Exceed (NASDAQ:EDS)

Full Year 2011 Results

• Revenue was RMB3,288.6 million (US$522.5 million), representing a 21.8% year-over-year increase.
• Gross profit was RMB992.3 million (US$157.7 million), representing a 17.9% year-over-year increase. Gross margin decreased from 31.2% for 2010 to 30.2% for 2011.
• Operating profit was RMB498.2 million (US$79.2 million), representing a 21.6% year-over-year increase.
• Net profit was RMB470.1 million (US$74.7 million), representing a 33.1% year-over-year increase.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We are pleased to report healthy results for the full year 2011, with over 20% growth in revenue and 30% growth in net income. Our results were supported by our ongoing marketing and branding efforts which have promoted our brand image and allowed us to further penetrate the domestic sportswear market in China. Our key target audience, younger generations in China's developing second and third-tier cities continue to identify with our 'happy lifestyle' branding theme. In addition, our involvement in the nationwide 'Fitness for All Campaign 2011' was recently recognized with an Outstanding Contribution Award from China's General Administration of Sport, the government agency responsible for sports in China, which further enhanced our brand image. By continuing to improve the awareness and acceptance of a 'Sports Lifestyle,' Exceed is helping to educate a whole new generation of Chinese youth about the benefits of leading a healthy and active life.

"In addition to our ongoing marketing and branding efforts, we have made progress on our operational plan to maximize our growth potential in the evolving PRC domestic sportswear market. As recently announced, we have sought to improve our internal manufacturing capacity, thereby increasing our bargaining power, providing more stability to our supply chain, which, in turn, we believe will positively affect our gross profit margin. A significant part of our new operational plan is to purchase a 400,000 square meter parcel of land in Ruichang City, Jiangxi Province, where we plan to establish a new operating subsidiary and construct a new production facility upon this parcel of land. Upon completion of the construction of our new production facility in Ruichang City by the end of 2013, we expect that our annual production capacity for our footwear products will increase to approximately 30.0 million pairs while also gaining certain internal apparel production capabilities.

"The filing of our annual results was rescheduled to allow us sufficient time to properly assess the accounting treatment of certain escrow shares and earn-out shares. To reflect the revision to our method of accounting in relation to our conditional obligations in relation to release and issue these escrow shares and earn-out shares, we subsequently restated results for 2009 and 2010. The restatement resulted in a non-cash and non-operating gain of RMB170.9 million, RMB1.6 million and RMB36.6 million from change in fair value of contingent share liability for the year ended 2009, 2010 and 2011, respectively. In addition, we believe our reassessment of the accounting treatment in this instance demonstrates our commitment to maintaining the highest level of transparency and disclosure in all of our reporting practices. Looking ahead, despite ongoing macroeconomic headwinds, we believe the execution of our operational plan combined with our continued brand building activities will position us to deliver steady growth in the year ahead. We will continue to expand our market presence at a measured pace to keep our sales and distribution channel and inventories in-line with consumer demand. Beyond our operational initiatives, the Company is also seeking to maximize shareholder value by extending the date of expiration of our previously announced US$10 million share repurchase program from February 14, 2012 to August 14, 2012. As of today, this extension will give us more time to prudently repurchase shares up to US$7.6 million that may yet be purchased under the share repurchase program. The strength of our balance sheet and financial position allow us to continue investing in the Company's future while simultaneously returning value to our shareholders."

First Quarter Fiscal 2012 Guidance

Exceed expects to generate net revenues in the range of RMB841.6 million to RMB864.1 million in the first quarter of 2012, representing a year-over-year increase of approximately 12% to 15%, as compared with RMB751.4 million in the same period of 2011. This represents the Company's preliminary estimates, and is subject to change.

Our premium research emailed to our members on 4/12/2012

A few GeoInvesting members have asked the GeoTeam for added perspective on the Exceed (NASDAQ:EDS) story. We have identified a red flag that should not be uncommon to GeoInvesting readers. Just as in our LTUS and CGPI investigations, we have some concerns about EDS and Land Use right fees it claims to have paid to the municipal government of Ruichang City, Jiangxi Province.

See our EDS commentary here.

To be among the first to receive alerts like this, subscribe to our premium service!

FUJIAN, China, April 3, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or the "Company"), the owner and operator of "Xidelong" brand and one of the leading domestic sportswear brands in China, has provided additional detail pertaining to the agreement announced by the Company on February 17, 2012. As previously disclosed, the Company had entered into an agreement with the municipal government of Ruichang City, Jiangxi Province, for the investment and construction of a sportswear manufacturing base on a parcel of land in Ruichang city, Jiangxi Province, PRC. Under this agreement, the Company would purchase a parcel of land of 400,000 square meters in Ruichang city, for a total consideration of RMB198,000,000, subject to municipal and administrative approvals. This parcel of land will be used for the construction of a new production facility, which is expected to be completed by the end of 2013.

The parcel of land is a prime piece of real estate within Ruichang Industrial Park West, located within close proximity to the office of the municipal government of Ruichang city, the Ruichang train and bus stations and the Ruichang Aimin Hospital. Given its prime location in the center of the city, the parcel of land is priced at RMB330,000 (approximately $52,300) per Chinese acre. In addition, the city will incur costs in relocating current residents, conducting environmental cleanup, conducting surveys and rezoning the land before it will be available for development.

As previously announced, the Company has made a deposit of RMB46,800,000 (approximately US$7.4 million) as a performance bond in conjunction with the signing of the agreement. The land will be officially purchased at an auction that will hopefully take place sometime later in 2012, after the government settles with the existing residents of the land. The Company intends to establish a new operating subsidiary in Jiangxi Province and construct a new production facility on the purchased land in order to increase its internal manufacturing capacity and expand its control over the product development process from setting up the supply chain of raw materials, moulds and supplementary materials, to in-house production, to delivery.

Notes:

1. A Chinese acre is equivalent to approximately 1/6 of a US acre

2. The following are coordinates for the location of the "parcel of land:" (1) Latitude: 29.699351786662326 / 29 degrees 41' 57"; (2) Longitude: 115.67490399462895 / 115 degrees 40' 29".

FUJIAN, China, March 30, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or "the Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China - today announced that it has reached settlement (the "Settlement Agreement") with D.B. Research LLC ("D.B. Research"), an independent research firm based in Chesapeake, Virginia, and its principal Michael Joseph Ritinski, in connection with the reports issued by D.B. Research in August 2011 and on March 14, 2012 (the "Reports").

Pursuant to the Settlement Agreement, D.B. Research has agreed to remove the Reports from its website and undertake its best efforts to remove said Reports from third-party websites. D.B. Research has further agreed to relinquish any positions it has relative to Exceed and that it will not assist others in the future in taking short positions in the Company's stock. As a condition of settlement, neither D.B. Research nor Mr. Ritinski admit to any liability or wrongdoing.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "The Company is pleased with the terms of settlement with D.B. Research and Mr. Ritinski, and believes that settlement of the matter was in the best interest of the Company and its shareholders at this juncture. Exceed has and continues to maintain the highest degree of transparency and disclosure with regards to all aspects of its financial reporting and corporate communications, and is intent on protecting its shareholders from any further damage inflicted by short sellers who stand to benefit financially by a decline in the Company's share price."

FUJIAN, China, March 16, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or "the Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China, today announced that it has retained Winston & Strawn LLP to issue a cease and desist letter to D.B. Research, an independent research firm based in Chesapeake, Virginia, in connection with the reports filed by D.B. Research in August 2011 and on March 14, 2012.

Exceed has requested that D.B. Research immediately retract its statements contained in the aforementioned reports, issue a press release acknowledging the retraction, remove said reports from its website and request removal of the reports from the Seeking Alpha website, refrain from further dissemination and distribution of the reports and any information contained within the reports, and take all other necessary actions to prevent the reports and the information contained therein from being disseminated further. Exceed will pursue further legal action should D.B. Research not comply with its request in the requested timeframe.

Furthermore, the Company notes that the report filed by D.B. Research on March 14, 2012 concerning the Company's land purchase agreement announced on February 17, 2012 is inaccurate and willfully misleading.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "While taking legal action is not our preferred approach, we believe it is necessary at this juncture to protect the company and its shareholders from further damage inflicted by malicious short sellers who stand to benefit financially by a decline in our share price. Exceed has and continues to maintain the highest degree of transparency and disclosure with regards to all aspects of its financial reporting and corporate communications. We will utilize all available resources at our disposal to seek redress against misrepresentations and defamatory statements made against us in an effort to maintain the positive reputation we have built over the years in financial markets and in the sportswear industry in China."

FUJIAN, China, February 13, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or the "Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China, today announced that its Board of Directors (the "Board") has extended the date of expiration of Exceed's existing US$10 million share repurchase program from February 14, 2012 to August 14, 2012. To date, the Company has purchased up to 485,242 of its ordinary shares, at an aggregate cost of approximately US$2.1 million, with a balance of approximately US$7.9 million available for further repurchases under the share repurchase program.

The share repurchase program will be reviewed from time to time and may be adjusted or terminated at any time without prior notice. Stock repurchases under this program may be made through open market purchases, in privately negotiated transactions, in block trades, pursuant to a 10b5-1 plan, or otherwise. The timing and actual number of shares repurchased will depend on market conditions, trading price of the ordinary shares and other factors and be subject to the restrictions relating to volume, price and timing under applicable laws.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We remain confident in our long-term strategy to expand Exceed's share of the domestic sportswear market and deliver profitable growth. With our healthy balance sheet and strong financial position, we continue to maintain the flexibility to both return value to shareholders and invest in our future growth."

Third Quarter 2011 Results

Financial Highlights – Second quarter ended June 30, 2011(1)

• Revenue was RMB741.5 million (US$114.7 million), representing a 15.7% year-over-year increase.
• Gross profit was RMB230.0 million (US$35.6 million), representing a 9.2% year-over-year increase. Gross margin was 31.0%, representing a 1.9 percentage point decrease as compared to 32.9% for the second quarter of 2010.
• Operating profit was RMB109.8 million (US$17.0 million), representing a 3.9% year-over-year increase.
• Net profit was RMB94.7 million (US$14.7 million), representing a 5.2% year-over-year increase.
• EPS was $0.47 vs $0.45

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We delivered steady top- and bottom-line growth in the second quarter with revenues exceeding guidance and sales in all three of our product categories increasing, demonstrating the healthy underlying demand for our products. We continue to benefit from the expansion of our distribution network in third-tier and selected second-tier cities, where retail sales trends remain strong, and from our increasing brand recognition supported by our effective marketing campaigns. In addition, we continued to invest in R&D to maintain our competitive advantage in our target markets by developing new products that effectively blend fashion with functionality, further supporting demand for our products among China's discerning but value conscious shoppers.

"As we head into the second half of the year, we remain committed to our strategy to ensure the long-term development of Exceed, including execution of our new operational plan initiated in the first half of 2011. We have made steady progress on the near-term components of that plan, namely the construction of new staff quarters which is currently underway. Our balance sheet remains healthy, with sufficient cash on hand to support our long-term development plans, including the accelerated construction of new factories, potential acquisitions of existing factories and expansion of our network of regional sales and logistics centers. We believe this strategic expansion of our internal production capacity will help to mitigate the impact from ongoing labor shortages while allowing us to effectively compete in a consolidating industry."

Business Highlights and Outlook

• Expansion of sales and distribution network
  • There were approximately 4,640 Xidelong retail stores, which are operated by our distributors and authorized third party retail store operators, as of June 30, 2011, an increase of approximately 653 compared with June 30, 2010. During the second quarter of 2011, approximately 182 retail stores, which are operated by our distributors and authorized third party retail store operators, were added.
  • The Company continued to deepen penetration into new cities, with a focus on third-tier cities in affluent provinces such as Guangdong, Jiangsu and Zhejiang provinces and selective expansion into second-tier cities. From June 30, 2010 to June 30, 2011, approximately 145 new stores, which are operated by our distributors and authorized third party retail store operators, were opened in these provinces
    
• Marketing initiatives and brand recognition
  • The Company uses the "happy lifestyle" theme in promotional activities and product offerings and continues to engage By2, a popular Taiwan-based musical group, as a product spokesperson. The Company will maintain these promotional initiatives as they have been effective in enhancing the "Xidelong" brand image and have helped to support our strong results.
  • The Company will continue to sponsor the "Fitness for All" program in 2011.
  • The Company has engaged Genedigi, one of the largest and longest standing China-based marketing and public relations firms to support its general public relations and marketing initiatives in China.

• Update on new operational plan
  • In response to ongoing trends in the highly competitive sportswear industry in China, including the consolidation of outsourced manufacturers and labor shortages which have resulted in weakened bargaining power, supply chain instability and gross profit margin pressure on brand owners like Exceed, we announced in the first quarter a long-term initiative to increase our internal manufacturing capacity and expand our network of regional sales and logistics centers. In the near-term, to specifically address the shortage of labor faced by all players in the sportswear industry in China, we also initiated a solution to construct new staff quarters to improve the working and living environments of our employees and bolster staff retention. The expected staff quarter construction project cost is approximately RMB150 million, with an aggregate gross floor area of approximately 66,000 square meters. We have started the construction project for the new staff quarters and approximately one-third of the construction has been completed to date.

As previously announced, we intend to capitalize on the abundant labor supply in the inner and western parts of China through the construction of new production facilities and the acquisition of other production facilities. For example, we plan to acquire existing shoe sole manufacturers and apparel manufacturers to enhance our internal productivity.

The preliminary production facility plan is as follows:

The production facility plan has not been finalized and may subject to change in the future.

In the long-term, recognizing the importance of having sufficient control over our sales channels, we plan to selectively acquire or partially invest in distributors of our products. Furthermore, to improve our market share in China, our strategy involves leveraging our established nationwide network to introduce new brands, which may include entering into licensing agreements with a foreign brand to target different market segments, in order to develop Exceed into a multi-brand operator.

Third Quarter Fiscal 2011 Guidance

Exceed expects to generate net revenues in the range of RMB1,007.2 million to RMB1,023.8 million in the third quarter of 2011, representing an approximate year-over-year increase of 21% to 23%, as compared with RMB832.4 million in the same period of 2010. This represents the Company's preliminary estimates, and is subject to change.

FUJIAN, China, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or "the Company"), one of the leading domestic sportswear brands in China, today announced that its Board of Directors has authorized the repurchase of up to US$10 million of the Company's ordinary shares within the next 6 months using existing cash reserves. The stock repurchase program will be reviewed from time to time and may be adjusted or terminated at any time without prior notice. Stock repurchases under this program may be made through open market purchases, in privately negotiated transactions, in block trades, pursuant to a 10b5-1 plan, or otherwise. The timing and actual number of shares repurchased will depend on market conditions, trading price of the ordinary shares and other factors and be subject to the restrictions relating to volume, price and timing under applicable laws.

Commenting on the announcement, Mr. Shuipan Lin, Exceed’s founder, Chairman and CEO said, “Recent share price movements for our company and financial market conditions overall have provided us with this opportunity to return value to our shareholders. Furthermore, we believe the authorization of the share repurchase program demonstrates our confidence in the long-term growth prospects for Exceed and the sportswear industry in China.”

It seems that EDS shares got a boost yesterday from favorable mention by hotstockinvestors.com (Hot Stock Investors) That website touts itself as a penny stock/small-cap alert service. Two statements by Picks Penny Stock ("PPS"), the entity that owns the Hot Stock Investors website, leads us to believe they receive compensation for the "research" reports they publish.

The company says it is one of the leading small-cap alerts services of its kind and is frequently contacted by CEO's of public companies for comments and views. Their disclaimer implies that because they receive compensation for PPS's dissemination of the information (as disclosed in their Compensation Disclosure Section), including at times in the form of common stock shares (the "Shares"), PPS should not be considered an independent information source.

PPS employees post messages on their individual message boards as a way to disseminate information on behalf of their issuer clients which should never be used as a means of conducting analysis into the Issuer and should only be used as a starting point to obtain the names of pink sheet or OTC Bulletin Board companies. A third party shareholder may have a potential or actual conflict of interest in paying PPS for the dissemination of the publication while still holding the Issuer's shares of common stock that he or she may sell after the third party shareholder has paid PPS with his or her shares.

We could not find compensation and disclosure statements on the Hot Stock Investors website. We would like to know who paid Hot Stock Investors for their coverage on EDS, as it came only two days after our report was published.

Disclosure: Still short EDS as the company is growing more suspect everyday.  What started out as Red Flags has quickly become more serious. Our investigation is ongoing.

Over the past few months, the GeoTeam has taken a closer look at Exceed Company (EDS), a Chinese footwear and sports apparel manufacturer located in Fujian province that went public through a Special Purpose Acquisition Company (SPAC) in 2009.  The company initially piqued our interest as a result of similarities that it shares with another famous 2009 SPAC from Fujian—China MediaExpress (CCME.PK). 

Though we have not yet completed our on-the-ground due diligence on EDS, an extensive review of company filings and other public documents available in the U.S. and China has left us cautious on the name.

...see our analysis here.

Financial Highlights –First quarter ended March 31, 2011(1)

• Revenue was RMB751.4 million (US$114.7 million), representing a 31.9% year-over-year increase.
• Gross profit was RMB232.6 million (US$35.5 million), representing a 29.4% year-over-year increase. Gross margin decreased to 31.0% from 31.6% for the same period in the fiscal year 2011.
• Operating profit was RMB128.3 million (US$19.6 million), representing a 42.5% year-over-year increase.
• Net profit was RMB110.9 million (US$16.9 million), representing a 43.0% year-over-year increase.
• EPS was $0.51 vs. $0.50

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "In the first quarter of 2011, we successfully executed our strategy to build Xidelong's brand recognition and deepen our market penetration in China. Our distribution network expansion plan remains focused on China's third-tier cities and in selected second-tier cities; consumers' purchasing power in these regions is growing and because our innovative and stylish products demonstrate good value for money, they have proven to be appealing to consumers in these cities. Our target customers have responded positively as we broaden the variety of footwear, apparel and accessory products that we offer. We have stepped up our investments in R&D to develop functional and fashionable new products and we will continue to dedicate resources to product development and manufacturing in order to regularly launch new products and expand our existing product lines.

Second Quarter 2011 Guidance

Exceed expects to generate net revenues in the range of RMB717.6 million to RMB730.4 million in the second quarter of 2011, representing an approximate year-over-year increase of 12% to 14%, as compared with RMB640.7 million in the same period of 2010.

The Company has recorded an order book growth of 25% for the 2011 Spring/Summer collection sales fair over the same sales fair last year. Since we delivered our summer products much earlier than last year in the first quarter of 2011, we achieved a higher revenue growth of 31.9% in the first quarter of 2011 against the same period of last year. The revenue growth in the second quarter of 2011 will therefore be comparatively lower. This represents the Company's preliminary estimates, and is subject to change.

Fourth Quarter Results:

• Revenue for the fourth quarter of 2010 was RMB656.0 million (US$99.4 million), representing a year-over-year increase of 9.4% from RMB599.4 million for the same period in 2009.
• Gross profit for the fourth quarter of 2010 increased by 10.9% to RMB198.4 million (US$30.1 million) from RMB178.9 million for the same period in 2009
• Net profit was RMB73.0 million (US$11.1 million), representing a 9.0% year-over-year decrease

Exceed expects to generate net revenues in the range of USD 109.72 million to USD 111.46 million in the first quarter of 2011, representing an approximately year-over-year increase of 26% to 28%, as compared with RMB569.8 million in the same period of 2010. This represents the Company's preliminary estimates, and is subject to change.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We are pleased to report a strong top- and bottom-line performance for the fourth quarter and full year 2010, supported by continued execution of our strategy to develop and enhance our brand, our products and our sales channels.  Our results demonstrate the success of our 'happy lifestyle' brand positioning, which has helped us to gain traction among a wide range of consumers, including the younger generation, which represent the fastest growing segment of the sportswear market in China.  This growing brand recognition, coupled with the expansion of our product offering, has resulted in increased customer demand and higher average selling price ("ASP") of our products.

Third Quarter Fiscal 2010 Guidance

Exceed expects to generate net revenues in the range of RMB795 million to RMB815 million in the third quarter of 2010, representing an approximately 20% to 23% year-over-year increase compared with RMB661.7 million in the same period of 2009. During the last several years, autumn in China has been relatively hot and short as a result of global warming. Retailers have tended to order more summer products and fewer autumn products. The Company mainly delivered its summer products during the first half of the year, and its autumn products during the third quarter. As the weather has been unstable so far this year, we do not expect third quarter revenue growth to be as strong as during the first half of 2010. This forecast reflects the Company's current and preliminary view, and is subject to change.