Deer Consumer Products, Inc. today announced record financial results for the first quarter ended March 31, 2012. The company is a leading provider of DEER branded household products for consumers in China.
Deer’s first quarter revenues were $49.9 million, representing an increase of $15.2 million, or 44%, over the same period in 2011. This revenue increase was the result of ongoing sales expansion in the China domestic market. Currently, the company has access to more than 4,000 retail stores through which its products are distributed.
Deer’s 2012 first quarter gross profit margin was approximately 31%. During this quarter, the company continued promoting its high value products and focusing on middle and high-end customer groups. The company has also continued adjusting its growth strategy to focus on domestic sales in China, which offer higher profit margins.
Deer’s SG&A expenses for the first quarter 2012 were $5.4 million, which represents an increase of $1.5 million, or 39%, from the same quarter of the previous year. This was an expected increase, due to the hiring of additional direct sales staff and in-store products promoters to further the company’s Chinese revenue growth. As anticipated, Deer’s advertising costs remained low during the first quarter, as the company uses factory representatives and in-store promoters to market its products directly to consumers at retail locations – a standard marketing practice in China’s small household appliances industry. During the first quarter 2012, Deer also experienced an increase in R&D-related expenses, also anticipated, in order to introduce new products.
Deer’s net income for 2012’s first quarter was $7.8 million, which represents an increase of 35% from the first quarter of the previous year. Fully diluted earnings per share were $0.23, an EPS increase of 35% from the first quarter of 2011.
Equity for Deer’s shareholders increased to around $193.4 million, or $5.76 per share in net assets, and the company had more than $15.3 million in cash and equivalents at the end of the first quarter 2012, with no long-term debts. The company has sufficient cash on hand to meet its liquidity requirements and has no current plan to dilute its shareholders.
Deer’s short-term strategies include continuing to build the reputation of its DEER branded products to become the number-one food preparation appliances brand by 2013. The company plans to focus sales of its high margin products to first- and second-tier Chinese cities that are experiencing strong economic growth, and to position itself as a high-end innovative brand in China in the coming quarters. The company additionally plans to expand its branded product line to include complete integrated household appliance systems for the kitchen and bathroom. Deer has also broken ground on its Wuhu manufacturing plant facility and made considerable progress there.
Over the course of 2012, Deer expects revenues from its high margin China domestic sales to continue. The company affirms its 2012 revenue guidance of $270 million to $290 million, net income guidance of $45 million to $47 million and targets EPS between $1.37 and $1.42. As previously disclosed, the members of Deer’s management team have voluntarily entered into a three-year share lockup agreement, prohibiting them from selling any shares to the general public through at least 2013. These lockup agreements represent approximately 47% of Deer’s total outstanding shares.
Deer Consumer Products, Inc. has been led by its original founders since its operating business was created 17 years ago. The company, a NASDAQ Global Select Market listed U.S. company, has its primary operations in China, and Deer has a 17-year operating business as well as a strong balance sheet. The company is a leading provider of DEER branded products to Chinese consumers, and the company is supported by more than 100 patents, trademarks and copyrights and approximately 1,000 staff members. The company’s current branded product lines include a series of small house household and kitchen appliances as well as personal care products.
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