Edmund Hen
感谢黄先生。现在我将更详细地讨论我们截至2013年9月30日第三季度的初步财务业绩。我们截至2013年9月30日的第三季度收入为3.407亿元人民币或5,530万美元，较第二季度增长53%，但较2012年第三季度下降11.8%。第三季度陶瓷砖销售量为1,250万平方米，较2012年第二季度增长50.6%，较去年同季度销售的1,220万平方米陶瓷砖增长2.9%。第二季度平均售价（ASP）较第二季度的每平方米24.4元人民币上涨1.9%至每平方米27.2元人民币，但仍较去年同期可比季度的ASP下降14.2%。公司将收入较第二季度大幅改善归因于中国房地产和建筑行业业务条件更加正常化，尽管由于为应对2012年底开始的困难市场条件而实施的价格优惠，价格复苏更为缓慢。2013年第三季度毛利润为3,330万元人民币或540万美元，较第二季度大幅增长50%，但仍低于2012年第三季度的1.1亿元人民币或1,770万美元记录。尽管销售量有所增长。毛利润同比下降是由于可比年度的第三季度仍显示公司陶瓷砖平均售价在季度内下降。我们第三季度的毛利率为9.8%，而2012年同期为28.5%，主要受季度内陶瓷砖平均售价下降影响。我们在本季度计提了1,890万元人民币或310万美元的资产减值，归因于公司恒大工厂更换和更新生产设备以更换其中一座窑炉。同时，某些成型和铸造组件得到更新，以便能够生产更符合客户偏好和市场需求的现代化陶瓷砖新产品。在扣除本季度非GAAP项目——资产减值的非现金处理以及股权激励费用后的税前营业利润方面，第三季度为2,480万元人民币或410万美元，而去年第三季度为9,920万元人民币或600万美元。然而，这较第二季度1,040万元人民币或170万美元的结果实现了约138%的强劲环比改善。非GAAP净利润（扣除本季度资产减值的非现金处理和股权激励费用）在截至2013年9月30日的第三季度为2,320万元人民币或390万美元，而2012年第三季度为2,410万元人民币或1,190万美元。然而，这也较第二季度实现了约130%的强劲环比改善，较第一季度的1,010万元人民币或160万美元结果有所提升。按GAAP基础计算，2013年第三季度净利润为440万元人民币或70万美元，而2012年同期为7,280万元人民币或1,170万美元。净利润同比下降是毛利润降低以及本季度资产减值的结果。2013年第三季度完全稀释后每股收益为0.21元人民币或0.03美元，而2013年第二季度为0.47元人民币或0.08美元，2012年第三季度为3.56元人民币或0.57美元。三个季度的每股计算均使用截至2013年9月30日的九个月期间的2,440万股股份进行比较。截至2013年9月30日的九个月收入为7.126亿元人民币或1.154亿美元，较截至2012年9月30日的九个月下降40.6%。毛利润为6,030万元人民币或980万美元，较2012年同期下降82.8%。前九个月的毛利率为8.5%，而2012年同期为29.3%。九个月的净利润为860万元人民币或140万美元，而2012年同期为2.305亿元人民币或3,670万美元。非GAAP净利润（调整季度非现金资产减值和股权激励费用后）为2,860万元人民币或470万美元。截至2013年9月30日的九个月，而2012年同期为2.349亿元人民币或3,740万美元。截至2013年9月30日的九个月完全稀释每股收益为0.42元人民币或0.07美元，按非GAAP调整基础计算，完全稀释每股收益为1.14元人民币或0.23美元。现在来看我们的资产负债表。截至2013年9月30日，我们的现金和银行存款为4,010万元人民币或650万美元，而截至2102年12月31日为8,940万元人民币或1,440万美元。现金和银行存款减少是由于2013年第三季度应收账款水平增加、银行借款偿还以及股息支付所致。截至第三季度末，我们的总债务为6,560万元人民币或1,070万美元，而截至2012财年末的总债务为6,000万元人民币或960万美元。截至2013年9月30日，我们的存货周转天数为126天，而截至2012年12月31日为101天。存货周转天数增加反映了陶瓷砖销售量下降，导致截至2013年9月30日的成品流动放缓以及2013年前九个月的产品积压。截至2013年9月30日的贸易应收账款周转天数为164天，而截至2012年12月为119天。公司延长了某些客户的信用期，以应对这些客户自2012年12月31日季度末以来的资金压力。在资本支出方面，我们在第三季度支出1,020万元人民币或170万美元用于恒大工厂的设备购置，并支出2,840万元人民币或460万美元用于改造恒大工厂的现有生产线，以生产符合市场需求的产品。尽管业务条件可能发生变化，管理层预计2013年剩余时间的资本支出将保持在最低水平，主要用于设备的少量维修和维护。接下来是我们的业务展望。正如我们CEO黄先生所讨论的，随着中国房地产开发和建筑的经济环境在第三季度改善，我们部署了第二季度未充分利用的额外产能。公司目前正在利用能够生产3,500万平方米陶瓷砖的工厂设施，而公司可用的年产能为7,200万平方米，高于第二季度的2,800万平方米年产能。由于市场环境改善，公司的陶瓷砖销售量较第二季度增长50.6%至1,250万平方米，并较2012年第三季度销售量高出2.9%。然而，我们的平均售价（ASP）较第二季度仅温和增长2.9%，仍远低于去年可比季度。正如许多人所记得的，由于去年12月开始的市场挑战，我们降低了ASP以保持市场份额。尽管季度销售量反映了业务活动水平的大幅改善，但我们尚未从2012年第四季度开始并持续到今年的经济放缓中恢复定价能力。然而，我们正在部署策略，如更密集和复杂的营销以及进一步的产品多样化，以恢复之前的ASP水平，我们相信在未来几个季度将取得进展。我们2013年10月和11月待交付的订单积压约为1.555亿元人民币或2,530万美元。我们估计2013年10月和11月的陶瓷砖销售量约为570万平方米，而2012年同期销售量为600万平方米。此外，我们估计2013年10月和11月的陶瓷砖ASP为每平方米27.1元人民币。这较我们2013年第三季度每平方米27.2元人民币的ASP和2012年第四季度每平方米28.2元人民币的ASP有所变化。公司认为房地产和建筑行业仍是中国政府鼓励以维持经济增长的重要领域，并且监管在遏制一些投机性购买方面已经稳定。这有助于该行业反弹，因为某些一线城市在第二季度录得销售增长，多个城市在土地销售市场报告了创纪录的高价。可持续和重点的城市建设因此被政府视为保持在合理水平。公司认为，在市场低迷期间对选定产品实施降价策略，以保留客户和维护声誉是成功的。尽管我们提供广泛的高端和价值导向产品，价格敏感性已成为我们客户的一个因素。然而，随着我们相信正进入更稳定的市场条件时期，我们能够在广泛的产品系列中调整销售重点，并努力在未来几个季度恢复定价能力和利润率。此外，我们认为我们的新营销展厅、研发计划的新产品以及具有定制设计和产品能力的升级现代化工厂设施，在市场上具有可持续的竞争优势。我们还相信，我们全面的产品系列继续使我们与竞争对手区分开来，其中一些较小的生产商已经停止或收缩运营，为我们提供了扩大市场份额的潜力。总之，我们将继续与客户保持密切联系，与他们合作满足他们的建筑材料需求，同时高效运营，以为股东创造价值。在此，我想开放电话会议，回答有关我们第三季度财务业绩的任何问题。接线员。
Edmund Hen
Thank you Mr. Huang. I would now move on to a more detailed discussion of our preliminary financial results for the third quarter in September 30, 2013. Our revenue for the third quarter ended September 30, 2013 was RMB340.7 million or U.S. $55.3 million, an increase of 53% from the second quarter but down 11.8% from the third quarter of 2012. The sales volume of ceramic tiles in the third quarter was 12.5 million square meters, an increase of 50.6% as compared to the second quarter of 2012 and a 2.9% increase from the 12.2% million square meters of ceramic tiles sold in the year of both quarter. The average selling price or ASP in the second quarter rose 1.9% to RMB27.2 per square meters from the second quarter’s ASP of RMB24.4 per square meter but is still represents 14.2% decrease from the ASP of the comparable year-ago quarter. The Company attributes its substantially improved revenue to the second quarter to more normalized business conditions in China’s real estate and construction sector although pricing has proved to be more resistant to recovery due to pricing concession institute to address the difficult market conditions that began in late 2012. Gross profits for the third quarter of 2013was RMB33.3 million or U.S. $5.4 million, a substantial rise of 50% from second quarter but still can see [ph] lower than the RMB 110 million or U.S. $17.7 million records for the third quarter of 2012. Although the sales volume have been quoted. The year-over-year decrease in gross profit was due to the comparable year of third quarter or still showed the decrease in the average selling price of the company’s ceramic tiles in the quarter. Our gross profit margin for the third quarter was 9.8% compared it to 28.5% for the same period of 2012 was forced by decrease in average selling price of ceramic tiles in the quarter. We incurred a write down asset in the quarter of RMB$18.9 million or U.S. $3.1 million attributable to the replacement and updating of plant production equipment at the company’s Hengda facility to replace one of the kilns. Whereas, certain molding and casting component were updated, so that new and modern ceramic tiles products more appropriates to customers’ preference and market demand could be manufactured. On shared profits from operations before taxes, which excluded the quarter’s non GAAP – non-cash treatment of asset write-down. And share based commendation expenses was RMB24.8 million or U.S. $4.1 million in the third quarter as compared to RMB$99.2 million or U.S. $60 million in the last year’s third quarter. However this represent a strong and sequential improvement of about 138% from the second quarter’s results of RMB 10.4 million or U.S. $1.7 million. Non-GAAP net profit, which excluded the quarter’s non-cash treatment of the asset write-down and share-based to compensation expenses, was RMB23.2 million or U.S. $3.9 million in the third quarter end September 30, 2013 as compared to RMB24.1 million or U.S. $11.9 million in the third quarter of 2012. However, this also represent a strong sequential improvement from the second quarter of about 130% from the first quarter’s result of RMB 101 million or U.S. $1.6 million. On a GAAP basis, net profit for the third quarter 2013 gross RMB4.4 million or U.S. $0.7 million as compared to RMB72.8 million or U.S. $11.7 million in the same period of 2012. The year-over-year decrease in net profit was the result of lower gross profit and right only [ph] in the current quarter. Earnings for a fully diluted share where RMB0.21 or U.S.$0.03 for the third quarter of 2013 as compared to RMB0.47 or U.S. $0.08 in the second quarter of 2013 and RMB3.56 or U.S. $0.57 in the third quarter of 2012. Per share calculations for the three quarters were compared to using 24.4 million shares for the nine months end September 30, 2013. Revenue was RMB712.6 million or U.S. $115.4 million, a decrease of 40.6% as compared to the nine months end September 30, 2012. Gross profit was RMB 60.3 million or U.S. $9.8 million down 82.8% from the same period of 2012. Gross margin for the first nine months was 8.5% compared to 29.3% for the same period of 2012. Net profit for the nine months was RMB8.6 million or U.S. $1.4 million compared to RMB230.5 million or U.S. $36.7 million for the same period of 2012. Non-GAAP net profits adjusting for the quarters non-cash asset write-down and share-based compensation expenses, was RMB28.6 million or U.S. $4.7 million. For the nine month end September 30, 2013 as compared it to RMB234.9 million or U.S. $37.4 million in the same period of 2012. Fully valued EPS for the nine months end September 30, 2013 with RMB 0.42 or U.S. $0.07 million and on the non-GAAP adjusted basis, fully diluted EPS was RMB1.14 or U.S. $ 0.23. Now in to our balance sheet. As of September 30, 2013, we had a cash and bank balances of RMB40.1 million or U.S. $6.5 million compared to RMB89.4 million or U.S. $14.4 million as of December 31, 2102. The decrease in cash and bank balances was the result of an increased level of receivables and of increments and repayment or bank borrowings in the third quarter of 2013 and the payment of a dividend. As of the end of the third quarter our total debt was RMB65.6 million or U.S. $10.7 million as compared it to total debt of RMB 60 million or U.S. $9.6 million as of year-end of fiscal 2012. As of September 30, 2013 we had an inventory turnover of 126 days compared to 101 days as of December 31, 2012. The increase in inventory turnover reflects the decrease in sales volume of ceramic tiles which result in slower moving of finished goods at September 30, 2013 and the products we’ve assumed in the first nine months of 2013. Trade receivable turnover was 164 days as of September 30, 2013 compared with 119 days as of December 2012. The company extended the credit period for certain customers to address funding pressure of those customers since the quarter end December 31, 2012. In terms of our CapEx, we expand RMB10.2 million or U.S. $1.7 million in the third quarter for the acquisition of equipment at Hengdali facility and expand RMB28.4 million or U.S. $4.6 million to modify an existing production line at the Hengdali facility to enable the manufacturer of products that are in market demand. Although business conditions are subject to change, Management anticipated a minimal level of capital expenditure for the remainder of 2013 that will be associated with small repairs and maintenance of equipment. Moving on to our business outlook. As discussed by our CEO, Mr. Huang. As the economic climate for the real estate development and construction in China imported [ph] in the third quarter, we deployed additional capacity from utilized in second quarter. The company is currently utilizing plants facility capable of producing 35 million square meters of ceramic tiles out of an annual production capacity out of 72 million square meters that is available to the company up from 28 million meters square meters of annual capacity in the second quarter. As a result of asset marketing environment the company’s sales volume rose 50.6% to 12.5 million square meters for ceramic tiles as compared to the second quarter and was 2.9% ahead for sales volume for the third quarter in 2012. However, our first selling price or ASP increased a moderate 2.9% increase over that of the second quarter and you’re still substantially lower than a year ago comparable [ph] quarter. As many of you recalled, due to the challenging matter around the elite [ph] to rebuild our ASP beginning in December of last year, in order to meet [indiscernible], and we think [ph] market share. And although the quarter sales volume reflect substantially improved level of business activity, we have yet to recover or our pricing power from the economical slowdown that took only in the fourth quarter in 2012 and continued into this year. However, we are deploying strategy such as a more intensive and sophisticated marketing in further product diversification to recoup our previous ASP level, which we believe we will meet with progress over the next few quarter. Our backlog of orders for delivery in October and November of 2013 is approximately RMB155.5 million or U.S. $25.3 million. We estimate that our sales volume of ceramic tiles in October and November of 2013 will be approximately 5.7 million square meters, as compared to sales volume of 6 million square meters for the same period of 2012. In addition, we estimate that our ASP is RMB27.1 per square meters on ceramic tile for October and November 2013. This compared with our ASP of RMB27.2 per square meters of ceramic tiles in the third quarter of 2013 and RMB28.2 per square meters in the fourth quarter of 2012. The company believes that the real estate and construction sector continue to be vital area for the Chinese government to encourage in order to sustain economic growth. And that regulation have stabilize in terms of curbing some of the speculative buying occurring for investment purposes. This has been conducive to be, to a rebound in the sector as certain Tier 1 cities record sales growth from the second quarter and several cities reported record high prices in the land sales market. Return signals [ph] obtained a sustainable and focus US certain [ph] continue construction therefore reported to be within reasonable level as seen by the government. The company believes that the strategy of implementing price cuts on select product during the market downturn uptakes [ph] last year. And early this year, in order to retain customers and maintain our reputation was successful. Although we market a wide range of both premium and value-oriented products, price sensitivity has become a factor with our customers. However, as we believe that we are entering a period of more stable market conditions, we have the ability shift sales emphasis among the wide range of products offering. And we will strive to recoup our pricing power and regain margin, quarters ahead. Further, we think that our new marketing showroom, development and new products from our R&D program and upgraded and modern plant facilities with customized design and product capability offering as a sustainable comparative advantage in the market place. We also believe that our comprehensive products suite continue to differentiate it from our competitors, where some smaller producer have discontinued or contract operation and offer us the potential for expansion and growth in the market share. In summary, we will continue to stay very close to our customers and work with them to meet their building materials needs as well as to operate efficiency, so as to generate [ph] all the retail for our shareholders. With that, I would like to open up the call to any questions pertaining to our third quarter’s financial and holding conference. Operator.
