Hongguo FY09 Q3 result

Revenue +27.23%
Gross profit +17.49% (because cost increase faster)
Selling and distribution cost +35.39%
Net profit -27.5% after the cost and tax increase

Cash and cash equivalent 247,971
Current liabilities 244,356
Debt repayable in one year 40,974
Net cash from operation 46,281

EPS 3.52 RMB cts (27% drop)

Sales still increase due to outlet expansion, but the profitability suffers. The gross profit margin is now 35.2% due to lower selling price. This actually tally with other consumer stock's performance. But management foresee the pick up in consumer demand and would intensify the store expansion. This might signal the bottom.

The result is uninspiring. Year to date, the earning is 13.10 RMB cts. Assume Q4 they are able to earn another 4 RMB cts, it would be 17.1 RMB cts (3.46 SGD cts). At last closing of 0.30 cts, it work out to be PE 8.67. This is not expensive. If the earning growth can restart, it could come down very quickly. Investor might want to look at next quarter result to decide.