.
  • Operating loss was RMB42.4 million (US$6.3 million) compared to an operating income of RMB7.7 million in 3Q09.
  • Net loss attributable to holders of ordinary shares was RMB52.9 million (US$7.9 million) compared to RMB83.8 million in 3Q09.

Revenues for the third quarter of 2010 were RMB286.0 million (US$42.8 million), compared with RMB410.7 million in the same period of 2009. The decrease from the third quarter of 2009 was primarily due to lower unit shipments and a decrease in the average selling price ("ASP") of products sold in the third quarter of 2010.

Total handset shipment in the third quarter of 2010 was approximately 370,000 units, representing a decrease of 8.9% compared with 406,000 units in the same period of 2009. The decrease in handset shipments compared to the same period of last year was primarily due to fewer new model launches and a slow-down in shipments amid increasing competition in the handset market.

The ASP of handset products decreased to RMB746 (US$112) in the third quarter of 2010, as compared to RMB866 in the third quarter of 2009. The lower ASP compared to the same period last year was primarily due to more aggressive pricing to drive sales in an increasingly competitive environment.

Gross profit in the third quarter of 2010 was RMB9.1 million (US$1.4 million), compared with RMB63.7 million in the same period of 2009. Gross margin was 3.2% in the third quarter of 2010, compared to 15.5% in the same period of 2009.  The year-over-year decline in gross margin arose primarily due to the decline in ASP.

Selling and distribution ("S&D") expenses in the third quarter of 2010 were RMB33.5 million (US$5.0 million), as compared to RMB34.5 million in the same period of 2009. The decrease in S&D expenses in the third quarter of 2010 was primarily due to a reduction in payroll costs and other payroll-related expenses.

General and administrative ("G&A") expenses were RMB12.2 million (US$1.8 million) in both the third quarter of 2010 and the third quarter of 2009. Share-based compensation expenses recognized in G&A expenses were RMB4.7 million (US$0.7 million) in the third quarter of 2010, compared to RMB2.9 million in the third quarter of 2009. The increase in share-based compensation expenses in the third quarter of 2010 was, however, offset by a reduction in payroll costs and bad debt provisions.

Research and development ("R&D") expenses were RMB4.7 million (US$0.7 million), compared to RMB8.1 million in the same period of 2009. The lower R&D expenses comparing with the same period of last year was primarily due to lower payroll costs and software license fees.

Total share-based compensation expenses, which have been allocated to S&D, G&A and R&D expenses, increased to RMB5.5 million (US$0.8 million) in the third quarter of 2010 from RMB3.3 million in the same period of 2009.

Operating loss in the third quarter of 2010 was RMB42.4 million (US$6.3 million), compared to an income of RMB7.7 million in the third quarter of 2009.

Net loss attributable to holders of ordinary shares in the third quarter of 2010 was RMB52.9 million (US$7.9 million), compared to RMB83.8 million in the same period of 2009.

Basic and diluted loss per share were both RMB1.00 (US$0.1) in the third quarter of 2010. For the third quarter of 2009, basic and diluted loss per share were both RMB1.76.

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$1.00 = RMB6.6905 on September 30, 2010 as set forth in the H.10 statistical release of the Federal Reserve Board of the United States. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2010, 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 December 7, 2010, and QXM undertakes no duty to update such information, except as required under applicable laws.

For further information, 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,

2009

September 30,

2010

RMB

RMB

Assets

Cash

3,129,070

2,756,707

Restricted cash

251,720

111,919

Accounts receivable, net

114,689

394,073

Inventories

97,146

125,384

Prepayments to suppliers

181,550

140,312

Prepaid expenses and other current assets

36,007

28,324

Assets held for sale

163,000

-

Deferred income taxes

16,249

14,625

     Total current assets

3,989,431

3,571,344

Property, machinery and equipment, net

23,708

20,568

Equity investment

5,000

-

Goodwill

112,814

112,814

Other intangible assets, net

4,433

1,108

Deferred income taxes

1,207

1,003

     Total assets

4,136,593

3,706,837

Liabilities and equity

Short-term borrowings

884,708

606,000

Accounts payable

60,751

72,060

Prepayments from customers

16,370

16,233

Accrued liabilities

34,590

52,143

Amounts due to related parties

5,568

7,621

Other payables and current liabilities

56,933

8,040

Embedded derivative liability

39,978

17,784

Convertible notes

112,162

112,162

     Total current liabilities

1,211,060

892,043

Warrant liabilities

22,637

14,301

     Total liabilities

1,233,697

906,344

Equity

Shareholders' equity

2,810,451

2,712,331

Noncontrolling interests

92,445

88,162

     Total equity

2,902,896

2,800,493

     Total liabilities and equity

4,136,593

3,706,837

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 September 30,

2009

2010

RMB

RMB

Revenues

410,746

286,023

Cost of goods sold

(347,092)

(276,876)

Gross profit

63,654

9,147

Selling and distribution expenses

(34,476)

(33,548)

General and administrative expenses

(12,165)

(12,160)

Research and development expenses

(8,133)

(4,747)

Amortization of intangible assets

(1,190)

(1,108)

Operating income (loss)

7,690

(42,416)

Interest income

3,873

4,896

Interest expense

(105,562)

(7,619)

Foreign exchange loss, net

(256)

(1,528)

Gain (loss) on remeasurement of embedded derivatives

18,809

(3,668)

Loss on remeasurement of warrant liability

-

(4,828)

Other (loss) income, net

(16)

235

Loss before income tax expense

(75,462)

(54,928)

Income tax expense

(8,494)

828

Net loss

(83,956)

(54,100)

Net loss attributable to noncontrolling interests

136

1,205

Net loss attributable to holders of ordinary shares

(83,820)

(52,895)

Loss per ordinary share:

- Basic

(1.76)

(1.00)

- Diluted

(1.76)

(1.00)

Weighted average number of shares outstanding:

- Basic

47,610,000

53,016,000

- Diluted

47,610,000

53,016,000

SOURCE Qiao Xing Mobile Communication Co., Ltd.



RELATED LINKS

http://www.qxmc.com