What is the point of the "Chairman's message" (XING)?

Mar.28.05 | About: Qiao Xing (XINGF)

Qiao Xing
Universal Telephone (ticker: XING), a Chinese telecom equipment maker, announced release of the "Chairman's
message on the Company's disclosure practice and on-going business". What should the release really have said? "Our stock is at 52-week lows. There are good things going on. Let me remind you of the news we have already released." So why is the stock up today?


Message by Mr. Wu Rui Lin, Chairman of XING:

....I would like to take this opportunity to provide our shareholders with a
brief update on the business.  First, as previously reported the Company
expects to post positive earnings per share (NYSEARCA:EPS) for the year ended December
31, 2004 when it issues its year-end results.  The earnings release for the
full-year 2004 will be issued within the time frame set by the SEC and NASDAQ.
Prior to the filing of Form 20-F, the Company will post a notice to inform the
public of the release date.

Quick thought: Positive EPS for the year? Great. Thanks for the news. Oh right, it's not news. But thanks for the reminder. See January's press release here.

Continue reading the Chairman's message:

....In its yearly Form 20-F the Company provides an annual report that
includes a full set of detailed financial statements.  As for quarterly
reporting, although as a foreign issuer it is not obligated to do so, the
Company will continue to release certain key financial data for Q1, Q2 and Q3,
in accordance with the practice of voluntary disclosure it has followed since
the first quarter of 2004.

Quick thought: Thanks for providing us with information that every company should provide!

The Chairman's message turns to XING's business operations:

....I would like to reiterate that XING's business fundamentals remain
strong, and the Company anticipates significant growth in sales revenue and
net income for 2005. 

Final thought: There are no new financial details regarding FY 2004 or 2005. So why is the stock up?

The announcement of increased sales of GSM phones? Not likely.

Another possibility is the announcement that the company is moving into the consumer electronics space by launching set-top boxes designed for Cable Digital Television services - expected to bring "additional revenue of about US$20M within 12 months of
the first shipment". Investors are probably aware that demand for digital television is growing rapidly in China. So that could explain today's move. Of course, there is no mention of how much the set-top boxes would add to the bottom line.

And when will FY 2004 numbers arrive?

....The earnings release for the
full-year 2004 will be issued within the time frame set by the SEC and NASDAQ.
Prior to the filing of Form 20-F, the Company will post a notice to inform the
public of the release date.

Your guess is as good as mine.

Read the full text of XING's press release here.

XING stock market performance:

Xing328