China Information (NASDAQ:CNIT)

First Quarter 2012 Financial Highlights

• Revenues decreased 39.6% YoY to $16.3 million
• Gross profit decreased 57.7% YoY to $5.8 million
• Operating loss of $3.2 million
• Net loss of $2.9 million
• Fully diluted net loss per share of $0.11
• Net cash used in operating activities was $0.7 million, vs. an operating net cash inflow of $1.9 million a year ago

Mr. Jiang Huai Lin, chairman and chief executive officer of the Company, commented, "As expected the first quarter was a weak season for the Company. Revenues and net income declined 39.6% and 134.8% year-over-year to $16.3 million and a net loss of $2.9 million, respectively. In addition to seasonality, the challenging market conditions remained a main contributor to the weakness of this quarter as the Chinese government's implementation of tightening policies continued to have a dramatic impact on our government IT projects. In addition, in the Company's efforts to improve its earnings quality and transition to a more healthy and sustainable product mix also led to relatively weak results: we have executed more stringent customer acceptance initiatives in the IT segment, while investing much time and capital in incubating our DT product offerings and customer base with the aim to ease our reliance on government clients and capture new market opportunities.

"Although we expect the tough environment will continue to have an impact on the Company throughout the year, we believe the slowdown of our business is temporary. When the difficult market conditions ease and our business restructure strategy is fully implemented, we expect to regain growth momentum. Our core competency, industry reputation and customer relationship in our core IT and DT segments remain strong, and we are highly confident in our abilities to sustain long-term growth and create shareholder value."

SHENZHEN, China, March 21, 2012 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of information technologies and display technologies based in China, today announced that the Company has received a letter from the NASDAQ Stock Market dated March 19, 2012 advising the Company that the closing bid price of the Company's stock on NASDAQ has been at $1.00 per share or greater for 10 consecutive business days. Accordingly, the Company has regained compliance with the minimum bid price requirement for continued listing on the NASDAQ Global Select Market.

SHENZHEN, China, March 15, 2012 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of information technologies and display technologies based in China, today announced that its Board of Directors has approved the termination of its stock purchase plan. At the same time, the Company's chairman and chief executive officer, Mr. Jiang Huai Lin, entered into a new $2 million purchase plan. Mr. Lin also agreed to purchase 1,084,895 shares in a private transaction outside the purchase plan at a purchase price per share of $1.20.

The Company has approximately 27.0 million shares outstanding, approximately 41.0% of which are currently held by Mr. Lin, not including the pending acquisition of approximately 1.1 million shares as described above.

Mr. Lin commented, "To reemphasize my commitment to the Company and my belief in its potentially strong future, I have decided to continue the increase in my equity holdings in the Company by reinitiating my purchases under our purchase plan and making a separate private purchase. At the same time, the termination of the Company's share repurchase plan will enable it to devote more resources to other priorities such as marketing and research and development."

The purchases under the new purchase plan will be made from time to time on the open market or in privately negotiated transactions at the discretion of Mr. Lin's broker, subject to market conditions and other factors, including black-out periods during which Mr. Lin and others are prohibited from trading in the Company's shares.

As the increase in our customer base and sales were primarily a result of an increase in non-public sector customers, the risk of recoverability increased compared with previous periods. Additionally, although we have had no significant experience of failure in the collection of accounts receivable from government customers, the recent slowdown in payments described above has caused us to view these customers’ risk of recoverability as having increased. In this regard, we further noted that turnover days of accounts receivable increased. The accounts receivable that were outstanding for longer than one year accounted for 52% of total accounts receivable as of December 31, 2011 and 6% as of December 31, 2010, and government customers accounted for 91% of all receivables outstanding for longer than one year as of December 31, 2011 compared to 57% as of December 31, 2010.

Fourth Quarter 2011 Results

• Revenues decreased 49.0% YoY to US$31.2 million 
• Gross Profit decreased 57.1% YoY to US$9.3 million 
• Operating loss of US$6.2 million mainly due to write-downs in inventory and increases in bad debt reserves
• Net loss of US$5.7 million 
• Cash flow from operations increased 12.9% to US$9.1 million

SHENZHEN, China, March 2, 2012 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of information technologies and display technologies based in China, today announced that it has filed a Certificate of Change pursuant to Section 78.209 of the Nevada Revised Statutes with the Nevada Secretary of State to effect a one (1)-for-two (2) reverse stock split of the authorized and issued and outstanding Common Stock, par value $0.01 per share, of the Company. The reverse stock split will be effective at the market opening on March 2, 2012, at which time the Company's Common Stock will begin trading on the NASDAQ Stock Market on a split-adjusted basis. The Company's Common Stock will continue to trade under the symbol "CNIT." The Company's common stock will trade under a new CUSIP number.

The Company's stockholders of record will receive instructions from its transfer agent and exchange agent for the reverse stock split, Island Stock Transfer, regarding the procedures for exchanging their stock certificates in connection with the reverse stock split. Stockholders are encouraged to surrender their stock certificates in connection with the reverse stock split. Those stockholders who hold their CNIT common stock in "street name" will receive instructions from their broker if they need to take any action in connection with the reverse stock split.

The Company is implementing the reverse stock split to maintain compliance with NASDAQ listing requirements. Following the reverse stock split the Company will have approximately 27.6 million shares issued and outstanding, exclusive of shares issuable under option and warrant agreements. Following the reverse stock split, the number of total authorized shares of the Company's common stock will be reduced to 100 million shares.

Item 4.01  Changes in Registrant’s Certifying Accountant.

On December 28, 2011, China Information Technology, Inc. (the “Company”) dismissed its principal independent accountant, BDO Limited (“BDO”) from its engagement with the Company, which dismissal was effective immediately. BDO was engaged by the Company on April 21, 2010. The decision to dismiss BDO as the Company’s principal independent accountant was approved by the Audit Committee of the Company on December 28, 2011.

There were no disagreements between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, within the period from BDO’s engagement and through the fiscal year of the Company ended December 31, 2010 and subsequently up to the date of dismissal which disagreements that, if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the subject matter of the disagreement in connection with its report issued in connection with the audit of the Company’s financial statements.

SHENZHEN, China, December 27, 2011 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of information technologies and display technologies based in China, today announced that the Company has received a staff deficiency notice from The NASDAQ Stock Market informing the Company that its common stock has not met the $1.00 minimum bid price requirement for continued listing on The NASDAQ Global Market under NASDAQ Listing Rule 5450(a)(1). The Company did not meet NASDAQ's minimum bid price requirement because the closing bid price for its common stock for each trading day in the 30-business day period from November 9, 2011 to December 22, 2011 was less than$1.00 per share. The notification letter stated that CNIT will receive 180 calendar days, or until June 20, 2012, to regain compliance with the NASDAQ listing requirements. During this compliance period, the closing bid price for CNIT's common stock must be at least $1.00 for a minimum of ten consecutive business days for the Company to regain compliance. In the event that the Company does not regain compliance within this period, it may be eligible for additional time to regain compliance by filing a listing application to transfer its common stock to the NASDAQ Capital Market and satisfying certain other requirements. The notification letter has no effect at this time on the listing of the Company's common stock on the Nasdaq Global Market. The Company's common stock will continue to trade on the Nasdaq Global Market under the symbol "CNIT".

The Company intends to actively monitor the bid price for its common stock between now and June 20, 2012, and will consider all available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

Our customers have historically been primarily public sector entities that use our products and services to improve the service quality and management level and efficiency of public security, traffic control, fire control, medical rescue, border control, surveying, mapping, and healthcare management. Over the past several years, especially during 2011 and 2010, we diversified our customer base beyond our historical geographic reach and expanded our market and product offerings in the public and private sectors, through geographic expansion and enhancement of our technical capabilities. Along with our expansion in the market, our customer base of accounts receivable increased from 234 as of December 31, 2009, to 289 as of December 31, 2010, and to 350 as of September 30, 2011.

Due to the Chinese government’s implementation of monetary tightening policies since the second quarter of 2011, government customers have slowed their payment of our accounts receivables. Historically, government customers generated over half of our revenues. As a result, the percentage of total accounts receivable attributable to government customers increased to 82% as of September 30, 2011 from 77% as of December 31, 2010.

As the increase in our customer base and sales were primarily a result of an increase in non-public sector customers, the risk of recoverability increased compared with previous periods. Additionally, although we have had no significant experience of failure of collection of accounts receivables by government customers, the recent slowdown in payments described above has caused us to view these customers’ risk of recoverability as having increased. In this regard, we further noted that turnover days of accounts receivables increased. The accounts receivables that were outstanding for longer than one year accounted for 41% of total accounts receivable as of September 30, 2011 and 6% as of December 31, 2010, and government customers accounted for 91% of all receivables outstanding for longer than 1 year as of September 30, 2011 compared to 57% as of December 31, 2010.

Third Quarter 2011 Resutls

SHENZHEN, China, Sept. 16, 2011 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of information technologies and display technologies based in China, today announced that its Board of Directors has approved the extension of the Company's current $5 million share repurchase program, which it originally announced on September 27th, 2010. The expected duration of the extension will be one year.

The amount, timing and extent of any repurchases will depend on market conditions, the trading price of its common shares and other factors and will be subject to restrictions relating to volume, price and timing under applicable law, including Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. The Company expects to implement this share repurchase program over the next 12 months, in a manner consistent with market conditions and the interest of shareholders. Repurchases may be in open-market transactions or through privately negotiated transactions, and the repurchase program may be expanded by the Board of Directors in the future. The repurchases will be funded with available cash on hand. Any shares of common stock repurchased under the program will be returned to treasury.

Mr. Jiang Huai Lin, Chairman and CEO of the Company, said, "Given difficulties in market conditions over the past year, and the more recent effects of the Chinese government's counter-inflationary policies, we are extending the duration of our share repurchase plan.  Throughout this trying period we have managed our cash prudently in the interest of our shareholders, while remaining confident in our long-term performance.  The one year extension of our share repurchase plan is a reflection of that confidence."

SHENZHEN, China, Aug. 16, 2011 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT) (the "Company"), a leading provider of information technologies and display technologies based in China, today announced that its Chairman and CEO, Mr. Jiang Huai Lin, has agreed to revise the terms of his earlier $5 million loan to the Company, allowing the loan's repayment to be converted into the Company's shares. The Company's Board of Directors approved the loan amendment on August 16, 2011 and the amendment was signed on August 16, 2011.

Effective August 16, 2011, the loan will be converted into 1,851,852 shares of the Company's common stock, at a conversion price of $2.70 per share, a premium of slightly over 100% of the average closing price of the Company's common stock over the prior four trading days. The loan was originally made to the Company in March 2010 as part of a note in the amount of $6 million and was not convertible into the Company's common stock. The Company repaid $1 million under the note in April 2010, resulting in a $5 million balance under the note.

Mr. Lin provided the following remarks: "Given my confidence in the long-term growth outlook for the Company, the Company and I have approved the amendment to the loan's repayment terms. The amendment allows for greater flexibility with our Company's current cash balance, while the premium price on the newly converted shares serves to lessen the dilution to shareholders that would have otherwise occurred if the loan were converted at the current market price. Looking ahead, we will continue to manage the Company’s cash prudently and in the best interests of our Company and our shareholders, while remaining focused on executing our core business strategies."

Rodman and Renshaw on CNIT                           7/15/2011

CNIT: 2Q11 New Contract Update

2Q11 Contract Wins Announced: CNIT announced its 2Q11 new contract numbers with a total of $30.4 MM in new project signed during the quarter, compared to $39.3 MM of new contract wins during 2Q10, implying a 22.6% y-o-y decline. By segments, core IT segment, which includes GIS, DPST, and DHIS software products, contributed $19.8 MM, accounting for 65% of total, while the Digital Display segment contributed $10.6 MM or 35% of total. Some of the key contact wins include:

· $3.5 million for additional works with the Shenzhen Traffic Police Bureau;

· $2.4 million for a follow-on project for the Shenzhen Police TETRA system;

· $1.8 million for a follow-on project for the Shenzhen Summer Universiade security management system;

· $1.7 million for a follow-on project for the Shenzhen - Hong Kong border e-Channel systems.

Figure 1: CNIT’s Historical Quarterly Contract Wins

Source: Company Data

Key Takeaways: In its press release management attributed the y-o-y and sequential decline to: (1) overall monetary tightening in China; and (2) the company’s continued efforts to turn more selective when bidding on new projects in order to improve its accounts receivable turnover and overall profitability. Based on the latter investors should be looking for improvements in the company’s operating metrics. We have seen some improvement on its operating cash flow in 1Q. (AR decreased by ~$140K in 1Q11 compared to an increase of $10.5 MM in 1Q10). The stock could be rewarded with a better multiple if the selective bidding effort and move towards increasing the mix of non-government business is successful. We will be seeking more clarity on margin impacts from the execution of this strategy and encourage investors to closely monitor improvements in the company’s earnings quality.

Valuation: At current levels CNIT is trading at P/E multiples of ~2.7x and ~2.4x to our FY11 and FY12 Non-GAAP earnings estimates. This is well below industry averages for similar players in the US and China. We believe CNIT should be trading in line with industry averages given the growth opportunity associated with it. Our price target of $9.00 translates into a P/E multiple of ~10.7x and ~10.6x to our earnings estimates for FY11 and FY12. This compares to an average forward FY11 and FY12 P/E multiple of ~25.2x and ~19.8x for similar companies listed in China and ~21.6x and ~16.3x for those listed in the US.

Risks: 1) Raw Materials Risk 2) Highly competitive industry 3) Geographic Concentration.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

SHENZHEN, China, July 5, 2011 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of Information Technologies and Display Technologies based in China, today announced that the Hunan Department of Health has qualified its proprietary digital hospital information systems (DHIS) for use throughout the entire province. The qualification effectively extends the Company's DHIS to the Hunan market, in addition to its current presence in the Guangdong, Guangxi and Hainan markets.

In 2010, China's Ministry of Health and Ministry of Finance, together, called for reform of the country's healthcare systems, including the update of information systems at over 8,000 county-level hospitals across the country. In order to participate in the update, prospective vendors shall go through a rigorous project bidding and approval process. In May 2011, the Hunan Department of Health invited China Information Technology and dozens of other DHIS software vendors to a preliminary round of bidding for projects in Hunan, where experts performed strict evaluations on competing DHIS, electronic medical records systems (EMR), medical imaging systems (PACS), and laboratory information systems (LIS).

CNIT's sophisticated software products passed all necessary assessments in each product category. As a result, the Company became one of only four qualified vendors whose DHIS products are recommended by the Hunan Department of Health.

"We are pleased to become one of the few DHIS vendors in China whose products meet all standards and testing requirements of the Hunan Department of Health," said Mr. Jiang Huai Lin, Chairman and CEO of the Company. "The recognition puts us in a favorable position to win future digital hospital projects related to the Ministry of Health mandate, and to further penetrate the Hunan market. We look forward to securing a critical first-mover position and a solid customer base in Hunan Province as we prepare to implement a top-down roll-out of our sophisticated products."

SHENZHEN, China, June 1, 2011 /PRNewswire-Asia-FirstCall/ -- China Information Technology, Inc. (Nasdaq:CNIT), a leading provider of Information Technologies and Display Technologies based in China, today announced a newly signed contract worth US$3.5 million for work with the Shenzhen Traffic Police Bureau ("the Bureau"). The contract includes work to design and create three tailored technology systems, which include:

a special "On-Stop Driving License Processing System." The Company's technology is expected to provide efficient, comprehensive guidance and management for over 2 million vehicles in Shenzhen city, while helping to standardize the Bureau's information management and business processing. The system will be comprised of 3 comprehensive platforms, over 20 processing sub-systems, and made to integrate with over 20 system components related to vehicle drivers;

a "Consolidated Vehicle-Related Business Auditing and Monitoring System." This system aims to consolidate all vehicle management-related sub-systems into one comprehensive platform.  It will facilitate business applications, data analysis and processing, remote operations auditing and enable monitoring with large-screen displays; and

a "Vehicle Inspection and License Plate Management System." This system will provide faster, more efficient processing for vehicle inspection and license plate issuing.

"We are excited to be working further with the Shenzhen Traffic Police Bureau to help them manage the growing challenges ofShenzhen's traffic management, undoubtedly one of the most difficult traffic tasks in the country," said Mr. Jiang Huai Lin, Chairman and CEO of the Company.  "The Bureau has long been a significant customer of ours for many years, and we are proud to continue to provide them with our proven, best-in-class information systems services."

SHENZHEN, China, May 27, 2011 /PRNewswire-Asia/ -- China Information Technology, Inc. (Nasdaq: CNIT), a leading provider of Information Technologies and Display Technologies based in China, today announced Ms. Jackie You Kazmerzak will resign from her post as Chief Financial Officer effective May 30, 2011 to pursue another career opportunity. The Company is in the process of vetting suitable candidates to serve as the Company's CFO following Ms. Kazmerzak's departure.　

"We wish to thank Jackie for her extraordinary contributions during her tenure at China Information Technology. As CFO she implemented a number of industry best-practices and raised the professionalism of our financial practices. We wish her the very best in her new endeavors," said Mr. Jiang Huai Lin, Chairman and CEO of the Company. "We will take the time necessary to ensure that we find the best possible candidate to build on Jackie's accomplishments. We remain fully committed to the highest levels of transparency and corporate governance," concluded Mr. Lin.

In the interim, Ms. Eva Liu, CPA, who is the Company's Financial Controller, will continue to manage daily financial operations, supported by the Company's established finance team. Ms. Liu has been with the Company since 2009. Prior to joining the Company, Ms. Liu worked with Ernst & Young's Shenzhen office for over five years. She has extensive experience in financial controls and planning, and a deep understanding of the U.S. GAAP and accounting-related rules and regulations applicable to U.S.-listed companies. Ms. Liu holds a bachelor's degree of Finance from Zhongnan University of Economics and Law.

Ms. Iris Yan, Director of Investor Relations and Corporate Secretary, and Ms. Margie Ma, Investor Relations Manager, will continue to manage the Company's investor relations activities. Until a new CFO is appointed, Ms. Liu and Ms. Yan will report directly to China Information Technology's Chairman and Chief Executive Officer, Mr. Jiang Huai Lin.

Rodman and Renshaw on CNIT                              5/27/2011

CNIT: CFO Departure Triggers Selloff

CFO Resignation: CNIT announced that its CFO, Ms. Jackie Kazmerzak effective May 30, 2011 will resign from her post to pursue another career opportunity. The company’s current financial controller, Ms. Eva Liu, CPA will assume the interim CFO role until the company hires an official CFO. The press released stated that the company is currently in the process of vetting candidates to replace Ms. Kazmerzak.

Stock Reaction Likely Overdone: Following the news, CNIT shares were down ~25% in the morning trading. We believe investors may have over-reacted given that fundamentally the business operation has not changed. However, the over-reaction is not surprising given the extremely fragile investor sentiment on China small cap in an environment of auditor resignations and stock halts. We spoke to Ms. Kazmerzak and believe her departure is driven by a new opportunity rather than her concerns on the soundness of the company. This announcement is coming right before an extended weekend and investors may be reluctant to hold their positions. Recent history has shown that some stock halts have come into play post CFO resignations. We don’t believe today’s development should warrant such an action. However, the market will be looking to see a full time, qualified CFO assigned quickly and for stock support from the company and insiders.

Maintain Market Outperform Rating: At current levels CNIT is trading at P/E multiples of ~2.3x and ~2.0x to our FY11 and FY12 Non-GAAP earnings estimates. This is well below industry averages for similar players in the US and China. We believe CNIT should be trading, in line with industry averages given the growth opportunity associated with it. Our price target of $9.00 translates into a P/E multiple of ~11.3x and ~9.5x to our earnings estimates for FY11 and FY12. This compares to an average forward FY11 and FY12 P/E multiples of ~23x and ~18.2x for similar companies listed in China and ~20.6x and ~15.4x for those listed in the US. We maintain our Market Outperform rating.

Risks: 1) Technology Risk 2) Highly competitive industry 3) Geographic Concentration 4) Country Risk

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

First Quarter 2011 Financial Highlights

• Revenues increased 6.5% YoY to US$26.95 million 
• Gross Profit increased 22.82% YoY to US$ 13.65 million, with Gross Margin expanding to 50.67 %
• Operating Profit increased 35.83 % YoY to US$ 8.92 million 
• Non-GAAP Net Income increased 22.91% YoY to US$ 7.36 million 
• Non-GAAP Fully Diluted EPS was US$0.14 vs. US$0.12 
• Cash flow from operations was US$1.90 million vs. negative $11.34 million a year ago

"Despite the first quarter usually being the slowest time of the year due to the Chinese New Year holiday, we are pleased to report healthy results and improved quality of earnings," said Mr. Jiang Huai Lin, Chairman and CEO of CNIT. "Year-over-year revenues grew by 6.5%, to US $26.95 million, while gross profit was up by over 22.82% and gross margin expanded to 50.67%. Moreover, cash flow from operations improved significantly from a year ago. Contract wins during the first quarter of 2011 came from 26 regions and were valued at $36 million, an increase of 17.6% compared to the same period last year."

Financial Outlook

For fiscal year 2011, the Company reiterates its guidance with projected

• revenue in the range of $165 million to $187 million 
• adjusted net income in the range of $42 million to $45 million, excluding any non-cash expenses as a result of employee stock awards, amortization of intangible assets associated with acquisitions and changes in fair value of contingent considerations.

Rodman and Renshaw on CNIT                     5/10/2011

CNIT: 1Q11 Earnings Update; Margins Bounce Back

1Q11 Results: CNIT reported its 1Q11 revenue and Non-GAAP net income of $26.9 MM and $7.4 MM, with Non-GAAP diluted EPS of $0.14. This compares to our expectations of $30.1 MM, $6.8 MM, and $0.13, respectively. Under US-GAAP, net income and EPS were $8.2 MM and $0.16.

Share Buyback Update: Management indicated that share buybacks have not yet taken place. This is due to compliance driven execution restrictions. Though we would like to see some buying support for the stock, we believe management should weigh any share buyback against working capital needs. CNIT in September 2010 announced that their Board had approved a $5.0 MM share buyback plan effective for one year. The buyback was intended to be funded with available cash on its balance sheet. As per the call, the next buyback restriction ends in three days and the window should be open till end of May 2011.

Key Takeaways: CNIT’s gross margin improvements in 1Q11 exceeded our expectations by ~10%. This encourages us to believe that gross margin for 2011 should, at a minimum come in line, with that seen in 2010. Management’s efforts to de-emphasize customers who were a drag on the balance sheet and cash flows began in 3Q10 and the strategy seems to be working with the company generating positive operating cash flows in the quarter. Continued execution on these lines should help boost investor confidence. One of the key indicators on this front will be improvements in the company’s Accounts Receivables level. The company’s $37.93 MM backlog remains healthy. The company typically recognizes IT backlog in 3-6 months and DT backlog in ~3 months. Management indicated that they may have Smart Grid related news in the near future. If this news is meaningful it could be a positive catalyst for the stock. We continue to believe that the last few bouts of selloff in the stock may have been overdone as the overall story remains intact. However, management should maintain a pro-active IR effort to re-engage investors.

FY11 Guidance Reiterated: The company reiterated its guidance for revenue and Non-GAAP earnings of $165 MM ~ $187 MM and $42 MM ~$45 MM for FY11, representing 10% ~15% y-o-y growth and a relatively flat profit margin compared to FY10.

2Q11 Projections: For 2Q11, we are now projecting revenue and Non-GAAP net income of $37.4 MM and $9.0 MM, with Non-GAAP diluted EPS of $0.17. For the full year numbers, we expect the company to generate $180.1 MM in revenue, $44.9 MM in Non-GAAP earnings, and $0.84 in diluted EPS, which are in the high end of the guided range. We are introducing our FY12 projections of $200.9 MM for top-line, $51.8 MM for Non-GAAP earnings, and $0.95 for Non-GAAP diluted EPS.

Valuation: At current levels CNIT is trading at P/E multiples of ~3.3x and ~2.9x to our FY11 and FY12 Non-GAAP earnings estimates. Our price target of $9.00 translates into a P/E multiple of ~10.7x and ~10.6x to our earnings estimates for FY11 and FY12.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

SHENZHEN, China, April 14, 2011 /PRNewswire-Asia-FirstCall/ --, China Information Technology, Inc. (Nasdaq: CNIT), a leading total solutions provider of geographic information systems (GIS), digital public security technology (DPST) and digital hospital information systems (DHIS) in China, today announced that its newly signed contracts in the first quarter of 2011 were valued at $36 million, an increase of 17.6% compared to the same period last year.

Rodman and Renshaw on CNIT                4/14/2011

CNIT: 1Q11 New Contracts Update

1Q11 New Contracts: CNIT announced its newly signed contracts during 1Q11 valued at $36.0 MM, a y-o-y increase of ~17.6% from $36.7 MM in 1Q11. Some of the key contact wins include:

• $3 MM – Shuohuang Railway Geographic Information System.
• $1.3 MM – Police-use GIS and PDA equipment for the Shenzhen Traffic Police Mobile Law-enforcement System;
• $1.0 MM – First Responder Coordination System for the Anxi City.
• $1.0 MM – Police-use GIS platform in Jiaozuo and Hebi City of Henan Province, under China's National PGIS Standardization Project.
• $0.6 MM – Digital hospital information systems platform for the Shenzhen Futian Second People's Hospital.

Figure 1: New Contracts Signed Over Time

Source: Company Data, RODM Research

Key Takeaways: Today’s announcement should provide some support to CNIT stock that has been on a downward trajectory since the beginning of the year. In our opinion the severity of the pullback (50%) may have been overdone, A key near term fundamental catalyst will be management’s ability to demonstrate some margin recovery in 1Q11 after a negative surprise in the 4Q10.

Valuation: At current levels CNIT is trading at P/E multiples of ~3.0x to our FY11 Non-GAAP earnings estimates. This is well below industry averages for similar players in the US and China. We believe CNIT should be trading, in line with industry averages given the growth opportunity associated with it. Our new price target of $9.00 translates into a P/E multiple of ~11.3x to our earnings estimates for FY11. This compares to an average forward FY11 P/E multiple of ~23.7x for similar companies listed in China and ~18.6x for those listed in the US.

Risks: 1) Raw Materials Risk 2) Highly competitive industry 3) Geographic Concentration.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on CNIT                            3/25/2011

CNIT: Stock Lower Sans New Developments; Maintain Market Outperform

Stock Performance: CNIT dropped over 15% yesterday without any negative news flow. We believe the weak stock performance over the last six months accompanied by heightened confusion associated with the small cap China sector may be causing investors to exit positions. We believe there has been no new development within the company since it held its 4Q10 earnings conference call held on March 8, 2011 to warrant this pullback.

2010 Audited Results Delivered: CNIT has already filed its 10K for BDO audited 2010 results. The 2010 10K filing season for the small cap China space has brought with it concerns around re-statements and auditor resignations but these should not apply to CNIT.

Expecting Margin Improvements in 1Q11: Investors were negatively surprised with lower margins in 4Q10 as the revenue mix included some one time clearance type sales. However, we are expecting sequential margin improvements (from ~35% in 4Q10 to ~40% in 1Q11). We believe the stocks post earnings pull back more than accounted for this development.

Investment Theme Remains Relevant: We believe CNIT should continue to be well positioned in China’s ‘Quality over Quantity’ growth approach over the next five years. We are not anticipating slow-down in demand for ‘soft’ infrastructure in China. The company’s revenue diversification strategy to include more consumer centric offerings should be a positive in relation to alleviating working capital constraints.

Stock Repurchase Program Still In Place: CNIT in September 2010 announced that their Board had approved a $5.0 MM share buyback plan effective for one year. The buyback was intended to be funded with available cash on its balance sheet. The company ended 4Q10 with $18.2 MM in cash, and DSO improved to 142 days in the quarter. The company generated $8.1 MM operating cash flow during 4Q10, compared to $3.2 MM in 4Q09.

Maintain Market Outperform: We continue to maintain our Market Outperform rating on CNIT as we remain optimistic on government technology spending in China. We believe CNIT is positioned quite well in several large scale and long term opportunities that provide growth avenues for its products and services. At current levels CNIT is trading at P/E multiples of ~3.3x to our FY11 Non-GAAP earnings estimates. This is well below industry averages for similar players in the US and China. Our price target of $9.00 translates into a P/E multiple of ~11.3x to our earnings estimates for FY11. This compares to an average forward FY11 P/E multiple of ~23.8x for similar companies listed in China and ~18.3x for those listed in the US.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on CNIT                                                  3/14/2011

CNIT: Looking For Margin Bounce in 1Q11; Lowering Price Target to $9.00

4Q10 Results: CNIT reported its 4Q10 revenue and Non-GAAP net income of $ 61.2 MM and $11.08 MM, with Non-GAAP diluted EPS of $0.21. This compares to our expectations of $44.2 MM, $11.6 MM, and $0.23, respectively. Under US-GAAP, net income and EPS were $8.2 MM and $0.16. Gross profit grew from $15.8 MM in 4Q09 to $21.6 MM for the quarter, while gross margin declined significantly from 50.03% in 4Q09 and 48.1% in 3Q10 to 35.22% in 4Q10, mainly driven by a liquidation of some HPC’s non-strategic inventory sold at cost as part of its restructuring process. Non-GAAP net income was $11.08 MM, compared to $9.5 MM in 4Q09 and $11.9 MM in 3Q10.

Over-reaction To Lower 4Q10 Margins? We view the ~35% drop in CNIT stock post its 4Q10 results as an over-reaction. The lower margins driven by one-time clearance sales for Huipu products were unexpected and negatively surprised investors. However, we believe this will not be a recurring theme and are expecting gross margins to bounce back to the ~40% levels in 1Q11 and potentially continue improving as the year progresses.

Top Line Guidance Spread Driven By Display Technology Business: We believe the key driven behind the spread in the company’s 2011 revenue guidance range of $165 MM to $187 MM is the Display Technology business. We will be looking for this range to be narrowed as the year progresses and management has better visibility for this segment. Investors should note that the Display business is more consumer centric and should be a positive from a working capital perspective (reduced DSO’s).

FY11 Guidance: The company is guiding for revenue and Non-GAAP earnings of $165 MM ~ $187 MM and $42 MM ~$45 MM for FY11, representing 10% ~15% y-o-y growth and a relatively flat profit margin compared to FY10.

1Q11 Estimates: For 1Q11, we are now projecting revenue and Non-GAAP net income of $30.1 MM and $6.8 MM, with Non-GAAP diluted EPS of $0.13. For the full year numbers, we expect the company to generate $184.0 MM in revenue, $42.4 MM in Non-GAAP earnings, and $0.79 in diluted EPS.

Lowering Price Target To $9.00: We are lowering our price target on CNIT from $11.00 to $9.00 to reflect current margin trends. However, we continue to maintain our Market Outperform rating on CNIT as we remain optimistic on government technology spending in China. We believe CNIT is positioned quite well in several large scale and long term opportunities that provide growth avenues for its products and services. At current levels CNIT is trading at P/E multiples of ~4.8x to our FY11 Non-GAAP earnings estimates. This is well below industry averages for similar players in the US and China. Our new price target of $9.00 translates into a P/E multiple of ~11.3x to our earnings estimates for FY11. This compares to an average forward FY11 P/E multiple of ~23.9x for similar companies listed in China and ~17.7x for those listed in the US.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

CONSOLIDATED STATEMENTS OF INCOME 
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
Expressed in U.S. dollars (Except for share amounts)

-F- 6 -

Fourth Quarter 2010 Financial Highlights

• Revenues increased 94.1% YoY to US$61.22 million 
• Gross Profit increased 36.6% YoY to US$21.56 million 
• Non-GAAP Operating Profit increased 33.3% YoY to US$13.18 million 
• Non-GAAP Net Income increased 17.2% YoY to US$11.08 million 
• Non-GAAP Fully Diluted EPS was US$0.21 vs. $0.19
• Cash flow from operations increased 156.3% to US$8.08 million
  

Full Year 2010 Financial Highlights

• Revenue increased 62.2% YoY to US$163.85 million 
• Gross Profit increased 39.3% YoY to US$70.56 million 
• Non-GAAP Operating Profit increased 32.8% YoY to US$47.01 million 
• Non-GAAP Net Income increased 19.5% YoY to $38.5 million
• Non-GAAP Fully Diluted EPS was US$0.74 vs. $0.66
• Cash Flow from Operations increased 134.8% YoY to $26.95 million 
• Updates FY2011 Revenue and Adjusted Net Income Guidance

"We are pleased to announce strong results for both the fourth quarter and full year 2010 and notable achievements across all our business segments. In the fourth quarter we signed $39.6 million in new contracts, bringing the total value of contracts signed in 2010 to $151.5 million, up 35.8 percent as compared with the previous year," said Mr. Jiang Huai Lin, Chairman and CEO of the Company.

"Looking ahead, our business is aligned with the top priorities of the Chinese government. GIS, IT for public safety and HIS all fall under key development areas within China's 12th 5-year plan. In the coming years, we will continue to sharpen our edge as the standard-setter for all of our existing business segments, and diversify into the private sector with new display technology products and internet solutions. We are even more confident we will expand our nationwide penetration strategy, while developing scalable and recurring revenue sources, providing lasting value to our shareholders, over the long term."

Financial Outlook

For fiscal year 2011, the Company updates its guidance with

• projected revenue in the range of $165 million to $187 million
• adjusted net income in the range of $42 million to $45 million, excluding any non-cash expenses as a result of employee stock awards, amortization of intangible assets associated with acquisitions, and changes in fair value of contingent considerations.

GeoTeam® Note: Guidance works out to an implied EPS of $0.83 vs. an $0.87 estimate.

Rodman and Renshaw on CNIT                 1/14/2011

CNIT: 4Q10 New Contract Update 

4Q10 New Contracts: CNIT announced its newly signed contracts during 4Q10 valued at $39.6 MM, a Y-o-Y increase of ~7.8% from $36.7 MM in 4Q10. On a full year basis, the company signed a total of $151.5 MM of new contracts in FY10, up 35.8% from $111.6 MM in FY09. 4Q10 new contracts consist of GIS, DPST, and DHIS system orders across 25 provinces and cities in China. Some major contract wins during the quarter include:

• $3 MM under China's National PGIS Standardization Project, to install its core PGIS platform in Jincheng (Shanxi Province), Guangzhou and Foshan (Guangdong Province), Nanning (Guangxi Province), and Henan Province; 
• $1.5 MM to supply digital large-screen products to customers in the Chinese coal mining industry; 
• $1.1 MM for a GIS project at the Zhongshan City Medical Rescue Center; 
• $0.9 MM for a First Responder Platform for the Yunfu City 110 Command Center; 
• $0.6 MM for the Hospital Information System (HIS) upgrade at the Shenzhen Longgang Hospital.   

Key Takeaways: This update shows a slower Y-o-Y growth of new contracts signed during the quarter, compared to the growth over the 9-month period of 2010. On a full year basis, the company still delivered a strong growth of 35.8% in contract wins. We remain confident about the public security / surveillance market in China, and we continue to believe CNIT is well positioned to capture the increase in government spending on this area. We think the upcoming 12^th Five-Year Plan with more detailed policies on public security and smart grid investments will likely to be an important catalyst for CNIT shares. Other catalysts include (1) stronger-than-expected 4Q10 earnings and (2) positive news flow on smart grid build-out and National Geographic Information Public Service Platform.

Valuation: At current levels CNIT is trading at P/E multiples of ~7.0x and ~6.1x to our FY10 and FY11 GAAP earnings estimates of $0.73 and $0.83. These multiples are well below industry averages for similar players in the US and China. We believe CNIT should be trading, in line with industry averages given the growth opportunity associated with it. We are comfortable maintaining our $11.00 price target on CNIT, which translates into a P/E multiple of ~15.1x and ~13.3x to our earnings estimates for FY10 and FY11. This compares to an average forward FY11 P/E multiple of ~23.2x for similar companies listed in China and ~15.7x for those listed in the US.

Risks: 1) Raw Materials Risk 2) Highly competitive industry 3) Geographic Concentration.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman & Renshawon CNIT:

Overview: CNIT announced 3Q10 revenue and Non-GAAP net income of $43.8 MM and $11.9 MM, with Non-GAAP diluted EPS of $0.23, beating our expectations of $40.2 MM, $11.0 MM, and $0.21 respectively; Street consensus was $40.9 MM, $10.8 MM, and $0.21, respectively. Under US-GAAP, net income and EPS were $10.6 MM and $0.21. 

Normalized Gross Margin: Total gross profit for the quarter was $21.1 MM, growing 39.5% from 3Q09, representing a gross margin of 48.13% compared to 52.7% in 3Q09 and 50.1% in 2Q10. Excluding the acquisition of Huipu, which generated ~9.68% gross margin, the organic gross margin for CNIT was 57.03%. The change in gross margin was primarily driven by (1) normalization of GM in product sales from 27.8% to 15.2%; (2) lower GM in software business due to the outsourcing started in 1Q10; (3) an increase in revenue contribution from product sales, which generated relatively lower GM. 

Balance Sheet: As of September 30, 2010, CNIT had $18.0 MM in cash, $91.8 MM in total accounts receivable, $23.5 in inventory, and $36.0 MM in total bank loans. Working capital was $63.1 MM, while total assets stood at $325.6 MM. Overall, the cash flow and balance sheet picture has improved sequentially. 

Backlog Remains Healthy: As of September 30, 2010, CNIT recorded a total of $50.5 MM in backlog, compared to $36.1 MM in 3Q09 and $52.3 MM in 2Q10. We believe this backlog number is an indication of a healthy demand for CNIT’s products and services. During 3Q10, according to management, the company won a series of contracts from 25 provinces, including high profile national projects such as State-backed “Map World” and 2011 Shenzhen Universiade. 

Guidance & Estimates: The company reiterated its FY10 guidance of $141 MM~$146 MM in revenue and $35.5 MM~$39.5 MM in net income. Management also introduces FY11 guidance with $165 MM~$172 MM in revenue and $43 MM~$45 MM in net income. Our 4Q10 estimates are maintained at $44.2 MM, $11.2 MM (Non-GAAP), and $0.22, respectively. This implies a full year projection of $146.8 MM, $39.0 MM (Non-GAAP), and $0.76 per share. For FY11, we are now projecting revenue, Non-GAAP net income, and diluted Non-GAAP EPS of $167.3 MM, $45.3 MM, and $0.88, respectively. Management has a history of being conservative in its guidance. We believe movement on smart grid related projects could provide upside to the guidance provided. 

 Valuation: At current levels CNIT is trading at P/E multiples of ~8.8x and ~7.8x to our FY10 and FY11 GAAP earnings estimates. These multiples are well below industry averages for similar players in the US and China. We believe CNIT should be trading, in line with industry averages given the growth opportunity associated with it. We are comfortable maintaining our $11.00 price target on CNIT, which translates into a P/E multiple of ~15.1x and ~13.3x to our earnings estimates for FY10 and FY11.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Third Quarter 2010 Financial Highlights

• Revenues increased 52.7% YoY to US$43.81 million

• Gross Profit increased 39.5% YoY to US$21.09 million

• Non-GAAP Operating Profit increased 24.5% YoY to US$14.55 million

• Non-GAAP Net Income increased 17.3% YoY to US$11.92 million

• Non-GAAP Fully Diluted EPS was US$0.23 vs. US$0.21 a year ago

• Cash flow from operations reached US$20.42 million

• Backlog of US$50.5 million representing 40.0% YoY growth

Commenting on the Company's third quarter earnings, Chairman and CEO, Jiang Huai Lin, said, "We are pleased to announce the results of another strong quarter."  

"We are fast becoming the IT partner of choice for many high profile government projects across China.  In this past quarter alone, we won a record number of contracts from clients in 25 provinces and cities.  Worth US$42 million in the aggregate, the contracts' value represents a 40% increase compared to the same period last year."

"The wins are indicative of both the continued demand for our unique technological expertise, as well as our brand's growth in our core markets of geographic information systems, healthcare, and public security technologies. In addition, our key role in numerous state-level high profile projects, including China's State-sponsored Web-based Map Service 'Map World' and the 2011 Shenzhen Universiade, further reinforced our unmatchable brand name and core competency in our fields."

"We own 110 software copyrights and 25 patents in China. Our technological expertise is further evidenced by the fact that six out of the seven operating entities under the CNIT umbrella enjoy the National High Tech Corporate status."

"We updated our corporate name and ticker symbol, for the purpose of re-aligning our brand to match our expanded business scope. We also renamed our digital information security technology segment as digital public security technology (DPST) to better reflect the business of the segment.   We are well positioned as a leading provider in China's high-growth information technology field and aim to create value for our shareholders over the long term."

Financial Outlook

For fiscal year 2010, the Company reaffirms its guidance with projected 

• Revenue in the range of $141 million to $146 million
• Adjusted net income in the range of $35.5 million to $39.5 million.

Additionally, with strong growth momentum and high visibility in its core business, the Company is issuing guidance for the full year 2011 with projected

• Revenue in the range of $165 million to $172 million
• Adjusted net income in the range of $43 million to $45 million, excluding any non-cash expenses as a result of employee stock awards, amortization of intangible assets associated with acquisitions, and changes in fair value of contingent considerations.  

Rodman & Renshaw on China Information

Stock Repurchase Program: CNIT announced that their Board has approved a $5.0 MM share buyback plan effective for one year. The timing and shares repurchased will be determined by the company based upon market conditions and subject to Rule 10b-18 under Securities Exchange Act of 1934. The buyback will be funded with available cash on its balance sheet. 

Key Takeaways: We believe CNIT’s share repurchase efforts are being driven by management’s efforts to take advantage of a low valuation being assigned to the company. In our opinion, in CNIT’s case, the market is overlooking the growth opportunity associated with government spending on technology and software to manage China’s burgeoning infrastructure. The stock has performed in line with other small cap China issues i.e. relatively weaker vs. the market. We believe the stock buy-back should provide a level of support and potentially act as a catalyst for a turnaround. 

Growth Drivers / Catalysts 

We continue to be bullish on CNIT driven by: (1) material contract wins in government public security / GIS initiatives and (2) early stages of government IT modernization in China. We believe the public service agencies in China should be expected to adopt new technology offerings to replace / improve legacy systems that are either obsolete or not scalable to deal with the demographic evolution that has occurred with recent economic developments. We maintain that China’s investments in deploying its ‘soft’ infrastructure should remain independent of stimulus related measures. 

Maintain Outperform Rating 

At current levels CNIT is trading at P/E multiples of ~6.3x to our FY10 GAAP earnings estimates. These multiples are well below industry averages for similar players in the US and China. We believe CNIT should be trading, in line with industry averages given the growth opportunity associated with it. We are comfortable maintaining our $11.00 price target on CNIT, which translates into a P/E multiple of ~15x to our earnings estimates for FY10. This compares to an average forward FY10 P/E multiple of ~31x for similar companies listed in China and ~16.4x for those listed in the US. 

Risks 

1) Raw Materials Risk 2) Highly competitive industry 3) Geographic Concentration.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

First Half of 2010 Financial Performance Highlights:

We continued to experience strong demand for our products and services during the six months ended June 30, 2010, which resulted in growth in our revenue and net income. The following are some financial highlights for the six months ended June 30, 2010:

• Revenue: Revenue increased $18.05 million, or 44.3%, to $58.82 million for the six months ended June 30, 2010, from $40.77 million for the six months ended June 30, 2009.
  
• Gross Profit: Gross profit increased $8.17 million, or 41.4%, to $27.92 million for the six months ended June 30, 2010, from $19.75 million for the six months ended June 30, 2009.
  
• Income from operations: Income from operations increased $5.92 million, or 46.4%, to $18.69 million for the six months ended June 30, 2010, from $12.77 million for the six months ended June 30, 2009.
  
• Net income attributable to the Company: Net income attributable to the Company was $15.63 million for the six months ended June 30, 2010, increased $4.08 million, or 35.3%, from $11.55 million for the six months ended June 30, 2009.
  
• Fully diluted net income per share: Fully diluted net income per share was $0.30 for the six months ended June 30, 2010, as compared to $0.24 for the six months ended June 30, 2009.
  
• As at June 30, 2010, the total of our contract backlog was approximately $52.27 million, which was another new record for our Company.

For the 2010 second quarter CPBY reported EPS of $0.18 vs. $0.16 in 2009.  Estimates called for EPS of $0.17.

 "'Though the first quarter has seasonally been a slow quarter for us because of the Chinese New Year holiday, the first three months of 2009 was even slower than anticipated, primarily due to the unexpected effect of the PRC stimulus plan on our operations. We had previously viewed the stimulus plan as a potential additional growth driver for our business. While this may subsequently prove true, the actual effect has been opposite thus far. We did not anticipate that the actual implementation of stimulus initiatives would result in the diversion of local government funding away from our core local projects, as local governments were obligated to allocate part of their spending to support those initiatives. While we continue to be pleased with our business opportunities, our product portfolio, our brand, and our leading market position, we believe that it is prudent for us to revise our year 2009 guidance to reflect the temporary deferment of local government spending."

Guidance Report:

Full Year Fiscal 2009 Guidance Ending December

EPS Figures exclude non-operating gains and losses. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information.

Source: SEC Form 8K (March 16, 2009 , 2009)

Guidance Report:

Full Year Fiscal 2008 Guidance Ending December

Full Year Fiscal 2009 Guidance Ending December

EPS Figures exclude non-operating gains and losses. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information.

Source: SEC Form 8K (February 17, 2009)