QIAO XING MOBILE COMMUNICATION CO., LTD. 
By BEIJING, Nov. 30, 2011 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Mobile Communication Co., Ltd. (NYSE: QXM) (''QXM'' or the "Company''), a domestic manufacturer of mobile handsets in the People's Republic of China (the "PRC"), today announced its unaudited financial results for the six months ended June 30, 2011.
First Half 2011 Results
-- Revenues were RMB238.6 million (US$36.9 million) compared to RMB324.0
million in the first half of 2010.
-- Handset shipments were 437,000 units compared to 621,000 units in the
first half of 2010.
-- Gross margin was a negative 32.5% compared to 3.3% in the first half of
2010.
-- Operating loss was RMB162.4 million (US$25.1 million) compared to
RMB85.1 million in the first half of 2010.
-- Net loss attributable to holders of ordinary shares was RMB148.4 million
(US$23.0 million) compared to net loss of RMB64.5 million in the first
half of 2010.
Revenues for the first half of 2011 were RMB238.6 million (US$36.9 million), compared with RMB324.0 million in the same period of 2010. The decrease was primarily due to a decline in handsets revenue which decreased from RMB319.0 million in the first half of 2010 to RMB151.9 million (US$23.5 million) in the first half of 2011. The decrease in handset revenue was however offset by an increase in revenue from the trading of handset materials and components, which generated sales revenue of RMB83.1 million (US$12.9 million) in the first half of 2011. Minimal revenue from the trading of handset materials and components were recorded in the first half of 2010.
The decrease in handsets revenue from RMB319.0 million in the first half year of 2010 to RMB151.9 million (US$23.5 million) in the first half of 2011 was primarily due to lower handset shipments and a decrease in the average selling price ("ASP") of products sold in the first half year of 2011.
Total handset shipment in the first half year of 2011 was 437,000 units, compared with 621,000 units in the same period of 2010. The decrease in handset shipments compared to the same period of last year was primarily due to a slow-down in shipments amid intense competition in the PRC handset market and poor reception of new product offerings in the first half of 2011.
The ASP of handset products decreased to RMB347 (US$54) in the first half year of 2011, as compared to RMB513 in the first half year of 2010. The lower ASP compared to the same period last year was primarily due to price reductions to drive sales in an increasingly competitive environment as well as to clear inventories of poorly-received new products that were launched in the first half of 2011.
Gross loss in the first half of 2011 was RMB77.6 million (US$12.0 million), compared with a gross profit of RMB10.9 million in the same period of 2010. Gross margin was a negative 32.5% in the first half of 2011, compared with 3.3% in the same period of 2010. The year-over-year decline in gross margin resulted primarily from the decline in ASP and the sale of products at below cost to clear inventories.
Selling and distribution ("S&D") expenses in the first half of 2011 were RMB47.8 million (US$7.4 million), compared with RMB60.9 million in the same period of 2010. The decrease in S&D expenses in the first half of 2011 was primarily due to lower advertising and promotion costs which were cut due to the poor sales performance of products launched in the first half of 2011.
General and administrative ("G&A") expenses in the first half of 2011 were RMB23.9 million (US$3.7 million), compared with RMB23.5 million in the same period of 2010. Share-based compensation expenses recognized in G&A were RMB8.9 million (US$1.4 million) in the first half of 2011, compared to RMB9.3 million in the first half of 2010.
Research and development ("R&D") expenses in the first half of 2011 were RMB13.1 million (US$2.0 million), compared to RMB9.4 million in the same period of 2010. The higher R&D expenses comparing with the same period of last year was primarily due to higher R&D investments to improve future product offerings.
Total share-based compensation expenses, which have been allocated to S&D, G&A and R&D expenses, decreased to RMB10.4 million (US$1.6 million) in the first half of 2011 from RMB11.0 million in the same period of 2010.
Operating loss for the first half of 2011 was RMB162.4 million (US$25.1 million), compared to RMB85.1 million in the first half of 2010.
During the first half of 2011, a principal amount of US$17.0 million of convertible notes plus accrued interest thereon of US$1.5 million were converted into 4,549,453 ordinary shares at a conversion price of US$4.05 per share. The transaction resulted in a gain on extinguishment of the convertible notes of RMB10.5 million (US$1.6 million).
Net loss attributable to holders of ordinary shares in the first half of 2011 was RMB148.4 million (US$23.0 million), compared to net loss of RMB64.5 million in the same period of 2010.
Basic and diluted loss per share were both RMB2.63 (US$0.41) in the first half of 2011. For the first half of 2010, basic and diluted loss per share were RMB1.22 and RMB1.53, respectively.
Foreign Exchange Rate Used
The United States dollar (US$) 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$1.00 = RMB6.4635 on June 30, 2011 in The City of New York for the cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on June 30, 2011, 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. Through its manufacturing facility in Huizhou, Guangdong Province, China, and a research and development center in Beijing, the Company develops, produces and markets a wide range of mobile handsets based primarily on the GSM, TD-SCDMA, and WCDMA technology. 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 November 30, 2011, and QXM undertakes no duty to update such information, except as required under applicable laws.
For further information, contact:
Lucy Wang, Vice President
Qiao Xing Mobile Communication Co., Ltd.
Tel: (8610) 57315638
Email: wangjinglu@cectelecom.com
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(Amounts in thousands)
December June
31, 30,
2010 2011
---- ----
RMB RMB
Assets
Cash 2,755,505 2,550,733
Restricted cash 37,758 122,023
Accounts receivable,
net 239,390 287,839
Inventories 59,969 46,088
Prepayments to
suppliers 86,302 159,614
Prepaid expenses and
other current assets 33,683 42,901
------ ------
Total current assets 3,212,607 3,209,198
Property, machinery
and equipment, net 20,830 18,728
------ ------
Total assets 3,233,437 3,227,926
======== ========
Liabilities and equity
Short-term borrowings 446,000 446,004
Accounts payable 39,737 73,409
Prepayments from
customers 3,902 81,778
Accrued liabilities 19,178 57,340
Amounts due to related
parties 8,136 5,208
Other payables and
current liabilities 8,078 9,590
Embedded derivative
liability 20,113 -
Convertible notes 112,162 -
------- --
Total current
liabilities 657,306 673,329
Warrant liability 17,650 1,083
----- -----
Total liabilities 674,956 674,412
====== =======
Equity
Shareholders' equity 2,474,417 2,474,982
Noncontrolling
interests 84,064 78,532
------ ------
Total equity 2,558,481 2,553,514
-------- ---------
Total liabilities and
equity 3,233,437 3,227,926
========= =========
Qiao Xing Mobile Communication Co., Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
Six months
ended
----------
June June
30, 30,
2010 2011
---- -----
RMB RMB
Revenues 323,983 238,621
Cost of goods sold (313,133) (316,189)
-------- --------
Gross profit (loss) 10,850 (77,568)
Selling and distribution
expenses (60,850) (47,801)
General and
administrative expenses (23,541) (23,886)
Research and development
expenses (9,388) (13,128)
Amortization of
intangible assets (2,216) -
------ ---
Operating loss (85,145) (162,383)
Interest income 12,106 8,778
Interest expense (28,528) (20,935)
Foreign exchange (loss)
gain, net (739) 70
Gain (loss) on
remeasurement of
embedded derivatives 25,423 (7,467)
Gain on remeasurement of
warrant liability 12,846 16,384
Gain on extinguishment of
convertible notes - 10,526
Other (loss) income, net (909) 1,069
---- -----
Loss before income tax
expense (64,946) (153,958)
Income tax expense (2,656) -
------ ---
Net loss (67,602) (153,958)
Net loss attributable to
noncontrolling interests 3,078 5,532
----- -----
Net loss attributable to
holders of ordinary
shares (64,524) (148,426)
======= ========
Loss per ordinary share:
- Basic (1.22) (2.63)
===== =====
- Diluted (1.53) (2.63)
----- -----
Weighted average number
of shares outstanding:
- Basic 52,685,000 56,511,000
========== ==========
- Diluted 56,647,000 56,511,000
---------- ----------
SOURCE Qiao Xing Mobile Communication Co., Ltd.
