> The revenue growth is disappointing. what we are seeing is that NPD
> opened 16 new stores in the first quarter. This is a small number
> compared to previous year but it is also indicating that the
> management is moving away from their previous strategy. This is also
> shown in the revenue growth of 12.1% instead of in the 20%-range. But
> I think the new strategy is a good thing because there is emphasize on
> the quality of stores and location. The revenue growth will be slower
> but the earnings as part of revenue will improve because. The per-
> store performance should improve over time. Anyway, the number of
> newly opened stores in the first quarter is very meager, even there is
> a shift in strategy. I expect the number of newly opened stores to
> grow in the 2nd quarter and onwards in the future. As the report
> indicates, there is already talks ongoing with the local governments
> of Hubei and Jilin Province. There is a lot of room for NPD to grow.
> Either by growing organically or by buying up smaller rivals. But this
> time with more emphasize on quality of the stores.

> First quarter revenue contribution from prescription drugs was 22.1%
> This is much better than the 19.7% in the previous quarter. I think
> that we already see some effect of the health care reforms which is
> shifting the drug distribution from hospitals to retail pharmacy. This
> is a good development for NPD and for the consumers.

> The company's margin is still improving and the balance and cashflow
> are very healthy.

> The earning of RMB 30 mln is a disappointment. In Q1 2008 this was 55
> mln. But this can be explained by RMB 12 mln less interest income and
> increased sales and marketing costs of 13 mln. This is very
> reasonable. What is important is that the gross margin, which is
> 48.2%, is still very strong.

> A positive note in the report is the expression of the management that
> 'We believe the worst is already behind us and look forward to
> recovery in the balance of the year'