-- Two major items contributed to net loss: Bad debt provision incurred by the indoor phone and lower-end mobile phone business and non-cash interest expenses related to a subsidiary's convertible notes

HUIZHOU, China, Dec. 11 /PRNewswire-Asia-FirstCall/ -- Qiao Xing Universal Telephone, Inc. (Nasdaq: XING) ("the Company" or "XING"), an emerging Chinese resources company headquartered in Huizhou, Guangdong Province, today released its unaudited financial results for the six months ended June 30, 2009.

"Fiscal 2009 has been a year of transition for us, as we moved to aggressively re-deploy our capital and focus our efforts and management attention in the resources industry in China, where we see significant opportunity to create value for our shareholders," commented Mr. Wu, Chairman and CEO of the Company. "In April we announced the acquisition of China Luxuriance, which owns the right to explore a large copper-molybdenum poly-metallic mine in Inner Mongolia. More recently we divested our indoor phone and lower-end mobile phone business subsidiary, and in the near future we expect to spin-off our shares in Qiao Xing Mobile Communication to our shareholders, thus completing our transition into a natural resources-focused business."

Financial Results for the First Half of 2009

Net sales for the first half of 2009 were RMB1,151.1 million (US$168.5 million), representing a decrease of 8.0% from RMB1,251.9 million for the same period of 2008. The decrease was primarily due to lower average selling price ("ASP") of products sold in the first half of 2009, compared to the same period in 2008.

For the first half of 2009, about 90.1% of our revenue was contributed by the Company's major operating subsidiary CEC Telecom Co. Ltd ("CECT"). CECT total handset shipments in the first half of 2009 amounted to 1,420,000 units, compared to 1,412,000 units in the same period of 2008. The increase in handset shipments compared to the same period of last year was primarily due to the launch of CECT's new VEVA handset models as well as a more aggressive pricing strategy to drive sales in a difficult and uncertain economic environment. In addition, shipments in the first half of 2008 had also been negatively impacted by the earthquake that took place in Sichuan province in May 2008.

Gross profit of the Company decreased by 36.3% to RMB222.5 million (US$32.6 million) in the first half of 2009, compared to RMB349.5 million in the first half of 2008. The decrease in gross profit was mainly attributable to the decline in ASP. Gross margin was 19.3% in the first half of 2009 compared to 27.9% for the same period of 2008.

Total operating expenses were RMB270.8 million (US$39.6 million) in the first half of 2009, which represented an increase of 75.1% from RMB154.7 million in the first half of 2008. The dramatic increase in operating expenses for the first half of 2009 was mainly due to RMB118 million (US$17.3 million) bad debt provision incurred by Hui Zhou Qiao Xing Communication Industry Ltd ("HZQXCI"), a subsidiary of the Company focused on indoor phone and lower-end mobile phone business. As of today, the Company has disposed of HZQXCI.

Net non-operating losses were RMB117.1 million (US$17.2 million) in the first half of 2009, compared with net non-operating income of RMB11.9 million in the first half of 2008. The significant increase in net non-operating losses was mainly due to non-cash interest expenses related to convertible notes issued by Qiao Xing Mobile Communication Co., Ltd ("QXM"), a main subsidiary of the Company. Recently, the USD 30 million principal amount of the QXM convertible notes have been bought back by QXM from the Company.

Operating loss for the first half of 2009 was RMB165.4 million (US$24.2 million), compared to operating income of RMB206.7 million for the same period of 2008.

Net loss was RMB184.1 million (US$26.9 million) compared to net income of RMB53.9 million for the same period of 2008. Basic loss per share was RMB3.62 (US$0.53) compared to basic earnings per share of RMB1.45 for the first half of 2008.

Financial Review of Operations for the Newly Acquired Molybdenum Mine

On April 6, 2009, the Company acquired a 100% equity interest in China Luxuriance Jade Company, Ltd. ("China Luxuriance"), which, through its wholly-owned Chinese subsidiaries, owns the right to receive the expected residual returns from Chifeng Haozhou Mining Co., Ltd. ("Haozhou Mining"), a large copper-molybdenum poly-metallic mining company in China. Haozhou Mining owns the exploration license of a mine covering 53.9 square kilometers (the "Mine") in the Inner Mongolia Autonomous Region in the People's Republic of China. As of the acquisition date, Haozhou Mining was still under construction and had no operating revenue.

In June, 2009, Haozhou Mining started test operation for 6 days and produced 53.36 tons of molybdenum concentrates (equal to 25.77 tons of molybdenum metal). The test operation generated sale revenue of RMB4.5 million (US$0.66 million) and a gross profit of RMB 0.89 million (US$0.13 million).

Haozhou Mining started operating on a commercial basis in the third quarter of 2009. The existing facility is believed to have the capacity to process 435,000 tons of ore to produce 2,817 tons of molybdenum concentrate annually (equivalent to 1,378 tons of molybdenum metal). It is planned that by 2011, production capacity will eventually increase to 540,000 tons of ore to produce 3,526 tons of molybdenum concentrate on an annual basis. The Company expects that the Haozhou Mining business will grow to reach an annual net profit of RMB125 million (around USD18 million at current exchange rate by 2011.

                            FINANCIAL TABLES FOLLOW



             Qiao Xing Universal Telephone Inc. and its Subsidiaries
                 Condensed Consolidated Profit and Loss Account
                         For six months ended 30 June

                                      2008               2009
                                     RMB'000      RMB'000      US$'000

    Net sales                      1,251,857    1,151,119      168,519
    Cost of goods sold              (902,378)    (928,615)    (135,945)
        Gross profit                 349,479      222,504       32,574
      Total operating expenses      (154,663)    (270,774)     (39,640)
        Income from operation        194,816      (48,270)      (7,066)
      Net non-operating income
       (loss)                         11,899     (117,147)     (17,150)
        Income before income tax     206,715     (165,417)     (24,216)
    Provision for income tax         (63,281)     (35,498)      (5,197)
        Net income                   143,434     (200,915)     (29,413)
    Less: Net income attributable
     to the noncontrolling
     interest                        (89,501)      16,842        2,466
        Net income (loss) after
         attribution of the
         noncontrolling interest      53,933     (184,073)     (26,947)
    To participatory convertible
     notes                             9,172           --           --
    To common stock                   44,761     (184,073)     (26,947)
    Basic earnings (loss) per
     common share:
        Before extraordinary gain       1.45        (3.62)       (0.53)
        Extraordinary gain                --           --           --
        After extraordinary gain        1.45        (3.62)       (0.53)
    Weighted average number of
     shares outstanding
        Basic                     30,948,836   50,876,616   50,876,616



              Qiao Xing Universal Telephone Inc. and its Subsidiaries
                      Condensed Consolidated Balance Sheet

                                          December 31,         June 30,
                                              2008               2009
                                            RMB'000      RMB'000      US$'000
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents           3,117,527    3,026,412      443,054
      Restricted cash                       263,800      248,468       36,375
      Bills receivable                      202,174      163,068       23,872
      Accounts receivable, net              934,107      976,900      143,014
      Inventories                           241,310      227,714       33,336
      Prepaid expenses                      497,766      505,844       74,053
      Other current assets                  609,233      236,554       34,630
      Due from related parties                   25           25            4
      Deferred income taxes                   6,994        9,780        1,432
      Deferred debt issuance
       costs, net                            34,689        9,884        1,447
        TOTAL CURRENT ASSETS              5,907,625    5,404,649      791,217
    NON-CURRENT ASSETS
      Property, machinery and
       equipment, net                       183,137      242,427       35,490
      Land use rights, net                   35,304       34,903        5,110
      Construction-in-progress                   --       63,399        9,281
      Mineral rights                             --      889,665      130,243
      Investment at cost                      7,802        7,802        1,142
      Goodwill                               82,059       82,059       12,013
      Other acquired intangible
       assets, net                           22,766       20,386        2,984
      Other non-current assets              111,786      111,786       16,365
      Deferred income tax assets
       - noncurrent                              --          194           28
        TOTAL NON-CURRENT ASSETS            442,854    1,452,621      212,656
        TOTAL ASSETS                      6,350,479    6,857,270    1,003,873

    LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Short term bank borrowings          1,500,855    1,381,405      202,232
      Accounts payable                      112,957      157,522       23,061
      Other payables                         14,124      105,021       15,375
      Accrued liabilities                    87,763      119,019       17,424
      Deposits received                       3,236        3,236          474
      Deferred revenues                      58,560       46,031        6,739
      Due to related parties                    905       23,938        3,504
      Taxation payable                       64,238       51,180        7,493
      Convertible notes                     383,596      335,280       49,084
      Embedded derivatives
       liabilities                          127,080       68,773       10,068
         TOTAL CURRENT LIABILITIES        2,353,314    2,291,405      335,454
    LONG-TERM LIABILITIES
      Shareholders loans                      6,729        6,737          986
      Asset retirement obligation
       liability                                 --       88,942       13,021
      Deferred tax liabilities                  320      181,031       26,502
        TOTAL NON-CURRENT LIABILITIES         7,049      276,710       40,509
        TOTAL LIABILITIES                 2,360,363    2,568,115      375,963
    EQUITY
    QIAO XING UNIVERSAL TELEPHONE,
     INC. SHAREHOLDERS' EQUITY
      Common stock, par value
       RMB0.008 (equivalent of
       US$0.001); authorised
       200,000,000 shares;
       outstanding and fully
       paid - 30,948,836 and 73,148,843
       shares as of December
       31, 2008 and June 30,
       2009 respectively                        251          540           79
      Additional paid-in capital          1,867,512    2,363,905      346,066
      Cumulative translation
       adjustments                          (75,623)     (74,373)     (10,888)
      Retained earnings                   1,189,190    1,005,117      147,141
        TOTAL XING SHAREHOLDERS'
         EQUITY                           2,981,330    3,295,189      482,398
    NONCONTROLLING INTEREST               1,008,786      993,966      145,512
      TOTAL EQUITY                        3,990,116    4,289,155      627,910
    TOTAL LIABILITIES &
     SHAREHOLDERS' EQUITY                 6,350,479    6,857,270    1,003,873

About Qiao Xing Universal Telephone, Inc.

Qiao Xing Universal Telephone, Inc. is an emerging Chinese resources company headquartered in Huizhou, Guangdong Province, China. The Company was previously one of the leading players in the telecommunication terminal products business in China, but made the strategic decision to diversify into the resources industry in 2007. In April 2009, the Company acquired 100% equity interest in China Luxuriance Jade Company, Ltd ("CLJC"). CLJC, which, through its wholly-owned Chinese subsidiaries, owns the rights to receive the expected residual returns from Chifeng Haozhou Mining Co., Ltd. ("Haozhou Mining"), a large copper-molybdenum poly-metallic mining company in Inner Mongolia, China. Since then, the Company has further refined its strategy to become a pure resources company and is actively seeking additional acquisition targets in the resources industry.

Safe Harbor Statement

This announcement contains forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words or phrases such as "aim," "anticipate," "believe," "continue," "estimate," "expect," "intend," "is /are likely to," "may," "plan," "potential," "will" or other similar expressions. Statements that are not historical facts, including statements about Qiao Xing Universal Telephone, Inc.'s beliefs and expectations, are forward-looking statements. Forward- looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement. Information regarding these factors is included in our filings with the Securities and Exchange Commission. Qiao Xing Universal Telephone, Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of December 11, 2009.

    For more information, please contact:

    Company Contact:
     Mr. Rick Xiao, Vice President
     Email: rick@qiaoxing.com
     Tel:   +86-752-282-0268

    CCG Investor Relations Contact:
     Mr. Ed Job, Account Manager
     Email: ed.job@ccgir.com
     Tel:   +1-646-213-1914 (NY office)

SOURCE Qiao Xing Universal Telephone, Inc.

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