China Nepstar Chain Drugstore Reports 231.5% Increase in Net Income and Record Gross Margin of 48.5% for Fourth Qu...( Executing Industry Conso...),Health

Executing Industry Consolidation Strategy in 2008

SHENZHEN, China, March 19 /Xinhua-PRNewswire-FirstCall/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) (''China Nepstar'' or the ''Company''), the largest drugstore chain in China based on the number of directly operated stores, today announced its financial results for the quarter and fiscal year ended December 31, 2007.

Financial Highlights

For the fourth quarter ended December 31, 2007:

-- Revenues increased 9.5% to RMB524.1 million (US$71.8 million) compared

to the same period in 2006.

-- Gross margin rose to 48.5% compared with 38.0% for the same period in

2006 and 47.1% in the third quarter of 2007.

-- Including share-based compensation expenses of RMB8.7 million (US$1.2

million), operating income grew 141.1% to RMB61.4 million (US$8.4

million) compared to the same period in 2006. Excluding share-based

compensation expenses, operating income grew 175.3% to RMB70.1 million

(US$9.6 million) compared to the same period in 2006.

-- Net income increased 231.5% to RMB58.5 million (US$8.0 million)

compared to the same period in 2006.

For the fiscal year ended December 31, 2007:

-- Revenues increased 12.8% to RMB1.95 billion (US$268.0 million) compared

to 2006.

-- Gross margin rose to 44.1% compared with 35.1% in 2006.

-- Including share-based compensation expenses of RMB8.7 million (US$1.2

million), operating income increased 532.0% to RMB180.8 million

(US$24.8 million) compared to fiscal 2006. Excluding share-based

compensation expenses, annual operating income increased 562.5% to

RMB189.5 milli
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