-- Revenue and Net Income Forecasts for Full Year Fiscal 2010 Increased
JINZHOU CITY, China, Sept. 7 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. (Nasdaq: WATG) ("Wonder Auto" or the "Company"), a leading manufacturer of automotive electric parts, suspension products and engine components in China, today announced that it has completed the acquisition of Jinheng (BVI) Limited ("Jinheng BVI"), which is a leading manufacturer of airbags and seatbelts in China.
The acquisition consisted of two transactions: one is the Company's disposal of 38.36% equity interest in Applaud Group Limited, the controlling shareholder of Jinheng Auto Safety Technology Holdings Limited ("Jinheng Holdings", a Hong Kong Stock Exchange listed company) to Jin Ying Limited at a price of HK$162 million; and the other is the Company purchase 100% equity shares of Jinheng BVI, a wholly-owned subsidiary of Jinheng Holdings, at a price of HK$1,130 million.
At the same time, the Company discloses its guidance for fiscal year 2010, now estimating $300 million or higher in sales revenue, and $36 million or higher in Non-GAAP net income (Non-GAAP Net Income=GAAP Net Income + non-cash stock-based compensation of about $6.5 million), or GAAP net income of above $29.5 million.
Jinheng BVI is the largest Chinese national brand automotive airbag supplier with over 50% market share in China. Jinheng BVI also has more than 10% market share of the overall market of automotive airbag products in mainland China in 2009, with annual capacity of over 2 million units. Jinheng BVI is also the largest national brand supplier of three-point pretension seatbelts in China with annual capacity of over 2.2 million units. Based on current estimates and market conditions, the Company expects that the automotive safety system products of Jinheng BVI will contribute approximately $130 million in sales revenue and approximately $14.8 million in net income to Wonder Auto next year.
Mr. Qingjie Zhao, Chairman and CEO of Wonder Auto, stated, "As we have already made several successful business acquisitions in the past, after we completed our fund-raise last November we had continued to look for new suitable growth drivers that would increase our current levels of operating income. We are very pleased to have completed this recent acquisition of Jinheng BVI. The auto safety market in China has bright prospects for future growth and we thank all parties involved in helping us close this acquisition. We expect this acquisition to open up new markets to our company's current products and also allow us, through our joint Research and Development activities, to bring the next generation of auto safety products to the China automotive market. This acquisition will be paid for with the company's cash on hand as well as financed with bank loans. We expect the earnings from this acquisition to be accretive to Wonder Auto's shareholders. Wonder Auto will now be upgraded to own three primary automotive systems, including the engine component system, the automotive safety system, and the automotive suspension system. In addition to strengthening Wonder Auto's current business scale, the Company will also enhance its development of the driving systems of alternative energy vehicles and automotive active and passive safety integration systems in the future."
Mr. Qingjie Zhao also stated that, "Our management team is optimistic about the future prospects and growth of the automotive safety systems in China. We anticipate that the Chinese government will promulgate the configuration of an automotive safety system that will be the compulsory safety standard for all new automobiles in the near future. We therefore expect Jinheng BVI will gain the more market shares from the vehicles currently without airbags, so that its businesses may be expected to grow exponentially. Wonder Auto is going to expand the existing passive safety technologies gained from this acquisition to both active and passive integrated safety systems."
Furthermore, Mr. Zhao added that, "Wonder Auto's operations will turn into a new structure, which consists of engine parts division, auto suspension division and auto safety division. Other than those three divisions, Wonder Auto will spend efforts on alternative energy vehicle parts, and the integration of auto passive safety technology and active safety technology. At last, it's Wonder Auto's mission that always works hard to maximize shareholder's value."
About Wonder Auto
Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc., through its Chinese subsidiaries, designs, develops, manufactures and sells automotive electrical parts, suspension products and engine components. Wonder Auto ranked second and third in sales revenue in the Chinese market for automobile alternators and starters in 2008, respectively. Wonder Auto's products are used in a wide range of passenger and commercial automobiles with special focus on the fast-growing small- to medium-engine passenger vehicle market. For more information, please log on http://www.watg.cn .
Note: Non-GAAP net income is defined by the company as [net income before stock-based compensation]. The company believes non-GAAP net income is an important measurement for management and investors given the effect that these non-cash charges have on the company's net income. The company regards non-GAAP net income as a useful measure of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures.
Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP.
Safe Harbor Statement
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expected 2010 financial results, our expectation regarding the final performance of Jinheng BVI and its subsidiaries, our future strategic and operational plans, our future operating results, our expectations regarding the auto safety market, our newly acquired auto safety business and our products, our expectations regarding the benefits from the acquisition and continued growth of the automobile market, as well as all assumptions, expectations, predictions, intentions or beliefs about our relative strength and about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "believe," "expect," "may," "should," "potential," "continue," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" or similar expressions. Such information is based upon assumptions and expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions and expectations are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release, except as required under applicable law. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov . All information provided in this press release and in the attachments is as of the date of this press release.
For more information, please contact:
Patrick Sun
Investor Relations Manager
Tel: +86-10-8478-5339
Cell: +86-153-1161-1742 (China)
Cell: +1-646-736-7588 (US)
Email: ir@watg.cn