WONDER AUTO TECH INC (NASDAQ:WATG)

JINZHOU, China, April 26, 2013 /PRNewswire-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company"), a manufacturer of automotive electrical parts, safety products, suspension products and engine accessories in China, today announced that the First Judicial District Court of the State of Nevada in and for Carson City on April 16, 2013 preliminarily approved the proposed settlement of In re Wonder Auto Technology Inc. Derivative Shareholder Litigation, Lead Case No. 11 OC 00193 1B (Carson City Super. Ct.).

On June 10, 2013 at 1:30 p.m., a hearing will be held before the Honorable James T. Russell, of the First Judicial District Court of the State of Nevada in and for Carson City, 885 East Musser Street, Department 1, Carson City, Nevada 89701, to consider final approval of the proposed settlement

On January 9, 2012, Wonder Auto Technology, Inc. (the “Company”) signed a Memorandum of Understanding (the “MOU”) with Worthy Talent Development Limited (“WTD”), an entity organized under the laws of the British Virgin Islands, pursuant to which WTD agreed to provide a loan, the material terms of which are summarized below, in the amount of US$6,000,000 to the Company within two months. The Company agreed to issue a convertible note (the “Note”) in the amount of US$6,000,000 to WTD at the time the loan proceeds are disbursed.

This Current Report on Form 8-K/A is being filed for the sole purpose of amending the Current Report on Form 8-K filed on December 14, 2011 (the “Original Filing”) to include as Exhibit 16.1 thereto the letter, dated December 15, 2011, from PricewaterhouseCoopers Zhong Tian CPAs Limited Company furnished to Wonder Auto Technology, Inc. and addressed to the Securities and Exchange Commission regarding statements included in the Original Filing. Except as set forth herein, no other changes are being made to the Original Filing.

As previously disclosed, on July 10, 2010, the Company’s wholly owned subsidiary, Vital Glee Development, Ltd. (“Vital Glee”) entered into a conditional disposal agreement with Jinheng Automotive Safety Technology Holdings Limited (“Jinheng Holdings”) (the “Conditional Disposal Agreement”) pursuant to which Vital Glee agreed to acquire Jinheng Holdings’ 100% interest in Jinheng (BVI) Ltd.  Pursuant to the Conditional Disposal Agreement, as subsequently modified, a portion of the purchase price was paid by Vital Glee in cash upon the completion of the acquisition, with the remaining payable in the form of three promissory notes with different maturity dates. The obligations under the notes are secured by all of the issued and outstanding shares of Jinheng (BVI) Ltd. (the “Charged Shares”).  As of the date hereof, the outstanding amounts under the first two promissory notes have been paid on time, and HK$452.0 million (US$57.9 million), plus accrued and unpaid interest, is expected to be paid in full on June 12, 2012 under the third promissory note.

Pursuant to a letter dated October 20, 2011 from Jinheng Holdings to Vital Glee, Jinheng Holdings asserts that Vital Glee has breached its obligations under the Conditional Disposal Agreement as a result of Vital Glee’s failure to notify Jinheng Holdings in writing of the Company’s delisting from the National Association of Securities Dealers Automated Quotation Exchange (“Nasdaq”).  As a result, Jinheng Holdings intends to enforce its security interest in the Charged Shares and requires Vital Glee to agree to additional restrictions on its business operations.  The Company does not believe that Vital Glee is in breach of any covenants under the terms of the charge and is seeking to resolve the disagreement between the parties.

An audit committee investigation of Wonder Auto, launched in response to a March 16 Todor Mitev report, found that relationships between Qingjie Zhao and third parties in connection with five transactions should be disclosed. The committee found that the company lacks sufficient qualified and competent accounting personnel and internal controls and directed the company's CFO to develop a remediation plan to address the deficiencies. The committee instructed the company, in consultation with its auditors, to determine whether the findings require restatement of and/or adjustment to its reported financial results. 8k

JINZHOU, China, Sept. 9, 2011 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company") (Nasdaq: WATG), a manufacturer of automotive electrical parts, safety products, suspension products and engine accessories in China, today announced that it has received notice that its appeal hearing with respect to Nasdaq's previously announced decision to delist the Company's common stock from trading on Nasdaq has been set for October 6, 2011.  As previously reported, the Company received a letter from the Listing Qualifications Department of Nasdaq on August 18, 2011 stating that based on the review of public documents and information provided by the Company, Nasdaq's staff (the "Staff") determined that the continued listing of the Company's securities on Nasdaq is no longer warranted.  Following the receipt of that letter, the Company requested an oral hearing before the Panel to appeal the Staff's determination.

In addition, Nasdaq has notified the Company that the trading halt on the Company's securities will be lifted as of the opening of the market on September 12, however, trading of the common stock of the Company will remain suspended on Nasdaq pending the results of the delisting hearing.  As a result of the lifting of the trading halt, the Company's common stock will become eligible to be traded on the over-the-counter bulletin board commencing September 12, 2011.  

The Company's Audit Committee is still conducting its investigation into certain alleged related-party transactions and other matters as well as whether the Company's financial statements have been manipulated and falsified by former senior corporate officers (the "Investigation"). The Company is working diligently to complete its delinquent Forms 10-K and 10-Q and expects the reports to be completed as soon as possible following the conclusion of the Investigation.  The Company intends to seek relief from the Nasdaq delisting determination and a further extension of time to file its delinquent reports.  

There is no assurance that the Panel will grant the Company's request for relief from the delisting determination.  If the Company's request is denied, the Company's securities will be delisted from Nasdaq.

JINZHOU, China, July 29, 2011 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company") (Nasdaq: WATG), a leading manufacturer of automotive electrical parts, safety products, suspension products and engine accessories in China, today announced that it has appointed Aijun Jiang as its Chief Financial Officer.  

Most recently, Mr. Jiang served as chief financial officer of Qiao Xing Universal Resources, Inc., a company traded on the Nasdaq Global Market (Nasdaq: XING), from August 2008 until April 2011. Mr. Jiang served as the head of finance for Tiens Biotech Group, Inc., a company traded on American Stock Exchange, from September 2005 until July 2008. From July 2003 to August 2005, he served as a consultant (diplomat) in the Economic and Commercial Representation of China in Tanzania, the Economic Section of the Chinese Embassy in Tanzania, and was mainly responsible for providing commercial and financial consultation to Chinese companies conducting business in Tanzania. He is a registered member of the Association of Corporate Treasurers (ACT), Great Britain since 2006, a registered member of the Association of Chartered Certified Accountants (ACCA), Great Britain since 2004, and a registered member of the Chinese Institute of Certified Public Accountants (CICPA), People's Republic of China since 2001.

Mr. Qingdong Zeng, the Company's Chief Executive Officer said of the hiring, "We are excited to welcome Mr. Jiang and his broad array of financial experience working with publicly traded companies. The appointment of Mr. Jiang will be a tremendous addition to the Company's senior management team."

On and effective July 12, 2011, Qingjie Zhao resigned as Chief Executive Officer and President of Wonder Auto Technology, Inc. (the “Company”). Also on July 12, 2011, Meirong Yuan resigned as Chief Financial Officer of the Company.

On July 12, 2011, the Company announced that Qingdong Zeng, the Company’s Chief Strategy Officer, has been appointed acting Chief Executive Officer. Mr. Zeng and will serve in this positions until such time the Company appoints his respective successor.

We believe that we maintain good relationships with the banks we deal with and our current available working capital, after receiving the aggregate proceeds of the capital raising activities and expected bank loans, should be adequate to sustain our operations at our current levels through at least the next twelve months.

JINZHOU, China, May 20, 2011 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company") (Nasdaq: WATG), a leading manufacturer of automotive electrical parts, safety products, suspension products and engine accessories in China, today announced that, as expected, it received a second notification letter (the "Nasdaq Letter") from the Nasdaq Stock Market ("Nasdaq") indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires the timely filing of periodic reports with the U.S. Securities and Exchange.

The Company received the Nasdaq Letter because it has not yet filed its Form 10-Q for the period ended March 31, 2011, and because, as previously announced, the Company has not filed its Form 10-K for the fiscal year ended December 31, 2010. These filings have been delayed as a result of the pending restatement of its financial statements for fiscal years 2008, 2009 and 2010, and for the quarters ended March 31, June 30 and September 30, 2009 and 2010, and the pending investigation by the Company's Audit Committee.

The Audit Committee commenced the investigation in response to a report alleging that the Company had engaged in several transactions without properly disclosing their related-party nature. Based on the information presently available to it, the Audit Committee expects that its investigation will continue at least through June 2011.

As previously announced, the Company's previously reported financial statements for the years ended December 31, 2008 and 2009, and for the quarters ended March 31, June 30 and September 30, 2009 and 2010, should no longer be relied upon and will be restated. Although the Company's work on the restatement is not complete, at this time it is expected that the restatement will be due primarily to certain sales cut-off errors and the timing of expenses associated with stock option compensation. The restatement also includes adjustments to cost of sales associated with the sales cut-off error and other adjustments. None of the amounts have been finalized at this point as the restatement has not been completed. However, based on the information currently available, it is expected that the net effect of the restatement will be to increase reported net income in 2008 and 2009. The Company continues to expect to meet the previously announced guidance for revenue and profit in its press release dated November 9, 2010. No change to the Company's cash position is expected to result from the restatement.

The Company does not anticipate being in a position to file its delinquent filings until the investigation is complete. Based on the Audit Committee's expected timetable for the investigation, and the Company's expected timetable to complete the restatement, the Company estimates that the delinquent filings may be complete by the end of July. There can be no assurance, however, that any of these deadlines will be met, or that the scope or depth of the restatement or the investigation will not change in a material manner, which could result in further delays.

Nasdaq has informed the Company that it has suspended trading in the Company's common stock pending the Company's provision of a satisfactory Plan of Compliance to Nasdaq, which is due by May 23, 2011. The Company has been in communication with Nasdaq regarding the matters noted above and intends to provide its Plan of Compliance to Nasdaq no later than May 23, 2011.

BEIJING, May 13, 2011 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. (Nasdaq: WATG) today announced that its Audit Committee, with the assistance of professional advisors, has undertaken an internal investigation concerning certain investment and acquisition transactions.

As a result of the pending restatement of its financial statements for fiscal years 2008, 2009 and 2010, and for the quarters ended March 31, June 30 and September 30, 2009 and 2010, and the investigation, WATG has not filed its Form 10-K for the fiscal year ended December 31, 2010 and does not expect to be able to file its Form 10-Q for the quarter ended March 31, 2011 by the filing deadline of May 10, 2011. As previously announced, WATG has received a notice from The Nasdaq Stock Market ("Nasdaq") as to its noncompliance with Nasdaq's continued listing standards as a result of the failure to file the 10-K in a timely manner. Nasdaq further has informed WATG that it has suspended trading in the company's common stock pending WATG's provision of a satisfactory Plan of Compliance to Nasdaq. WATG plans to provide its Plan of Compliance to Nasdaq on or about May 13th and in no event later than May 23, 2011. The company does not expect that its filings will be completed until the completion of the investigation.

Rodman and Renshaw on WATG                                         5/2/2011

WATG: Terminating Coverage

Terminating Coverage: Effective immediately, we are terminating coverage on Wonder Auto Technology Inc. (Nasdaq: WATG) to better allocate resources within our coverage universe. Our last rating for WATG was Under Review / Speculative Risk. Investors should not rely on our previously published financial projections.

Financial Restatement

WATG announced that its historical financial statements for quarterly and annual financial results from 1Q08 to 4Q09 should no longer be relied upon due to a cutoff error on the timing of revenue. As of now, it is difficult to assess how this is going to affect WATG’s numbers, but management expects the adjustment to increase the revenue and earnings for those periods. WATG is still in the process of reviewing this issue and no time line for the restatement has been provided. Following this development, we put our rating on WATG Under Review and removed our financial projections.

Nasdaq Letter: On March 25, 2011, WATG announced that the company has received a letter from Nasdaq indicating that the company was not in compliance with the continued listing requirements under Nasdaq Listing Rule 5250(c)(1), the timely filing rule. According to the letter, WATG has 60 calendar days or until May 23, 2011 to submit a plan to Nasdaq to regain compliance status, which, if accepted by Nasdaq, may grant WATG an extension of up to 180 calendar days for filing the 10-K form.

Company Description

Headquartered in Jinzhou City of Liaoning Province, Wonder Auto Technology Inc. (WATG) is a manufacturer and distributor of automotive electrical parts such as alternators, starters, engine valves and tappets, and shock absorber rods in China. The company’s customer base includes a wide range of automakers, engine producers and auto parts suppliers in the domestic market and abroad. It is the second largest supplier for alternators and starters, and the largest supplier of engine valves and tappets in the Chinese auto parts market. It is also the largest independent supplier for shock absorber rods in China. As of Dec-08, the company had 4 alternator assembly lines, 4 starter assembly lines, 3 rods and shafts production lines, 20 engine valves production lines, and 5 tappets production lines. As of Jun-09, the company had an annual production capacity of 5MM alternators and starters, 15MM shock absorber rods, 15MM engine valves, and 8MM valve tappets. All the production lines are located in facilities at Jinzhou and Shandong. The company has four R&D centers with a technical team of 163 members, involved in new product development including design, testing and production.


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.

Global Hunter on WATG

We believe the restatements should have only minor impact on the financials in the last three years. The restatements were due to a cutoff error in the timing of revenue recognition. So far the net effect is expected to be an increase in revenue and net income in 2008 and 2009. We expect only a minimal impact on 2010. The company still expects to meet its previously provided revenue and profit guidance for 2010. Due to the restatement, we expect a slight delay in the filing of its 2010 10K, which we expect to be released at the end of March or first half of April. We expect Q4 and FY10 results to exceed the company's guidance and our previous estimates.

Net/Net: We increased our 2010 estimates and maintained 2011-2012 estimates. Shares are trading at 4.5x our FY11 EPS. We reiterate our Buy rating and $14 price target, which is 10.4x our FY11 EPS.

Rodman and Renshaw on WATG           

WATG: Putting Our Rating Under Review 

Restatement: WATG announced that its historical financial statements for quarterly and annual financial results from 1Q08 to 4Q09 should no longer be relied upon due to a cutoff error on the timing of revenue. As of now, it is difficult to assess how this is going to affect WATG’s numbers, but management expects the adjustment to increase the revenue and earnings for those periods. WATG is still in the process of reviewing this issue and no time line for the restatement has been provided. 

Rating Under Review: We are putting our rating on WATG under review from a Market Outperform rating previously. This rating change is due to the announced re-statements. In line with this we are removing our financial projections for the company. The company intends to have PricewaterhouseCoopers Zhong Tian CPAs Limited Company re-audit its financial statements for FY08 to FY09. We are uncertain as to whether the company will be able to file its upcoming 10K and 10Q on a timely basis given this development. We will revisit our financial projections and rating once management finishes the re-auditing process and files its 10-K/10-Q forms with SEC. WATG continues to expect to meet the previously announced guidance for revenue and profit in its press release dated November 9, 2010.



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.

On February 23, 2011, in connection with the preparation of its consolidated financial statements for the fiscal year ended December 31, 2010, Wonder Auto Technology, Inc. concluded, that its financial statements as of and for the years ended December 31, 2008 and 2009, included in its Annual Report on Form 10-K for the year ended December 31, 2009, as well as the financial statements included in its Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30 during each of the years 2008 and 2009 should no longer be relied upon due to a cutoff error regarding timing of revenue in such periods. The Company is continuing to evaluate the impact of the cutoff errors on its quarterly reports on Form 10-Q for the periods ended March 31, June 30 and September 30, 2010. Although the Company has not completed its analysis, it currently is expected that the net effect of these adjustments on the Company’s financial statements will be an increase in revenues and income in 2008 and 2009 for the reasons described below.

Historically, the Company has disclosed in its Annual Report that “revenue from sales of its products is recognized when the significant risks and rewards of ownership have been transferred to the buyer at the time when the products are put into use by its customers, the sales price is fixed or determinable and collection is reasonably assured.” During 2008 and 2009, two of the company’s significant subsidiaries recorded period sales and cost of sales based on when usage reports were provided by the customers. The periods covered by the usage reports, however, did not always exactly correspond to the financial reporting periods. As a result of these cut-off errors, sales, cost of sales and net income for individual financial reporting periods (annually and quarterly) have been misstated. The Company and its subsidiaries are implementing accounting procedures designed to permit the Company to report its financial results consistent with U.S. Generally Accepted Accounting Principles (“GAAP”). As a result of these changes, the Company’s revenue for 2008 and 2009 is expected to increase from what previously was reported as a result of the shifting of revenue from 2009 to 2008 and from 2010 to 2009. The Company’s net income for 2009 and 2008 also are expected to increase as a result of these changes. In addition, the Company continues to expect to meet the previously announced guidance for revenue and profit in its press release dated November 9, 2010.

WATG released some investor friendly related news this moring related to our new checklist on Suggested Steps Companies Should Consider to Establish Credibility : (although the company still may desire to raise capital).

BEIJING, Dec. 20, 2010 /PRNewswire-Asia-FirstCall/ -- On December 20th, 2010, Wonder Auto Technology, Inc. announced that it has launched a project to list (the "Listing") its subsidiary Jinzhou Halla Electrical Equipment Co., Ltd. ("Jinzhou Halla") on China's Shenzhen Stock Exchange ("SZSE"). As part of the Listing, the Company anticipates that Jinzhou Halla will conduct an initial public offering of its new shares on SZSE, and WATG's shareholders will still hold more than 73% of shares of Jinzhou Halla after the IPO. The purpose of the Listing is to maximize the Company's capital value by taking advantage of attractive valuations on the SZSE and to raise additional capital that can be used to grow the business.

Global Hunter on WATG

As expected from our 11/5 published note read “WATG: Raising Ests/Expecting Beat- Reiterate Buy (GHS)” ……

(WATG) reported Q3 ahead of our/consensus estimates. Revenue and gross margin were both better than expected, while the bottom line was complicated by higher professional fees related to the Jinheng acquisition and a $5.3MM gain on disposal of Applaud Group. Net margin remained in line excluding non recurring items. Q3 revenue grew 34% YoY due to contribution from Jinheng in addition to 18% organic growth of legacy businesses. Management raised its FY10 guidance. We consider the Jinheng acquisition as a positive development given that it further enlarges and diversifies the offering portfolio. We continue to like the long term fundamentals of the company and believe the business is positioned to benefit from the long-term growth perspective and consolidation opportunity in China’s auto industry. Shares are trading at 7.3x our FY11 EPS estimate. We believe the company is looking for paths to unlock shareholder value. We expect several near term catalysts, including a potential upgrade to a Big Four auditor and other strategic moves. We reiterate our Buy rating and $14 price target.

Maintaining Buy. We continue to like the fundamentals of the company given management's execution capability and forward vision for future growth. We believe the company is well positioned to benefit from the long term auto industry growth and consolidation opportunities in the market. We expect several near term catalysts to help unlock shareholders' value, including a potential upgrade to a Big Four auditor and other strategic moves. Shares are trading at 7.3x our FY11 adjusted EPS estimate. We maintain our Buy rating and $14 price target.

Highlights for the third quarter of 2010:

• Sales revenue increased 33.7% year-over-year to approximately $78.8 million;

• Gross profit rose 48.2% year-over-year to approximately $20.7 millionfrom approximately $14.0 million;

• Net income attributable to Wonder Auto increased 83.5% year-over-year to approximately$11.9 million;

• EPS was approximately $0.35, representing a 45.8% increase from approximately $0.24compared with the third quarter of 2009;

• Non-GAAP Net income attributable to Wonder Auto increased 108.6% year-over-year to approximately $13.6 million;

• Non-GAAP EPS was approximately $0.40, representing a 66.1% increase from approximately $0.24in the third quarter of 2009.| 

Business outlook:

"As the founder and CEO of WATG, I'm very glad that it has been growing rapidly and stably since it was listed on NASDAQ. The third quarter of 2010 is the 15th consecutive quarter of record results since the fourth quarter of 2006 excluding, the fourth quarter of 2008, which was affected by the financial crisis," said Mr. Qingjie Zhao. "In addition to the contribution from the acquisition of auto safety business in September, the increase in our sales revenue in the third quarter also benefited from a year-on-year increase of 18% organic growth despite the fact that July and August are usually low season months in the Chinese automobile market. Particularly, our rods and shafts business increased 97% in the third quarter year-on-year. This increase was mainly attributable to the increase in sales to our existing customers as a result of greater customer acceptance of our brand and products. Meanwhile, the integration of the newly acquired business is going well, better than we have expected. We believe Jinheng's auto safety business will be able to contribute more to the growth of WATG. Along with the penetration and increasing coverage of major customers and markets, the Company expects to further improve its scale advantage. We are very optimistic that in the following years WATG will continue to grow rapidly. We thank our shareholders who have provided WATG with strong support and benefitted from its rapid growth."

The Company raises guidance for full year 2010

• Sales revenue to $307 million from $300 million, 
• Net income to $37.5 million from $36 million, excluding the share-based compensation.

Rodman & Renshaw on WATG

Overview: WATG reported 3Q10 revenue of $78.8 MM and US-GAAP net income of $11.9 MM, with GAAP EPS of $0.35. On a Non-GAAP basis, the adjusted net income and EPS are $13.6 MM and $0.40, respectively. This beat our estimates of $66.5 MM in revenue and $6.0 MM in GAAP net income and $7.6 MM in Non-GAAP earnings. 

Margin Improvement Aided By Favorable Revenue Mix: Gross margin stood at 26.2%, higher than 23.7% in 3Q09 and 25.1% in 2Q10. This was primarily due to an increased portion of revenue contributed by heavy duty engine valve products relative to light duty engine valve products. The higher overall GM was also partially attributable to improved margins in rods and shafts. 

Balance Sheet: WATG ended this quarter with $60.6 MM in cash, $99.6 MM of accounts receivable, $82.6 MM of inventory, and total borrowing of $139.3 MM. DSO during the quarter was ~100.3 days, compared to 2Q10’s 71.2 days and 3Q09’s 107.0 days. 

Key Takeaways: WATG’s 3Q10 results included several one-time gains and expenses partly driven by acquisitions that took place in 3Q10. Some of these expenses and gains may continue to show up in 4Q10 results. Investors should view the company’s performance from an operating perspective in the near term to avoid any confusion surrounding earnings. We believe management’s execution abilities on integrating the recent acquisitions will have an impact on the company’s performance over the next 12 months. In line with that, investors should also monitor the company’s working capital requirements and ability to maintain margins. Given the strength in passenger and commercial vehicle sales in China currently, we would not be surprised if the top line guidance provided proves to be conservative. However, a multiple expansion will primarily be driven by margin stability and cash flow improvements. 

4Q10 & FY11 Estimates: For 4Q10 we are expecting revenue and GAAP net income of $100.9 MM and $9.2 MM, with diluted EPS of $0.27. On a Non-GAAP basis, our net income and EPS projections are $10.8 MM and $0.31 per share. This implies full year estimates of $311.8 MM, $28.0 MM (GAAP), and $0.82 (GAAP). We are introducing FY11 estimates with revenue and GAAP net income of $419.6 MM, $39.1 MM, and $1.15, respectively based on US-GAAP. 

Valuation: Currently WATG is trading at a P/E multiple of ~9.8x and ~7.4x to our FY10 and FY11 Non-GAAP earnings estimates. This multiple is below industry averages for similar players in the US and China. We believe WATG should be trading at industry averages given the growth opportunity associated with it. We are comfortable maintaining our $15 price target on WATG, which translates into P/E multiple of ~15x and ~11x to our 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.

Highlights for the second quarter of 2010:

• Sales revenue increased 37.9% year-over-year to $68.5 million
• Non-GAAP net income attributable to Wonder Auto increased 54.0% year-over-year to $8.3 million
• Non-GAAP EPS was $0.24, representing a 22.7% increase from approximately $0.20 compared with the second quarter 2009;
     

For the third quarter of 2010, our sales revenue is expected to achieve $69.0 million or higher. We may update our revenue guidance for third quarter 2010 after we close the M&A project with Jinheng Automotive Safety Technology Holdings Limited ("Jinheng Holdings").

"We have experienced continuous growth of our revenue for the second quarter 2010," said Wonder Auto's Chairman and Chief Executive Officer Mr. Qingjie Zhao. "The Company increased the revenue not only from the existing customers, but also from new clients and new product models. Meanwhile, the increased sales revenue from outside China was also a growth driver to our robust top-line growth. We expect the Company will maintain its growth with its increased production capacity and by generating more new contracts."

Try discussing this over a dinner. My head is spinning... and then ask yourself why P/E in the ChinaHybrid space are so low.

Maj..

On July 10, 2010, Wonder Auto Technology, Inc.’s (the “Company”) wholly-owned subsidiaries Wonder Auto Limited (“Wonder BVI”) and Yearcity Limited (“Yearcity”) entered into a conditional sale and purchase agreement (“Applaud Agreement”) with Jin Ying Limited, a British Virgin Islands corporation (“Jin Ying”) under which Wonder BVI and Yearcity will sell an aggregate of 4,015 ordinary shares (the “Applaud Shares”) of Applaud Group Limited (“Applaud”), representing 38.36% of the total equity interest in Applaud, for a total consideration of HK$162,000,000 (approximately US$20.86 million). Applaud is a British Virgin Islands corporation that has no assets other than its ownership of 48.58% of equity interest in Jinheng Automotive Safety Technology Holdings Limited, a Cayman Islands corporation (“Jinheng Holdings”).  Wonder BVI and Yearcity acquired the Applaud Shares for a total consideration of HK$115,449,757.80 (approximately US$14.87 million) in January 2010. The closing of the Applaud Agreement is conditioned upon the Closing of the Vital Glee Agreement.

Conditional Disposal Agreement

On the same date, the Company’s wholly-owned subsidiary Vital Glee Development Limited (“Vital Glee”) entered into a conditional disposal agreement (the “Vital Glee Agreement”) with Jinheng Holdings, under which Vital Glee will acquire a 100% equity interest in Jinheng (BVI) Ltd., a British Virgin Islands corporation (“Jinheng BVI”). Jinheng BVI is a holding company without any active operations or assets except (i) its 100% equity ownership of Jinheng (Hong Kong) Ltd., a holding company with no active business operations (“Jinheng HK”); (ii) its indirect (through Jinheng HK) 100% equity ownership of Jinzhou Jinheng Automobile Safety System Co., Ltd. (“Jinzhou Jinheng”), a Chinese corporation primarily engaged in the design, manufacturing and sale of automobile airbags and safety belts; (iii) its 55.56% indirect (through Jinheng PRC and Jinheng HK) equity ownership of Shenyang Jinbei Jinheng Automobile Safety System Co., Ltd., a Chinese corporation primarily engaged in the design, manufacture and sale of automobile airbags and related parts; (iv) its 100% equity ownership of Beijing Jinheng Sega Automotive Spare Parts Limited, a Chinese corporation engaged in the manufacture and sale of automobile steering wheels; and (v) its 90% equity ownership of Harbin Hafei Jinheng Automotive Safety System Co., Ltd., a Chinese corporation engaged in the manufacture and sale of airbags and other automobile parts. Jinheng BVI also owns Shanxi Winner Auto-Parts Limited (“Shanxi Winner”), a Chinese corporation engaged in design, manufacturing and sale of clock spring, wire harness and inflator; and Shenyang Jinheng Jinsida Automobile Electronic Co., Ltd. (“Jinsida”), a Chinese corporation engaged in design, manufacturing and sale of electronic control units. However, the parties agreed that Vital Glee will not acquire ownership of Shanxi Winner or Jinsida as part of the transactions contemplated by the Vital Glee Agreement, and Jinheng BVI and its subsidiaries will transfer ownership of Shanxi Winner and Jinsida to Jinheng Holdings or its subsidiaries.

Under the Vital Glee Agreement, Vital Glee will pay total cash consideration of HK $1,130 million (approximately US$145.54 million) in exchange for the 100% equity interest in Jinheng BVI. The total purchase price is scheduled to be paid by Vital Glee in four installments as follows. The first installment payment of HK $339 million (approximately US$43.66 million) will be made within seven business days after the satisfaction of all the closing conditions (except for the payment of such first installment payment) as set forth in Section 4.1 of the Vital Glee Agreement. Vital Glee also will issue three non-interest bearing promissory notes in the respective amount of HK $169.5 million (approximately US$21.83 million), HK $169.5 million (approximately US$21.83 million) and HK $452 million (approximately US$58.22 million) to Jinheng Holdings at the closing of the transactions contemplated by the Vital Glee Agreement (the “Closing”), which will become payable at the 30th, 90th and 180th days after the Closing, respectively. Vital Glee will pledge shares of Jinheng BVI to secure the payment of the promissory notes pursuant to a share pledge agreement to be entered into at the Closing.

Mr. Zhao, Chairman and CEO of Wonder Auto Technology, Inc. commented, 'Significant changes have taken place in the world economy during the process of fighting against the financial crisis globally. For example, China's economy is recovering steadily. There is no doubt that China's auto industry will be the world's leader. Therefore the US capital markets have begun to re-evaluate and focus on Chinese companies. The adjustments we made in our strategies to response to the financial crisis worked well as we expected. In a word, at the moment, our competitiveness is even greater than before the crisis.'

2009 3rd Quarter Guidance Ending September ^a

	3rd Quarter 2009 Guidance	3rd Quarter 2008 Reported	Period Change
GAAP Revenue	$55.5 million	$39.3million	41.2%
Net Income	$6.3 million	$6.4million	-1.6%
GAAP EPS a	$0.23	$0.24	-4.2%

Source: See Release, August 3, 2009

^a The company did not provide EPS guidance. The GeoTeam® used the second quarter ending shares outstanding of 26,959,994 to derive an implied EPS number.

"Under current global recession, the auto industry in western countries dropped sharply, while in China and other emerging economies still remain growing. I foresee this momentum will continue. Wonder Auto is well positioned in this weather, and achieved remarkable results this quarter. To adapt to these changes, I believe new concepts, new valuation models and new investment strategies are essential for success.''

2009 2nd Quarter Guidance Ending June

	2nd Quarter 2009 Guidance	2nd Quarter 2008 Reported	Period Change
GAAP Revenue	$45.0 million	$36.7 million	22.6%
Net Income	$5.3 million	$5.3 million	00.0%
GAAP EPS a	$0.20	$0.20	00.0%

Source: See Release

^a The company did not provide EPS guidance. The GeoTeam® used the year ending shares outstanding of 26,959,994 to derive an implied EPS number.

Guidance Update: (China)

WATG reduces guidance.

The updated guidance for year 2008:

 -- Sales revenue for 2008 is expected to be over $140 million, reflecting a 37% YoY increase.

The updated guidance for year 2009 reflects:

 -- Sales revenue for year 2009 is expected to be over $200 million, reflecting a 40% YoY increase.

 Mr. Qingjie Zhao, chairman and CEO of Wonder Auto Technology, Inc. stated that "The global economy has shown a downturn trend after the subprime mortgage crisis in 2008, which has led to a slowdown of the growth rate for China's domestic auto market and export market. Accordingly, the company has adjusted its perspective performance because of the weak fourth quarter financials affected by the changing environment, but we will still able to maintain a growth rate of 37% for the whole of 2008."

Source: PR Newswire (January 21, 2009)

The updated guidance for year 2008:

   -- The projected sales revenue for 2008 will be over $150 million.

 The guidance for year 2009:

   -- The targeted sales revenue for year 2009 will be between $220 million to $230 million.

'We are increasingly confident in our revenue outlook for the whole year of 2008 and 2009 as we are experiencing continuing strong demand for sales of alternator and starter products for mid- to small-displacement engines. With emphasis on research and development we are able to maintain a long-term collaborative relationship with our existing customers and win more new customers. We are also increasing sales to the international auto markets. Through our recent acquisition, we are expecting higher sales revenue for the coming years,' commented Mr. Qingjie Zhao, chief executive officer of Wonder Auto.

Source: PR Newswire (November 4, 2008)