National Press Release

JINZHOU CITY, China, Nov. 2 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. (Nasdaq: WATG) ("Wonder Auto" or "the Company"), a leading manufacturer of automotive electric parts, suspension products and engine components in China, today announced its financial results for the third quarter ended September 30, 2009.

    Highlights:
    -- $59.0 million sales revenue for the third quarter of 2009, an increase
       of 50.2% from the same quarter of last year; $41.0 million organic
       sales revenue in China, an increase of 24.1% on year-over-year basis
       excluding acquisition contribution.
    -- $6.5 million net income, or $0.24 per share on a basic and diluted
       basis, for the third quarter of 2009, an increase of 2.4% from the same
       period of last year;
    -- On a non-GAAP basis, net income for the third quarter of fiscal 2009
       increased 25.8% to $6.9 million, or $0.26 per share, on a basic and
       diluted basis, as compared with a non-GAAP net income of $5.5 million,
       or $0.20 per share, for the third quarter of fiscal 2008. Non-GAAP net
       income excludes non-cash exchange gain/loss in connection with a loan
       denominated in euro.

Business outlook

We project approximately $208 million sales revenue and $23 million net income attributable to our common stockholders for the whole year ended December 31, 2009.

Financial performance

Sales Revenue. Sales revenue increased by approximately $19.7 million, or 50.2%, to approximately $59.0 million for the three months ended September 30, 2009, compared with $39.3 million of the same period last year. This increase was mainly attributable to the $12.9 million in additional revenues generated in the third quarter of 2009 by recently acquired subsidiary, Jinan Worldwide and increased sales volume of starter and alternator products in the third quarter of 2009 due to the high market demand.

Gross Profit. Gross profit increased by approximately $3.8 million, or 37.8%, to approximately $14.0 million for the three months ended September 30, 2009, compared with approximately $10.1 million for the same period in 2008 as a result of increased demand for and sales of alternator and starter products and the consolidation of the operating results of Jinan Worldwide which contributed $3.7 million to gross profit. Gross margin was 23.7% for the three-month period ended September 30, 2009, as compared to 25.8% of the same period in 2008. Such decrease was mainly due to a larger portion of sales revenue was generated from alternators and starters for small-to-mid displacement engine vehicles which generally have a lower margin than alternators and starters for large displacement engine vehicle.

Total Operating Expenses. Total operating expenses increased by approximately $1.8 million, or 54.3%, to approximately $5.2 million for the three months ended September 30, 2009, compared with approximately $3.3 million for the same period in 2008. As a percentage of sales revenue, total expenses increased to 8.8% for the three months ended September 30, 2009, compared from 8.5% for the same period in 2008.

Net finance cost. Net finance cost was $1.5 million for the three months ended on September 30, 2009 as compared to a net finance income of $139,381 for the same period last year. The Company has an outstanding loan of EUR8.3 million from DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH, (the "DEG Loan"). Since the DEG Loan is denominated in euro, with the depreciation of RMB against euro, the Company incurred a $439,746 non-cash exchange loss during the three months ended September 30, 2009. In contrast, the Company had a non-cash exchange gain of approximately $1.0 million for the same period of 2008.

Income Taxes. Income taxes increased $307,503 to $939,622 during the three months ended September 30, 2009 from $632,570 during the same period in 2008. The income taxes increase is mainly due to the increase in income and the change in tax rate for the Company's subsidiary Jinzhou Wanyou. Jinzhou Wanyou was exempted from the PRC enterprise income tax in 2008 and its EIT rate increased to 12.5% in 2009.

Net Income. Net income increased by $153,483, or 2.4%, to approximately $6.5 million during the three months ended September 30, 2009 from approximately $6.4 million during the same period in 2008.

Events overview

On September 28, 2009, Wonder Auto's subsidiary Jinzhou Halla entered into a joint development agreement with Shenzhen BYD Auto Company Limited ("Shenzhen BYD") to design and develop alternator prototypes for Shenzhen BYD's F3/F3R sedan models, which have engine sizes between 1.3 liters and 1.5 liters, and were among the top ten best-selling models in China in the first nine months in 2009. Sample deliveries are expected to start in November 2009 for testing.

On September 22, 2009, Wonder Auto's subsidiary Jinzhou Wanyou Mechanical Parts Co., Ltd. acquired Friend Birch Limited and its China-based operating subsidiaries, Jinzhou Jiade Machinery Co., Ltd. and Jinzhou Lida Auto Parts Co., Ltd. Jinzhou Jiade Machinery and Jinzhou Lida Auto Parts manufacture and sell gas spring shafts and other thin mechanical shafts products, automotive springs and gas springs, and prior to the acquisition were among Wonder Auto's key suppliers of those products. As part of the transaction, Jinzhou Wanyou also acquired all proprietary technologies of Friend Birch Limited's rods and shafts technology center in Brazil.

Wonder Auto recently entered into an investment option agreement with the shareholders of Jinzhou Wonder Alternative Energy Vehicle Technology Co., Ltd. ("Jinzhou AEV"), which allows Wonder Auto to acquire a 10% ownership interest in Jinzhou AEV by the end of 2009 and grants the Company a right of first refusal to acquire a greater ownership interest in Jinzhou AEV. In addition, Wonder Auto will be the preferred supplier of motors to Jinzhou AEV. Jinzhou AEV is a manufacturer of electric and alternative energy vehicles, including electric sedans, taxis, minivans, pick-ups, freight cars, tourist coaches, golf carts and motorized bikes. Wonder Auto's CEO and chairman, Mr. Qingjie Zhao, is a 60% owner of Jinzhou AEV.

Mr. Qingjie Zhao, Chairman and Chief Executive Officer of Wonder Auto commented, "In the process of fighting against the global economic recession, significant changes have taken place in the auto industry. As the 10 million sales target was achieved in the Chinese auto market during October, people begin to turn their focuses to China's economy recovery. We have achieved our preliminary goals for adjustments to response to the financial crisis, and thus reinforced our competitiveness in the markets."

Conference call

The company will host a conference call on Monday, November 2 at 8:00 a.m. U.S. Eastern Daylight time. A question and answer session will follow management's presentation. Mr. Qingjie Zhao (Chairman & CEO), Mr. Ryan Yuan (CFO), Mr. Patrick Sun (Investor Relations Manager) and Mr. Rui Wang (Assistant CFO) will be the primary speakers for the call.

To participate, please call the following numbers ten minutes before the call start time:

    Phone number:  +1 866 242 1388       (United States)
    Phone number:  +852 800 968 831      (Hong Kong)
    Phone number:  +86 10 800 264 0084   (China, China Telecom)
    Phone number:  +86 10 800 640 0084   (China, NetCom Users)
    Phone number:  +44 08082347860       (United Kingdom)
    Conference ID:  38225903

A live webcast of the conference call will be available on the investor relations page of Wonder Auto's web site at http://www.watg.cn .

Non-GAAP Financial Measures and Related Reconciliation

To supplement the Company's financial results presented in accordance with GAAP, the Company provides non-GAAP net income and non-GAAP net income per share data on a basic and diluted basis. The presentation of these non-GAAP financial measures should be considered in addition to the Company's GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The Company's non-GAAP measures may be different from non-GAAP measures used by other companies. The Company's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain exchange gains and losses that may not be indicative of the Company's business operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance. These non-GAAP financial measures also facilitate comparisons to the Company's historical performance and its competitors' operating results. The Company includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Non-GAAP measures are reconciled to comparable GAAP measures in the table below:

                                                         Three Months Ended
                                                            September 30,
                                                         2009           2008
    Calculation of non-GAAP net income:
      GAAP net income                                  $6.5 mil       $6.4 mil
      Foreign exchange (loss) gain:                   ($0.4 mil)      $1.0 mil
      Non-GAAP net income                              $6.9 mil       $5.5 mil
      Basic and diluted non-GAAP net income
       per share                                          $0.26          $0.20
      Shares used in the calculation of non-GAAP
       net income per share - basic and diluted      26,959,994     26,959,994

About Wonder Auto

Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc., through its Chinese subsidiaries, designs, develops, manufactures and sells automotive electrical parts, suspension products and engine components. Wonder Auto ranked second and third in sales revenue in the Chinese market for automobile alternators and starters in 2008, respectively. Wonder Auto's products are used in a wide range of passenger and commercial automobiles with special focus on the fast-growing small- to medium-engine passenger vehicle market. For more information, please log on http://www.watg.cn .

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, our future operating results, our expectations regarding the market for our products, as well as all assumptions, expectations, predictions, intentions or beliefs about our relative strength and about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "believe," "expect," "may," "should," "potential," "continue," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" or similar expressions. Such information is based upon assumptions and expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions and expectations are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward- looking statements contained in this press release, except as required under applicable law. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov . All information provided in this press release and in the attachments is as of the date of this press release.

    Wonder Auto Technology, Inc.
    Condensed Consolidated Statements of Income and Comprehensive Income
    For the three and nine months ended September 30, 2009 and 2008

                             Three months ended        Nine months ended
                               September 30,             September 30,
                                (Unaudited)               (Unaudited)
                               2009        2008         2009         2008

    Sales revenue          $58,961,604 $39,265,821 $148,588,838 $107,041,424
    Cost of sales           45,007,159  29,139,968  112,320,802   79,238,857
    Gross profit            13,954,445  10,125,853   36,268,036   27,802,567

    Operating expenses
      Administrative
       expenses              2,594,285   1,676,857    7,662,331    4,444,210
      Research and
       development
       expenses                487,572     459,804    1,408,479    1,128,026
      Selling expenses       2,080,438   1,209,170    4,811,601    2,912,020
                             5,162,295   3,345,831   13,882,411    8,484,256

    Income from operations   8,792,150   6,780,022   22,385,625   19,318,311
      Other income             149,146     107,023      827,043      520,349
      Government grants        397,277          --      749,815           --
      Net finance (costs)/
       income               (1,481,640)    139,381   (3,511,726)  (1,380,951)
      Equity in net
       income of an
       unconsolidated
       affiliate                    --     567,802           --      792,924

    Income before income
     taxes and
     noncontrolling
     interests               7,856,933   7,594,228   20,450,757   19,250,633
    Income taxes              (939,622)   (632,570)  (2,492,651)  (1,859,813)

    Net income before
     noncontrolling
     interests               6,917,311   6,961,658   17,958,106   17,390,820
    Net income
     attributable to
     noncontrolling
     interests                (410,290)   (608,120)    (903,823)  (1,785,599)

    Net income
     attributable to
     Wonder Auto
     Technology, Inc.
     common
     stockholders           $6,507,021  $6,353,538  $17,054,283  $15,605,221

    Net income before
     noncontrolling
     interests              $6,917,311  $6,961,658  $17,958,106  $17,390,820
    Other comprehensive
     income
      Foreign currency
       translation
       adjustments             167,348     185,858      112,056    4,448,672

    Comprehensive income     7,084,659   7,147,516   18,070,162   21,839,492
    Comprehensive income
     attributable to
     noncontrolling
     interests                (421,159)   (623,982)    (904,590)  (2,372,767)

    Comprehensive income
     attributable to
     Wonder Auto
     Technology, Inc.
     common
     stockholders           $6,663,500  $6,523,534  $17,165,572  $19,466,725

    Earnings per share
     attributable to
     Wonder Auto
     Technology, Inc.
     common stockholders:
     basic and diluted           $0.24       $0.24        $0.63        $0.58

    Weighted average
     number of shares
     outstanding:
     basic and diluted      26,959,994  26,959,994   26,959,994   26,959,994



    Wonder Auto Technology, Inc.
    Condensed Consolidated Balance Sheets
    As of September 30, 2009 and December 31, 2008

                                              September 30,      December 31,
                                                  2009               2008
                                               (Unaudited)        (Audited)
    ASSETS
        Current assets
            Cash and cash equivalents         $21,419,751         $8,159,156
            Restricted cash                    21,283,623         24,181,645
            Trade receivables, net             50,640,997         46,571,619
            Bills receivable                   21,351,329          8,388,926
            Other receivables, prepayments
             and deposits                       9,225,466         16,408,304
            Inventories                        46,916,547         44,016,192
            Amount due from Hony Capital               --          7,637,216
            Income tax recoverable                     --            289,000
            Deferred taxes                      1,204,625          1,075,766

        Total current assets                  172,042,338        156,727,824
            Intangible assets                  22,097,408         22,062,560
            Property, plant and equipment,
             net                               71,883,262         69,131,579
            Land use rights                    10,206,638         10,391,527
            Deposit for acquisition of
             property, plant and equipment      2,554,387          3,845,774
            Deferred taxes                        628,382            870,500

    TOTAL ASSETS                             $279,412,415       $263,029,764



    Wonder Auto Technology, Inc.
    Condensed Consolidated Balance Sheets (Cont'd)
    As of September 30, 2009 and December 31, 2008

                                               September 30,     December 31,
                                                   2009              2008
                                                (Unaudited)       (Audited)
    LIABILITIES AND EQUITY

    LIABILITIES
        Current liabilities
            Trade payables                     $30,633,985       $21,616,932
            Bills payable                       31,161,376        31,247,100
            Other payables and accrued
             expenses                           13,540,880        20,465,014
            Provision for warranty               2,581,872         2,377,620
            Payable to Hony Capital                     --        10,187,216
            Income tax payable                     602,290                --
            Secured borrowings                  54,010,768        44,055,803
            Early retirement benefits cost         371,247           419,301

        Total current liabilities              132,902,418       130,368,986
        Secured borrowings                      18,577,971        16,054,478
        Deferred revenue - government grants     3,382,726         2,806,777
        Early retirement benefits cost             519,895           798,115

    TOTAL LIABILITIES                          155,383,010       150,028,356

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY
        Preferred stock: par value $0.0001
         per share; authorized 10,000,000
         shares in 2009 and 2008;
         none issued and outstanding                    --                --
        Common stock: par value $0.0001 per
         share Authorized 90,000,000 shares in
         2009 and 2008; issued and outstanding
         26,959,994 shares in 2009 and 2008          2,696             2,696
        Additional paid-in capital              67,711,999        71,349,599
        Statutory and other reserves             7,944,120         7,628,541
        Accumulated other comprehensive
         income                                  9,609,908         8,424,270
        Retained earnings                       31,708,870        14,654,587

    TOTAL WONDER AUTO TECHNOLOGY, INC.
     STOCKHOLDERS' EQUITY                      116,977,593       102,059,693

    NONCONTROLLING INTERESTS                     7,051,812        10,941,715

    TOTAL EQUITY                               124,029,405       113,001,408

    TOTAL LIABILITIES AND EQUITY               279,412,415      $263,029,764



    Wonder Auto Technology, Inc.
    Condensed Consolidated Statements of Cash Flows
    For the nine months ended September 30, 2009 and 2008

                                                        Nine months ended
                                                          September 30,
                                                           (Unaudited)
                                                        2009         2008
    Cash flows from operating activities
        Net income attributable to Wonder Auto
         Technology, Inc. common stockholders      $17,054,283   $15,605,221

        Adjustments to reconcile net income
         attributable to Wonder Auto
            Technology, Inc. common stockholders
             to net cash provided by
             operating activities:
                Depreciation                         4,239,790     2,248,751
                Amortization of intangible assets
                 and land use rights                   297,888        85,162
                Deferred taxes                         111,617      (208,858)
                Loss (gain) on disposal of
                 property, plant and equipment          59,490        (1,205)
                Provision for doubtful debts           303,738        (4,020)
                Provision of obsolete inventories       26,149        43,671
                Exchange loss (gain) on translation
                 of monetary assets and liabilities    387,701      (828,205)
                Equity net income of a
                 non-consolidated affiliate                 --      (792,924)
                Share-based payment compensation            --       109,772
                Noncontrolling interests               903,823     1,785,599
                Deferred revenue amortized            (193,408)           --
        Changes in operating assets and
         liabilities :
            Trade receivables                       (4,366,425)  (15,303,061)

            Bills receivable                       (11,649,801)    6,302,977

            Other receivables, prepayments and
             deposits                                1,694,880    (1,860,072)

            Inventories                             (2,926,673)   (6,365,418)

            Trade payables                           9,010,565     3,254,639
            Other payables and accrued expenses     (4,604,814)   (1,584,738)

            Amount due from a related company               --        78,516
            Early retirement benefit costs            (325,977)           --
            Provision for warranty                     203,981       542,873
            Income tax payable                         886,176        (9,835)

    Net cash flows provided by operating
     activities                                    $11,112,983    $3,098,845



    Wonder Auto Technology, Inc.
    Condensed Consolidated Statements of Cash Flows (Cont'd)
    For the nine months ended September 30, 2009 and 2008

                                                        Nine months ended
                                                          September 30,
                                                           (Unaudited)
                                                          2009        2008
    Cash flows from investing activities
        Payments to acquire intangible assets          $(146,600)     $(7,080)
        Payments to acquire and for deposit for
         acquisition of property, plant and
         equipment and land use right                 (6,463,215) (11,776,593)

        Proceeds from sales of property,
         plant and equipment                              29,125      100,988
        Proceeds from sales of Money Victory Limited   5,950,000           --
         Net cash paid to acquire Jinzhou Hanhua
          Electrical Systems Co., Ltd.                        --   (3,042,676)
        Net cash paid to acquire Money Victory Limited        --   (5,000,000)


        Net cash paid to acquire Jinzhou Karham Co.,
         Ltd.                                                 --     (703,712)
        Net cash paid to acquire Fuxin Huirui
         Mechanical Co., Ltd.                                 --     (140,990)
        Net cash paid to acquire Yearcity             (9,936,057)          --
        Net cash paid to acquire Jinzhou Wanyou
         Mechanical Parts Co., Ltd.                   (1,705,437)          --

        Net cash flows used in investing activities  (12,272,184) (20,570,063)

    Cash flows from financing activities
        Dividend paid to Winning                              --     (384,500)
        Government grants received                       769,006           --
        Decrease in bills payable                     (1,381,350)  (4,819,593)

        Decrease in restricted cash                    2,888,474    4,011,467

        Proceeds from secured borrowings              64,274,001   15,631,122

        Repayment of secured borrowings              (52,193,550)  (9,196,570)

    Net cash flows provided by financing activities   14,356,581    5,241,926

    Effect of foreign currency translation
     on cash and cash equivalents                         63,215      980,483

    Net increase (decrease) in cash and cash
     equivalents                                      13,260,595  (11,248,809)

    Cash and cash equivalents - beginning of period    8,159,156   26,102,993

    Cash and cash equivalents - end of period        $21,419,751  $14,854,184

    Supplemental disclosures for cash flow
     information:
        Cash paid for:
            Interest                                  $3,382,425   $1,346,694
            Income taxes                              $1,489,450   $1,656,577

        Non-cash investing and financing activities:
            Settlement of amount due to Hony Capital
             II, L.P. ("Hony Capital") by offsetting
             with amount due from Hony Capital        $7,626,804          $--


    For more information, please contact:

     Patrick Sun
     Investor Relations Manager
     Tel:   +86-10-8478-5339
     Cell:  +86-153-1161-1742
     Email: ir@watg.cn

SOURCE Wonder Auto Technology, Inc.