Proprietary Production Technology Improves the Efficiency of Its Energy Saving Transformers and Reduces Internal Production Costs
NEW YORK, June 30 /PRNewswire-Asia-FirstCall/ -- China Power Equipment, Inc. (OTC Bulletin Board: CPQQ) today announced that it has completed the integration of its new transformer core production technology in its Xi'an, China amorphous core factory.
China Power Equipment, as the designer and manufacturer of energy-saving amorphous alloy cores for transformers used in China's power grid, continually examines the processes and materials used in the production of its products. In the first quarter of this year China Power Equipment's engineering team began working directly with its key customers to test the new cores. The final modifications were made during the second quarter and the Company is now marketing the new transformer cores to its entire customer base.
The newly-developed three-phase transformer core has numerous benefits to both China Power and its customers. The three-phase core has a tighter structure than its predecessor, requiring a smaller housing and reducing the quantities of other consumable materials necessary for the assembly process, thereby reducing the material costs. The new design has also resulted in a decrease in the noise generated during the operation of the transformer, reducing energy loss. Finally, the new design makes installation and dismantling of the transformers much simpler. These design enhancements make the new transformer core more efficient and easier to service, with an anticipated result being increased customer orders.
Yong Xing Song, Chairman of the Board of the Company, stated, "As the Chinese government continues to promote investment in the country's power generation and transmission infrastructure, the market for electrical
energy-saving products has become increasingly competitive. While this has had a positive effect on our sales, it has also resulted in an increase in the price of our main raw material, the amorphous strip we use for our transformer cores. The 33% cost increase in the price of these strips, over the price during the first quarter of 2008, led to an increase of about 3% in the cost of goods for our main product."
Mr. Song went on to say, "However, the strong demand within China for energy efficient products has also prompted Hitachi Metals Japan, our main supplier of the amorphous strips used in our cores, to expand its production capacity, which has, in turn, resulted in a significant reduction in our raw material costs. This decrease in the price of one of our key raw materials, combined with continual improvement in productivity and increased sales, should start to be reflected in the Company's financial results toward the end of this year."
ABOUT CHINA POWER EQUIPMENT, INC.
China Power Equipment, Inc., through its wholly-owned subsidiary, Xi'an Amorphous Zhongxi Co., Ltd., has developed a proprietary, patented technology to produce a new generation of energy saving transformers and transformer cores. The Company currently manufactures 55 different models of transformers in four product series which are sold throughout China, with the primary markets being electrical utilities. The Company was formed in 2006 as a U.S. corporation, and in November 2006, formed a Chinese subsidiary which was granted a license as a privately held, Wholly-Owned Foreign Enterprise, or "WOFE", by the Chinese government.
Safe Harbor
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings, including our Prospectus dated November 7, 2008, 10-K filed on March 31, 2009 and our other recent filings. These filings are available at http://www.sec.gov . We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.
For More Information on China Power Equipment, Inc., please visit the website at http://www.chinapower-equipment.com , or email requests to
xa-fj@xa-fj.com , or call +1-866-374-1957 (US).
