frankposting

Xinhua Finance Media: Positive Developments Ahead

Let's do some math.

For 2Q07, the revenue was $29.0M and EBITDA was $9.1M, thus the gross margin was 31% -- almost inline with the cpmpetitors -- not bad. However, the adjusted net was only $2.8M, i.e., the operation margin was only 10% -- too low.

If the revenue for 3Q07 can reach the consensus ($38M), XFML needs 22% operation margin to meet the current estimated EPS ($0.12).

For the year 2007, XFML needs 27% overall operation margin (wrt $130M revenue) to meet the current estimated EPS ($0.35).

I believe that XFML will have difficulties to achieve those expectations. Better to add XFML's own earning outlook on revenue outlook. Otherwise, low pps will continue to hunt XFML.