The following was originally posted last night in our forum by reader 'PeterLynch' and is reproduced here to further publicise the insights shared. 'PeterLynch' subsequently clarified that the original posting was made by 'sgmystique' in Valuebuddies.com
Conference call with CFO Jackson Tso of Qingmei Group Holdings.
This call was coordinated by Ms. Wrisney Tan from August Consulting (Qingmei's PR firm).
Interestingly, I was the only one on the conference call.
Q: What happened to turnover in 3Q2012 with revenues falling by 54.6% as compared to 3Q11.
A: They had come out with a profit warning prior to the results release. Apparently shoe manufacturers had overstocked on shoe soles in previous quarters and with a slowdown in demand for shoes, that led to a drastic reduction in orders for Qingmei.
Jackson estimated that 3Q12 was the low point as far as Qingmei is concerned and things can only look up from here. We can only wait and see...
Q: What is the outlook for 4Q12?
A: Should be better than 3Q12. However the slowdown in demand will will last for about six months till the overstocking situation at the shoe manufacturers end gets sorted out and we see demand turning more normal.
Q: What is the outlook for FY2013?
A: At this point of time they would not like to make any projections.
Q: Who is involved in the massive volumes on the stock that we have recently seen?
A: They have no idea.
Q: Have any clients stopped doing business completely with Qingmei leading to the massive drop in revenues?
A: Qingmei still has all their customers intact. It's just that due to reasons mentioned above the orders across the board for all companies in the shoe manufacturing business has gone down drastically. IN FACT I WOULD APPRECIATE IF ANY FORUM MEMBERS COULD ANALYSE RESULTS OF SHOE / SHOE SOLE MANUFACTURING COMPANIES IN THE PRC AND SEE IF THIS IS A GENERIC TREND ACROSS THE BOARD.
Q: What has happened to the website development for Qingmei. I had raised this question during the AGM last year and was told that the website would be up by Dec 2011. However we have seen nothing so far. I tried to make Jackson and Wrisney appreciate the fact that for a relatively large company to have no website in today's times is quiet odd and would be a definite putdown for potential investors.
A: The website will be up and running in June 2012. (GUESS WE WILL AGAIN NEED TO WAIT AND WATCH...)
Q: Considering that the net cash hoard with the company is now around S$94 million I wanted to know about their plans for dividend payouts in 2012. Also seeing turnover down so drastically their working capital needs should also have come down quiet a bit.
A: The board will take a decision on this at the right time. Jackson assured me that he will put forward shareholder views to the board.
Comments
Initially, my view is that a slower growth of China is a healthy correction to curb the growing inflation. But it seems like the slower growth in China turned out to be far worse than I thought.
Will China's growth picked up in 2H 2012? hard to say...Europe is in quite a bad mess than I initially would hv thought.