Gongyou Machines Ltd. is currently operating at full capacity to meet the strong demand for its products. Most of our production facilities are operating in 3 shifts, 24 hours per day.

 

Since the beginning of 2007 our R&D engineers have developed 15 new types of machines for our production facilities of which 5 are already operating and the last 10 in final testing phase with expected utilization in the coming months.

 

Our export sales in the period July 2006 to April 2007 grew by 24% to RMB 35 million. On the 2007 Guangzhou International Trade Fair, Gongyou secured export orders of more than RMB 8 million.

 

We still expect an increase in profits for the current financial year despite higher costs for our main raw materials steel and copper

 

With the proceeds from the placement in March 2007, Gongyou is in the process of substantially expanding its production capacities. Several new factory halls are already under construction, and new machinery has been ordered. The new facilities will gradually be ready for production over the second half of calendar year 2007. This should give us a platform to increase our domestic and international sales in the coming years.

 

Gongyou, with about 1400 employees, is the largest producer of woodworking machines in China. Gongyou exports its products to all continents and meets rising demand from the furniture and construction material industries, especially in emerging markets around the globe. Gongyou’s strong team of R&D engineers constantly develop new machine types. Gongyou’s sales in the financial year ending on 30.06.2006 reached, after strong growth in previous years, RMB 192.7 million with a Net Profit of RMB 33.7 million. More information on www.gongyoumachines.com.

 

We will keep our shareholders informed of all future developments.

 

Dong Yanwei

Chairman

Gongyou Machines Ltd.