Earnings per ADS are expected to be in the range of $0.08-$0.09, which compares to $0.09 in the prior year period. Due to the expiration of its preferential PRC tax treatment at the end of 2010, Xiniya’s tax rate will increase to 25% from 2011 onwards versus a rate of 12.6% in 2010.
Outlook for First Half 2011
Based on the planned production and delivery schedule, Xiniya expects to realize revenue growth in the first half of 2011 of approximately 27%-30% in RMB terms compared to the same period in 2010. The growth is expected to be mainly attributable to organic sales growth at existing stores as well as additions of new stores, which is projected to lead to overall increases of approximately 16%-17% in unit volume and approximately 10%-11% in ASP.
Gross margin in the first half of 2011 is expected to be in the 32%-33% range, compared with 31.9% in the first half of 2010. A projected 10%-11% 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.Momentum of new store openings remains strong. As of the end of February 2011, Xiniya’s network of authorized distributors added 28 new stores as compared to 24 during same period in 2010. As of March 28, 2011, a total of 41 new retail stores have been added, compared to 35 new stores added in the first three months 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. For the full year 2011, Xiniya targets the opening of 180-220 additional stores by its authorized retailer network. Conference Call Xiniya will host a conference call and live webcast at 9 am Eastern Standard Time (EST) (9 pm Beijing time on March 29, 2011).
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