HARBIN, China, April 7, 2008 /Xinhua-PRNewswire-FirstCall/ -- Harbin Electric, Inc., (“Harbin Electric” or the “Company”, Nasdaq: HRBN), a market leader in customized linear motors, motor/controller automation systems, automobile specialty micro-motors, and other special motors, today provided additional information on the acquisition of Weihai Hengda Electric Motor Co. Ltd. and Wendeng Second Electric Motor Factory (together “Hengda”) which was announced on March 28, 2008.
According to the unaudited financial statements, for the fiscal year ended December 31, 2007, Hengda recorded revenues of approximately RMB330 million (US$46.5 million), net profits of approximately RMB35 million (US$4.9 million) and net assets of approximately RMB210 million (US$29.6 million). (The financial data is subject to revision upon auditing.) Based on the terms of the acquisition Letter of Intent signed on March 27, 2008, the acquisition price will be determined based on the total net profits that Hengda generated in the last consecutive 12 months prior to March 31, 2008 (March 2008 included) or the value appraised by a third party evaluation agent.
“We expect that the acquisition will be immediately accretive to earnings,” said Harbin Electric’s Chairman and Chief Executive Officer Tianfu Yang. “Furthermore, it will strengthen Harbin Electric’s business diversification strategy and increase our production capacity. It will also give us the capability to produce capacitors and enameled wire, enabling Harbin Electric to internally produce key components and raw materials needed by our subsidiaries. This will allow us to ensure consistent quality of these key raw materials, lower manufacturing costs, and reduce the reliance on third party suppliers. Geographically, we will benefit from a wider manufacturing platform that covers major economic regions in China, with Harbin Tech Full in the North, Shanghai Tech Full in the South and Hengda in the Central region.”
The acquisition is also expected to result in significant synergies in R&D, manufacturing and supply chain management. “We expect to improve the productivity of Hengda by establishing certified manufacturing processes with international standards, adopting advanced technologies, and upgrading production equipment,” noted Mr. Yang. “We also plan to leverage Harbin Electric’s strong R&D resources with those of Hengda to upgrade Hengda’s existing products to a higher standard, which is expected to increase the exports of rotary motors to developed countries where demand for high efficient rotary motors is rising. Based on the current growth in demand from Hengda’s existing customers, we expect Hengda’s revenues and net profits in 2008 to grow about 30% from 2007.”
* The RMB and USD exchange rate used for currency conversion is
RMB 7.10/USD.
About Hengda
Located in Weihai city, Shandong province, Hengda develops, manufactures, and distributes rotary motors and provides after-sale customer services. Its award-wining “Wenbao” brand products include a total of 28 categories and more than 2500 models of various industrial motors such as high/low voltage motors, AC/DC motors, and speed control motors. With an ISO 9000 certified manufacturing and quality management system, Hengda has an annual production capacity of 3.2 million kilowatts. In addition to industrial motors, it also produces capacitors and enameled wire, which are key components and raw materials used in electric motors. Supported by a strong sales and distribution network across the country, Hengda sells its products nation wide and also exports products to Europe, Southeast Asia, and Africa. Hengda has a manufacturing facility of over 150,000 square meters and a team of 1,700 employees.
About Harbin Electric, Inc.
Harbin Electric, headquartered in Harbin, China, is a market leader in linear motors, motor/controller automation systems, automobile specialty micro-motors, and other specialty motors. It is the first and currently, to our knowledge, the only Chinese company to provide product development and integrated production tailored to customer applications in this industry. The Company takes pride in its environmental and social policies, providing customers with energy efficient products and employees with a family-friendly working environment, based on competitive compensation and humane work schedules.
Harbin Electric emphasizes technology, innovation and creativity in its award-winning research and development (R&D) efforts. It recruits professional engineering and operating talent worldwide and through collaboration with top scientific institutions. Its ISO certified manufacturing facility is equipped with state-of-the-art production lines and quality control systems to ensure product quality.
China’s rapidly expanding economy together with its government policy supporting the industry provides a sizeable market opportunity for Harbin Electric. To learn more about Harbin Electric, visit http://www.harbinelectric.com .
Safe Harbor Statement
The actual results of Harbin Electric, Inc. could differ materially from those described in this press release. Detailed information regarding factors that may cause actual results to differ materially from the results expressed or implied by statements in this press release may be found in the Company’s periodic filings with the U.S. Securities and Exchange Commission, including the factors described in the section entitled “Risk Factors” in its annual report on Form 10-KSB for the year ended December 31, 2007. The Company does not undertake any obligation to update forward-looking statements contained in the press release. This press release contains forward-looking information about the Company that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and the Company’s future performance, operations and products.
For investor and media inquiries, please contact:
Harbin Electric, Inc.
In China
Tel: +86-451-8611-6757
Email: MainlandIR@Tech-full.com
In the U.S.
Christy Shue
Executive VP, Finance & Investor Relations
Tel: +1-631-312-8612
Email: cshue@HarbinElectric.com
