China Electronics Announces Six Month Revenue of $55.7 Million and Net Income of $9.3 Million or $0.63 per Share

2nd Quarter Revenue up over 566% to $29.1 Million and Net Income of $5.1 Million or $0.34 per Share

Oct 14, 2010, 07:02 ET from China Electronics Holdings, Inc.

LU'AN CITY, Anhui Province, China, Oct. 14 /PRNewswire-FirstCall/ -- China Electronics Holdings, Inc. (OTC Bulletin Board: CEHD), one of rural China's major U.S.-listed retailers of household appliances and consumer electronics, announced that its earnings for the first six months of 2010 increased 441% over the same period in 2009, reaching USD$9,346,292 for the first six months of 2010. Revenues were up 382% and totaled USD$55,785,305 for the first half of 2010.  On the CEHD Balance Sheet, Stockholders' Equity increased from USD$6.0 million to USD$28.3 million.

"We had 217 new stores in operation during the three months ended June 30, 2010 compared to 2009," said China Electronics Chairman and Founder Hailong Liu. "New products from SONY, LG and THTF that we began to carry in 2010 and the improved economic climate in the PRC all had a positive impact on the demand for our products and our sales," Chairman Liu stated.  Through the first half of 2010 CEHD has recorded 117% of the revenues achieved for all of 2009, and earned 96% of the profits in the first six months of 2010 that it did for the entire calendar year of 2009.

China Electronics through its PRC subsidiary Lu'an Guoying Electronic Sales Co., Ltd. (the "Company") operates a network of 600 franchise stores, 412 direct stores, and 3 company-owned locations in primarily rural areas of central China's Anhui, Henan and Hubei Provinces under the brand of Guoying.  In its most recent fiscal year ended December 31, 2009 China Electronics achieved after-tax net income of USD$9.7 million from USD$47.7 million in revenues. As a condition of the recent financings totaling nearly USD$5.3m, China Electronics agreed to a net income target of USD$12 million, subject to certain adjustments, for the fiscal year ending December 31, 2010, and an uplisting to Nasdaq or the NYSE Amex exchanges.  Hunter Wise Securities, LLC and American Capital Partners, LLC served as placement agents to the financings.

China Electronics' Guoying subsidiary is the exclusive wholesaler in the Lu'an area for products under the brand names Sony, LG, Samsung, Shanghai Shangling, Chigo, Huayang and Huangming.  Guoying is the general sales agency of Sino-Japan Sanyo electronic products, such as Sanyo TVs, air conditioners, washing machines and microwave ovens.  Guoying has teamed up with Huangming and Huayang, the two largest manufacturers of solar thermal products in China, to be their exclusive retail outlet in Anhui.

China Electronics also produces Guoying brand refrigerators under its own trademark, selling a total of 30,000 refrigerators in 2007, 46,000 in 2008, and 62,000 in 2009, and expects to sell 77,000 in 2010 and 100,000 in 2011, in PRC provinces Anhui, Henan and Hubei.

About China Electronics Holdings and Household Appliance Retailing in Rural China

China Electronics has been based in Lu'an City, Anhui Province, central China since its founding in 2001 and sells household appliances and consumer electronics of major manufacturers through a network of more than 1,000 retail stores in rural areas of the PRC's fourth- and fifth tier markets. For more information please visit www.chinaelectronicsholdings.com .

Approximately 56% of China's population still resides in rural areas of the PRC, making rural residents the largest consumer group in the country. After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. The rural market is largely untapped and has enormous potential for growth. This rural consumer group has tremendous purchasing power and is increasing as the Chinese government encourages rural communities to modernize.

The PRC central government has decided to expand internal demand by increasing the income of the rural population. Continuous improvements in the rural power network, rural transportation, and rural communication make the rural market extremely favorable for home appliances and electronics.

After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. It is reported that the rural residents hold more than US$120 billion in savings and US$106 billion in cash. A survey done by the China Electronic Product Association showed that 14% to 33% of rural families are willing to spend their money on televisions, DVDs, washers and dryers, and telephones in the next few years. For example, refrigerator ownership in big and middle cities of China is over 95%, even 99% in some cities. However, the ownership of refrigerators is only 22.7% in rural areas of China.

The Chinese government has initiated a rural home appliance and electronics rebate program, called "Rural Consumer Electronics" plan, which provides that the maximum sales price of electronics is fixed at a price which is usually equal to or less than the market price in urban areas of the same product. Meanwhile, rural consumers can get a 13% government rebate on their purchases of electronics.

Finally, the current consumer electronics and appliances markets in big cities like Beijing, Shanghai, and Shenzhen are already saturated by an over abundance of competitors – leading to very lean margins. Although some competitors have announced interest in the rural market, none of the current competitors have established any significant presence in the rural markets. Successful brand names established in large cities are not an indicator of automatic success in China's rural market. Guoying is the first rural home appliance and electronics retailer in Anhui province.

Cautionary Statement Regarding Forward Looking Information

This press release may contain forward-looking information about the Company, Buyonate, Inc., China Electronics Holdings, Inc., Lu'an Guoying Electronic Sales Co., Ltd., and its subsidiaries. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and statements which may include discussions of strategy, and statements about industry trends, future performance, operations and products of each of the entities referred to above. Actual performance results may vary significantly from expectations and projections as a result of various factors, including without limitation and the risks set forth "Risk Factors" contained in the Company's Current Report on Form 8-K filed on July 20, 2010. The shares of common stock issued in connection with the transaction has not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. The Company has agreed to file a registration statement covering the resale of the shares of common stock issued in the private placement and certain other shares, upon request by the investors.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

    Contacts:

    China Electronics Holdings, Inc.

    John Bai

    +86 186 0128 8923

   johnwhit2008@gmail.com

   www.chinaelectronicsholdings.com

    Hunter Wise Financial Group, LLC

    Dan McClory, Managing Director

    +1 949 732 4102

   dmcclory@hunterwise.com

   American Capital Partners, LLC

    Frank Lorenzo, Senior Vice President

    +1 551 427 8476

    florenzo@acpweb.com

SOURCE China Electronics Holdings, Inc.



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http://www.chinaelectronicsholdings.com