China Metal Automotive International Corporation Limited - 43.24 % Interest

Capital Charm Associated Limited (100%): Investment holdings

CMP (HK) Industry Company Limited (100%): Investment holdings and trading of casting products

CMTS(Cayman Islands) Industry Company Limited (100%): Investment holdings and trading of casting products

Tian Jin CMT Industry Company Limited (100%): Manufacturing and sale of casting products

Suzhou CMS Machinery Company Limited (100%): Manufacturing and sale of casting products

The Group is principally engaged in the design, development, manufacture ad sale of customized metal castings for use in various industries. As part f its integrated services the group also provides moulding, machining and coating services to its customers.

The Group has been engaging in the metal casting business in the PRC for more than 12 years. With the strong technical experience of its management, the Group focuses on manufacturing high specification metal casting and providing value-added service, such as moulding, machining and coating services, to its custoemrs as part of its vertical business integration strategy.

The Groups products are generally manufactured according to its customers¡¦ specification. They can be broadly classified into three categorizes: compressor parts) including air-conditioner compressor parts and refrigerator compressor parts); automotive parts and components; and mechanical parts.

The Group focuses on developing an international custoemrs base which mainly includes air conditioner manufactures and air conditioner compressor manufacturers (such as Guangdong Meizhi, MITSUBISHI ELECTRIC, SAMSUNG., SANYO and DAIKIN), refrigerator compressor manufacture (i,e. Matsushita), automotive part and component manufactures (such as Ford, TRW Automotive and Lucas); and other industrial manufactures (such as Sauer-Danfoss, Yanmar, Grundfos, SEW-Eurodrive and john Deere).

• Product Liability exposure
• Reliance on key management and experienced technical professionals
• Uncertainty associated with the expansion plans
• Financing resources for the JV Company
• Disruption in operations at manufacturing facilities
• Compressor, automobile and other industrial sectors
• Supply and price fluctuation of raw materials
• Supply and price fluctuation of energy
• Environmental regulations
• Foreign currency exposure
• Tax exemption
• Spread of communicable diseases
• Breach of bank covenants
• Liquidity of the group
• Dividend policy

The Directors believes that there is a growing demand for metal casting in the PRC, particular in the automotive part and component sector and the air conditioner compressor part sector, as international manufacturers in those sectors are continuously moving or expanding their manufacturing operations, or outsourcing their purchase requirement in the PRC. The Group intends to capitalize on such market trend through (i) expanding its production capacity; (ii) improving its moulding capability; and (iii) enhancing its machining an coating services. The Group will also consider further strengthening the co-operation relationship with its strategic partners.

• Expansion of production capacity

The Company and the JV partner will form a joint venture company in the PRC for the production of certain iron casting parts and components. The new foundry will be mainly engaged in the production of metal castings of automobile parts and components.

• Improvement of moulding capability

In order to improve its moulding capability, the Group plans to purchase advanced computerised design system and moulding equipment which will be applied in the design and development of moulds for higher specification metal castings.

• Enhancing machining and coating services

In addition, the Group seeks to create higher value added services to its customers through enhancing its machining and coating services. The Group plans to acquire new machining and coating equipment, such as CNC digital control machining centers and surface coating processing equipment.

• Strengthening the strategic co-operation with international customers

Most of the existing and targeted customers of the Group are renowned international manufacturers, which requires substantial R&D support. The group plans to strengthen the co-operation with these international customers by establishing strategic alliances and increasing business co-operation.

Assuming that the Over-allotment Option is not exercised, the net proce4eds of the Share Offer after deducting related expenses are estimated to be approximately HKD 334.13 million. The Group currently intends that the net proceeds from the Share Offer will be applied as follows: