Lizhong Wheel Q1 Results

Lizhong Wheel 1Q2008 net profit jumps 42% to RMB 35.2 m

• New Tianjin plant up and running at the end of 1Q2008

• Continuing strong demand from both new customers and existing customers

Singapore, 30 April 2008 – Lizhong Wheel Group Ltd. (“The Group” or “立中车轮”), one of the largest PRC manufacturers of aluminum alloy wheels, recorded a 12% increase in revenue to RMB 236.1 million for 1Q2008 (3 months ended 31 March 2008).

With the new Tianjin plant only coming on stream at the end of 1Q2008, the Group was operating at similar production capacity levels versus a year ago. However, with a better customer and product mix, gross profit rose by 15.3% to RMB40.3 million, with a gross margin of 17.1% (1QFY2007: 16.6%).

Overall, net profit attributable to equity holders rose 42.3% to RMB35.2 million. Earnings per share also rose in tandem from RMB10.52 cents to RMB14.96 cents.“The first quarter of 2008 has been business as usual for us as we strive to meet the ever growing demand of our customers while putting the finishing touches to Phase 1 of our Tianjin plant. While aluminum prices had a brief spike in 1Q2008 due to the winter storms in southern China affecting major aluminum producers, we were able to maintain our margins with stringent cost control measures we have put in place. Overall, I am pleased to report a commendable set of results to start the year.”Mr. Zang Ligen (臧立根), Lizhong Wheel’s Executive Chairman

Distribution costs went up by RMB1.1 million to RMB4.5 million due mainly to increase in delivery costs arising from increased sales volume and accrued bonus for the Group’s sales personnel. Administrative expenses increased by RMB3.7 million to RMB11.9 million due mainly to increase in research and development expenses of RMB1.2 million, pre-operating expenses of RMB2.1 million incurred by the newly set up subsidiary, Tianjin Dicastal Wheel Manufacturing Co., Ltd, and other expenses in line with higher business volume.

Other operating income increased by RMB14.0 million largely due to RMB4.9 million of fair value gain on the Group’s convertible bond issue and RMB9.4 million of foreign exchange gains from the appreciation of RMB against the US dollar as a result of the Group’s US dollar denominated borrowings. The foreign exchange gain was largely due to revaluation of US dollar liabilities.Everything in PlaceChina's car market continues to grow by leaps and bounds.

According to the China Association of Automobile Manufacturers (CAAM), in the first three months of this year, 1.85 million passenger vehicles were sold in China, up 20.4% from last year. Passenger vehicle sales in March itself increased 23.6% versus a year earlier to 700,500 units, with March sales also being 43.3% higher than February's. To capitalize on this strong market demand, the Group is not only striving for more orders from existing customers, but also actively marketing tonew customers, which includes General Motors The Group also actively participates in various automotive trade fairs to raise its profile amongst its international and domestic customers. One recent event is the widely anticipated Beijing Auto 2008 where the world's top car-makers descended on China in force between 21st to 28th April.

The Group’s new Tianjin plant had completed trial production in March and commercial production has started in April. It is expected to reach full production capacity by June 2008. This has successfully raised the Group’s annual production capacity by 2 million wheels to 5.6 million wheels. Not resting on their laurels, construction of the facility and equipment procurement for Phase 2 is currently underway with Phase 2 scheduled to come on-stream by the first half of FY2009.

Barring unforeseen circumstances, the Group expects to achieve favourable performance in 2008 as a result of the expanded production capacity from the completion of the Tianjin facility’s Phase 1.