The gross profit margin is improving from 32.28% (FY 2009) to 33.62% (FY 2008) and 36.63% (FY 2009). This is due to the average selling price of the outdoor and indoor sports and leisure shoes for FY 2009 increased by 8.9% to RMB 82.73 per pair from RMB 75.98 per pair recorded for FY 2008. The increase in the gross profit is mainly due to the introduction of new model of shoes sold at higher selling price in the FY 2009 and as well as lower cost of sales per unit due to economies of scales.
We can see from the increasing gross margin, the china people is getting rich and XingQuan's brand AddNice is getting strong in China so that the China people are willing to pay more to acquire the the sport shoe.
Beside that, XingQuan targets the mid-high end market for the outdoor segment, focusing on the second and third tier cities in China.
XingQuan current price is RM 1.60
Latest EPS 10 cents which equal to PE 4
Source: Xingquan International Sports Holdings Limited Annual Report 2009
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