Some highlights:
Sales for the three months ended March 31, 2010 totaled $1,540,941, an increase of $1,071,369, or 228%, as compared to sales of $469,572 for the three months ended March 31, 2009. The increase in sales was attributable to positive reponses to our "New Agriculture-Generator" campaign, which was designed to expand our distribution network directly and to establish a closer relationship with farmers through agricultural cooperatives in the rural areas of China. Sales from our Direct Sales Stores amounted to $1,062,461, approximately 69% of total sales in the three months ended March 31, 2010. Sales from our Super Chain Branded Stores amounted to $183,281, approximately 12% of total sales in the three months ended March 31, 2010, as compared to $26,010 in the same period of 2009. Sales from our traditional sales network amounted to $295,199, a decrease of $148,363, or 33%, as compared to $443,562 in the three months ended March 31, 2009. As of April 30, 2010, the Company had established approximately 250 direct sales stores which are controlled and managed directly by the Company, and approximately 100 super chain branded stores, the majority of which are located in Shannxi Province (local province) and Hunan Province.
Cost of goods sold for the three months ended March 31, 2010 totaled $865,118, an increase of $718,876, as compared to cost of goods sold of $146,242 for the three months ended March 31, 2009. Gross profit rate was 44%, a decrease of 25 percentage points as compared to 69% for the three months ended March 31, 2009. The increase in cost of goods sold and decrease in gross profit margin rates was attributable to our new direct sales stores. To attract more farmers to our direct sales stores, in addition to selling products manufactured by the Company, our direct sales stores also sell certain fertilizer products manufactured by third parties. For the three months ended March 31, 2010, total sales of third party products was $870,754, or 57% of total sales. Following is an analysis of our gross profit margin for the three months ended March 31, 2010 (We did not have direct sale stores in the same period of 2009).
Net income for the three months ended March 31, 2010 was $331,808, an increase of $224,892, or 210% as compared to net income of $106,916 for the three months ended March 31, 2009. The increase in net income primarily resulted from our "New Agriculture-Generator" campaign and expansion of our direct sales network.
Q1 EPS diluted was $ 0.02, I think there is room to grow this EPS to $ 0.03 the coming quarters. My expectation was an EPS of $ 0.12 this year, maybe it was sharply set but I still believe in it. I know the expanding of their growth programs will continue to pressure net income, but right now I am not going to revise my projections.
POSITION: LONG (ENTRY: $ 0.70)
Monday, May 17, 2010
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