BEIJING -- SGOCO Group, Ltd. (NASDAQ: SGOC), (the “Company” or “SGOCO”), a company focused on building its own brands and retail distribution network in the Chinese flat panel display market, including LCD/LED monitors, TVs, and application specific products, today announced its unaudited operating results for the three month and six month periods ended June 30, 2011.
Overall AssessmentMore Features to ExpectCash and Working CapitalThe Panasonic TX-L37D25B has two speakers, each emitting 10 watts and featuring the 1-way bottom speaker design. You get 3 sound modes namely music, user and speech. You also get Dolby Digital Plus and V-audio ProSurround for gaming and watching movies and programs. The TV has a CI or common interface, the Viera image viewer which is unique to Panasonic TVs, 2 USB ports, 4 HDMI inputs, 1 composite video input, 1 audio input, 3 component video input, 1 PC input, 1 audio input, a 21-pin input/output, a LAN port, 1 analogue audio out, 1 digital audio output (optical), and a headphone jack.Since the close of the second quarter, the Company announced the appointment of David Xu as Chief Financial Officer and Head of its Beijing office.Compared to the first quarter of 2011, the increase in revenue was mainly due to increased sales of its own higher margin branded products and OEM products relative to resale products. In the second quarter of 2011, sales of SGOCO’s own brands represented 61% of total revenues, OEM represented 34%, and other products including electronic components represented 5%.About SGOCO Group, Ltd.ConclusionNet income for the second quarter of 2011 was $7.1 million, an increase of 87%, compared to $3.8 million recorded for the same period last year. Diluted EPS was $0.45 in the second quarter of 2011, compared to $0.40 in the second quarter of 2010. Of note, diluted EPS for the second quarter of 2011 was calculated based on 16,032,343 weighted average number of common shares as compared to 9,566,229 weighted average number of common shares for the second quarter of 2010.Conference CallThis Panasonic
LED TV also features an EPG or electronic programme guide, Viera Cast, Viera Tools, Viera Link and DLNA. There is a PAT multiwindow and CATS or contrast automatic tracking system. You get game mode, off timer, child lock and Q-link as well. You get the power supply with rated power consumption of 147 watts. The standby power consumption is 0.3 watt. Everything measures 917 x 590 x 77 m without the stand and 917 x 632 x 287 mm with the stand. Panel depth is 45 mm. The package weighs 14.5 kgs without the stand and 17.5 with it. You also get a swivel angle of 15 degrees. The TV is compatible with the VESA wall mount, although this is not included in the package. You get the user manual, stand and remote control with the package.� Lots of connectivity option � Some of the connectivity ports included are for the HDMI, USB, SD Card, and Scarts, to name a few. You will therefore have input available depending on what device you want to connect to your LED TV or what device you use to contain files you want to showcase onto the TV screen.Subsequent EventsWith the increase in revenues, especially for SGOCO’s own brands, gross profit for the second quarter of 2011 increased 68% to $10.7 million from $6.4 million for the second quarter of 2010.Gross MarginSales of the Company’s own brands increased by 68% in the second quarter of 2011 compared to the second quarter of 2010. The Company’s own brand sales have been aided by the expansion of the SGOCO Image partner network. The Company had 705 partners as of June 30, 2011 compared to 364 partners as of June 30, 2010.Revenue for the second quarter of 2011 was $85.6 million, an increase of 100% from $42.9 million in the second quarter of 2010. Over the past year, the Company has seen an increase in both the number of large regional distributors and the size of the orders placed.� Fantastic picture quality � The use of unique picture technology (notably the V Real Pro picture technology), accurate colour reproduction, and high contrast ratio all combine to deliver quality HD viewing on your television.However, when compared to the gross margin for 2011 first quarter, the Company, as expected, was able to improve gross margins for both its own brand and OEM products. The sequential increase in gross margin was also aided by stronger sales of the Company’s high margin application specific Edge 10 brand which is exported to the U.K. and earns gross margins of approximately 20%.Pricing InformationIncome tax for the second quarter of 2011 was $1.3 million compared to $0.7 million during the three months ended June 30, 2010.Other Income (Expenses)� The bass system is little and therefore limits the sound capability it can deliver.� Thin LED construction � It therefore facilitates in ease of placement and makes it very lightweight while looking stylish and sleek.The gross margin for the second quarter of 2011 decreased to 12.6% compared to the 15.0% for the same period of last year. The decline was mainly due to downward pressure on own brand product prices.Financial Highlights First Half 2011 vs. First Half 2010:
- Total revenues increased by 177% to $172.6 million, compared to $62.3 million;
- Gross profit increased by 89% to $18.0 million, compared to $9.5 million;
- Gross margin was 10.5%, compared to 15.3%;
- Operating income increased by 109% to $14.6 million, compared to $7.0 million;
- Net income increased by 180% to $12.3 million, compared to $4.4 million;
- Fully diluted EPS was $0.76, compared to $0.48; and,
- The number of SGOCO Image retail partners on June 30, 2011 was 705, compared to 364 a year earlier.
2011 Second Quarter Overview
SGOCO continued to show strong year-on-year growth into the second quarter of 2011. The high quality of SGOCO brands continues to distinguish it from low-end competitors in the marketplace. With continued strong demand from customers and the addition of monitor and TV production capacity over the past year, the Company was able to achieve significantly higher revenues. The Company believes its strategy of multiple brands and multiple channels continues to effectively penetrate the market.
SGOCO Group, Ltd. is focused on developing its own brands and distribution in the Chinese flat panel display market. Our main products are LCD/LED monitors, TVs, and other application specific products. Our target markets are Tier 3 and Tier 4 cities where we compete by providing high quality products at competitive prices.
