Knobias Clip Report (06-16-2008)
Submitted By Knobias ClipReport
FUQI: Guides for EPS of 98c to $1.04; Comments on Earthquake
Monday saw oil up in early trade and reverse its course again later in the day. The past few days have seen down in early trade only to gain those losses back in the afternoon. With the reversals, the market has normally followed in suit with the exact opposite move.
One small cap name reported some fairly positive news. Fuqi International (FUQI) is designer of precious metal jewelry in China. It is engaged in developing, promoting and selling a range of products to the Chinese luxury goods market.
With the recent earthquake, the elevated prices of oil, and a slowing global economy, high end retail would seem to be a market to shy away from, but the Company announced on Monday that it might not be the case.
Yu Kwai Chong, Chairman of Fuqi said, “The Sichuan province, which experienced the most damage from the earthquake’s impact, is an area in which FUQI conducts business. While we have experienced slower wholesale demand for our jewelry products from this region because of the earthquake, this region represents less than 5% of our wholesale jewelry sales. Additionally, from a seasonality standpoint, the second quarter is one of the slower quarters for our business and we do not anticipate any long-term slowdown in sales from this region. We reiterate comfort with our second quarter wholesale revenue estimate of approximately $62 - $64 million, which represents a year-over-year increase of approximately 136% to 144%, and net income in the range of $4.5 - $4.6 million, or $0.20 - $0.21 per diluted share, based on a weighted average share count of 22.2 million shares.
Analysts are estimating for EPS of $0.21 on revenue of $62.75 million for the quarter.
“For the full year 2008, we reiterate comfort with wholesale revenue, net income and diluted earnings per share estimates of approximately $305 - $315 million, net income of $21.9 - $23.0 million, and diluted EPS of $0.98 - $1.04, based on a weighted average share count of 22.2 million shares,” said Yu Kwai Chong.
Analysts are expecting EPS of $1.08 on $314.21 million in revenue. Following the news, the stock gained some 6% on over 300 thousand shares traded.
With the global economy slowing, earthquake cleanup and the rising price of fuel, it would be wise to not underestimate the growing middle class in China. Investors would be smart to take that into consideration when making international investment decisions and to keep this name on the radar.
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