3 September 2009

Qiao Xing Universal Telephone (News - Alert), Inc.(XING) has signed a letter of intent (LOI) to sell its subsidiary, Qiao Xing Communication Holdings Limited, to Dragon Fu Investment Limited (DFIL).

Dragon Fu Investment Limited is an independent third-party holding company, which is planning to enter into China's consumer electronics industry.

Qiao Xing Communication Holdings Limited, which specializes in the indoor phone and low-end mobile phone business via its subsidiary Huizhou Qiao Xing Communication Industry Co., Ltd., had suffered a loss of $42.7 million for the year 2008.

The company officials said that it was mainly due to the global economic downturn and increasingly intensive competition.

The board in order to carry out the company's diversification strategy authorized the management to find potential buyers to dispose of this business sector.

As per the plan, 100 percent equity interest in QXCI would be sold to DFIL.

According to the executive director of DFIL, the widely-recognized 'COSUN' brand name and the extensive distribution network are the most attractive factors for DHIL's new entry strategy.

"Now, it is the right time to focus on the resource industry. So far, our Moly business has been going well. Things have kept moving forward in the right direction," said Wu Ruilin, chairman of XING, in a statement.

Qiao Xing Universal Telephone, Inc. is manufacturer and distributor of telecommunications products in China.

The company’s product portfolio includes telecommunications terminals and related products, including fixed wireless phones, VoIP telephones, mobile handsets, PDAs and consumer electronic products, including MP3 players, cash registers and set- top-box products.

Back in August the company had announced its un-audited first quarter financial results for the three months ended March 31, 2009.

Compared to the first quarter of 2008, XING's net sales decreased 32.9 percent. Revenues for the first quarter of 2009 were RMB513.3 million (US$75.1 million), compared with RMB764.4 million in the same period of 2008.

The decrease was primarily due to lower unit shipments and a decrease in the average selling price (ASP) of products sold in the first quarter of 2009.

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