China Electric Motor (PINK:CELM)

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Tuesday, January 25, 2011

SHENZHEN, China, January 25, 2011 -- China Electric Motor, Inc. today announced that Luck Loyal International Investment Limited, an indirect wholly owned subsidiary of the Company, entered into an Equity Transfer Contract with New-Metal Technology Limited on January 21, 2011. Under the terms of the Agreement, Luck Loyal will purchase 100% of the equity interests of Shenzhen Guofa Optoelectronics Co.Ltd.,a wholly foreign owned enterprise incorporated in China, held by the Seller, for an aggregate purchase price of RMB42.7 million (or approximately US$6.5 million, based on the exchange rate as of January 21, 2011)

With this acquisition, the Company will acquire new production lines and expertise focused on high-end DC micro motors used in products like digital cameras, cell phones, electronic door locks, and other similar products. Guofa’s products are sold to clients representing high-end OEM companies which include Ricoh, Toshiba, Philips, OMRON, Panasonic, OLYMPUS, and Taiwan Asia Optical. In 2010, Guofa Optoelectronics recognized RMB83.4 million (or approximately US$12.7 million) in revenue and RMB8.7 million (or approximately US$1.3 million) in net income.

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Thursday, January 6, 2011

SHENZHEN, China, Jan. 6, 2011 /PRNewswire-Asia-FirstCall/ -- China Electric Motor, Inc. today announced that its indirect wholly owned subsidiary, Shenzhen YuePengCheng Motor Co., Ltd. entered into a Property Purchase Agreement with Shenzhen Jianhuilong Industry Co., Ltd. ("Jianhuilong") pursuant to which YuePengCheng agreed to purchas the remainder of the Shenzhen-based "Sunna Industrial Park" it did not previously own, for approximately RMB170.9 million (or approximately US$25.8 million). The total amount is expected to be paid in a series of installments by January 31, 2011. The closing of the Transaction is expected to take place within 30 days following the date of the Agreement, subject to government approvals.

Mr. Yue Wang, Chief Executive Officer of China Electric, stated, "Our recent purchase of the Sunna Industrial Park facility represents a cost-effective, long-term investment for China Electric that will increase the stability of our operations and allow us to better forecast expenses. We believe the purchase of this facility will also improve overall efficiency as we consolidate existing operations and future acquisitions into this centralized facility. After a review of our 2011 budget, and in light of a proposed rental increase of almost 50% for our Sunna Industrial Park leased facility, we determined that purchasing the entire facility for our current and future production plans was in the best interest of the Company and the most cost-effective alternative. This facility will serve as our core production hub and will provide China Electric with additional production capacity, paving the way for our future expansion plans."

Wang continued, "We expect to fund this transaction through a combination of existing cash on our balance sheet and cash flow generated from operations in 2011. After the purchase, we will be able to collateralize the purchased property if we were to apply for any bank loans to help fund our operations. We look forward to a more stable manufacturing environment for our business and believe this acquisition provides us with a great opportunity to expand our market position and improve the profitability of our business over time."

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