As of December 31, 2010, the Company had trade receivables of RMB221.4 million arising wholly from its sales recognized during the fourth quarter of 2010. The trade receivables as of December 31, 2010 were down from RMB276.0 million in trade receivables as of September 30, 2010 which were entirely related to sales recognized during the third quarter of 2010. The trade receivables outstanding as of December 31, 2010 were fully collected by March 28, 2011 in accordance with the Company’s standard maximum 90-day credit terms. The three-months moving average trade receivables turnover days were 67 days and 64 days as of December 31, 2010 and March 28, 2011, respectively. The trade receivables as of March 28, 2011 are entirely related to sales recognized during the first quarter of 2011.
Outlook for First Quarter 2011
Following a strong response to the Xiniya brand during the bi-annual sales fair in September 2010, revenue for the first quarter ended March 31, 2011, is expected to increase 29%-30% in RMB terms, based on the anticipated increase in unit volume of approximately 8%-9% and ASP growth of approximately 18%-19%. ASP is expected to be higher in the first quarter of 2011 as compared to the prior year driven mainly by the shift in product mix. Xiniya improved its product mix by introducing more new designs and higher quality products. The Company also held its sales fair earlier in September 2010, thereby allowing its OEMs to purchase their materials earlier in an effort to manage rising materials costs.
Gross margin is expected to be in the range of 33%-34% in the first quarter of 2011 versus 32.5% in the first quarter of 2010. An 18%-19% increase in ASP is expected to fully offset the increase in materials and labor costs as well as the impact of sales rebate increases, leading to overall gross margin improvement.
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