MIRA INFORM REPORT

Report Date :

06.06.2007

IDENTIFICATION DETAILS

Name :	yuexing group co., ltd.
Registered Office :	No. 198, Guanghua Road, Changzhou City Jiangsu Province 213004 Pr
Country :	China
Financials (as on) :	31.12.2005
Date of Incorporation :	Mar. 2, 1991
Com. Reg. No.:	3204002103033
Legal Form :	Limited Liabilities Company
Line of Business :	Engaged in investing and managing its subsidiaries, and manufacturing furniture.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	Up To usd1,000,000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

name & address

yuexing group co., ltd.

NO. 198, GUANGHUA ROAD, CHANGZHOU CITY

JIANGSU PROVINCE 213004 PR CHINA

TEL : 86 (0) 519-8826631

FAX : 86 (0) 519-8836000

EXECUTIVE SUMMARY

INCORPORATION DATE : mar. 2, 1991

REGISTRATION NO. : 3204002103033

REGISTERED LEGAL FORM : limited liabilities company

CHIEF EXECUTIVE : Mr. ding zuohong (chairman)

STAFF STRENGTH : 833

REGISTERED CAPITAL : cny80,000,000

BUSINESS LINE : manufacturing

TURNOVER : cny139,700,774.84 (AS OF DEC. 31, 2005)

EQUITIES : CNY228,098,242.30 (AS OF DEC. 31, 2005)

PAYMENT : average

RECOMM. CREDIT RANGE : up to usd1,000,000 (PERIODICAL REVIEW)

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly good

OPERATIONAL TREND : steady

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 7.65 = US$1 AS OF 2007-06-05

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Ren Min Bi

SC was registered as a limited liabilities company at local Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on Mar. 2, 1991.

Company Status: Limited liabilities co.

This form of business in PR China is defined as a legal person. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is listed as follows:

-manufacturing co. : CNY 500,000.00

-trading &wholesaling co. : CNY 500,000.00

-retailing co. : CNY 300,000.00

-consultancy & service co. : CNY 100,000.00

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 50% of the registered capital while contribution by intangible assets must not exceed 20% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

SC’s registered business scope includes manufacturing and selling furniture; and selling building materials, decoration materials, grocery, knit wears, textiles, handicraft, lumber, and hardware; indoor decoration and technical consulting; land freight; exporting homegrown products; importing and exporting raw materials, accessories, machinery, instrument and apparatus, components, and relevant technology; processing with imported materials, processing with imported samples, assembling with imported parts, and compensation trade in agreement; manufacturing and selling electric motor car, dune buggy, and scooter; and sales of motorcycle and component.

SC is mainly engaged in investing and managing its subsidiaries, and manufacturing furniture.

Mr. Ding Zuohong has been chairman of SC since 1991.

SC owns about 883 staff at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Changzhou. Our checks reveal that SC owns the total premise about 16,192 square meters.

http://www.yuexing-group.com The design is professional and the content is well organized. At present, the web is only in Chinese version.

SC’s Changes are as follows:

Date of change	Item	Before the change	After the change
1996-7	Company name	Changzhou Yuexing Furniture Set Co., Ltd.	Jiangsu Yuexing Furniture Group Co., Ltd.
	Registered capital	CNY 4,250,000	CNY 20,800,000
	Shareholding Structure	Ding Zuohong 43.53% Ding Zuolong 14.12% Ding Zuoyong 11.76% Ding Banggui 11.76% Shen Meilan 10.59% Xu Yingmei 8.24%	Ding Zuohong 43.27% Ding Zuolong 13.46% Ding Zuoyong 11.54% Ding Banggui 11.54% Shen Meilan 10.58% Xu Yingmei 9.61%
	Registered business scope	Manufacturing furniture; and selling building material, decoration material, grocery, knit goods, textile, handicraft, lumber, and hardware; and meals service.	Manufacturing and selling furniture; and selling building material, decoration material, grocery, knit goods, textile, handicraft, lumber, and hardware; indoor decoration and technical consulting; land freight; exporting homegrown products; importing and exporting raw material, accessories, machinery, instrument and apparatus, component, and relevant technology; processing with imported materials, processing with imported samples, assemblying with imported parts, and compensation trade in agreement; manufacturing and selling electric motor car, dune buggy, and scooter; and sales of motorcycle and component.
1999-8	Registered capital	CNY 20,800,000	CNY 32,035,000
	Shareholding Structure	Ding Zuohong 43.27% Ding Zuolong 13.46% Ding Zuoyong 11.54% Ding Banggui 11.54% Shen Meilan 10.58% Xu Yingmei 9.61%	Ding Zuohong 42.58% Ding Zuolong 13.41% Ding Zuoyong 11.46% Ding Banggui 11.86% Shen Meilan 11.05% Xu Yingmei 9.64%
2004	Company name	Jiangsu Yuexing Furniture Group Co., Ltd.	Yuexing Group Co., Ltd.
	Registered capital	CNY 32,035,000	CNY 50,000,000
	Shareholding Structure	Ding Zuohong 42.58% Ding Zuolong 13.41% Ding Zuoyong 11.46% Ding Banggui 11.86% Shen Meilan 11.05% Xu Yingmei 9.64%	Ding Zuohong 52% Ding Zuolong 16.66% Ding Zuoyong 16.66% Ding Banggui 7.6% Shen Meilan 7.08%
2005	Registered capital	CNY 50,000,000	CNY 80,000,000

MAIN SHAREHOLDERS:

Name % of Shareholding

Ding Zuohong 52

Ding Zuolong 16.66

Ding Zuoyong 16.66

Ding Banggui 7.6

Shen Meilan 7.08

l Chairman and General Manager:

Mr. Ding Zuohong, ID# 320622620515047, born in 1962, 45 years old with university education. He is currently responsible for the overall management of SC.

Working Experience(s):

From 1991 to present Working in SC as chairman and general manager;

At present Working in Changzhou Yuexing International Furniture Square Co., Ltd. as

chairman, in Shanghai Yuexing Furniture Manufacturing Co., Ltd. as

chairman, in Changzhou Yuexing An-Di-Gao Furniture Co. as chairman,

and in Shanghai Yuexing House Furnishings City as chairman.

l Assistant Manager:

Mr. Ding Zuoyong, ID# 320622660309047, born in 1966, 41 years old with university education. He is currently responsible for the daily management of SC.

Working Experience(s):

From 1991 to present Working in SC as assistant manager;

At present Working in Nanjing Yuexing Advertising Decoration Co. as chairman, and

in Changzhou Yuexing Advertisement Co., Ltd. as chairman.

SC is mainly engaged in investing and managing its subsidiaries, and manufacturing furniture.

SC’s products mainly include: Solid Hardwood, Dining Room, and Bedroom, etc.

SC’s brand: “ Yuexing”.

SC sources its materials 70% from domestic market, mainly Shanghai and Jiangsu province, and 30% from overseas market; SC sells its products 60% in domestic market, mainly Dalian province, and 40% to overseas market, mainly America, Canada, Korea, and Japan.

The buying terms of SC include T/T, L/C and Credit of 30-60 days. The payment terms of SC include T/T, L/C and Credit of 15-30 days.

*Major Suppliers:

==============

Shanghai Songyin Wood Co., Ltd.

Wuxi Zhongyi Steel Manufactures Co., Ltd.

*Major Customers:

==============

Dalian Changjiang Mansion
Shenyang MT Decoration Co.
 

SC is known to have 13 subsidiaries at present, as follows:

Changzhou Yuexing International Furniture Square Co., Ltd.

Nanjing Yuexing International Household Square Co., Ltd.

Nanjing Yuexing Advertising Decoration Co.

Changzhou Moonlight Furniture Co., Ltd.

Yuexing Group Wuxi International Household Square

Changzhou Yuexing Advertisement Co., Ltd.

Wuhan Yuexing Furniture Co.

Changzhou Yuexing An-Di-Gao Furniture Co.

Shanghai Yuexing Household Square Co., Ltd.

Shanghai Yuexing House Furnishings City

Shanghai Yuexing Furniture Manufacturing Co., Ltd.

Changzhou Department Store Co., Ltd.

Hu-Ning High-way Company

Overall payment appraisal :

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience : SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record : None in our database.

Debt collection record :No overdue amount owed by SC was placed to us for collection within the last 6 years.

Communications Bank of China Chengnan Sub-branch

AC#：324006240010252006942

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2004	As of Dec. 31, 2005
Cash & bank	25,175	30,555
Bills receivable	3,400	0
Inventory	7,308	32,765
Short invest	0	0
Accounts receivable	11,992	12,033
Other Accounts receivable	7,308	34,196
Accounts payable in advance	9,657	8,400
To be apportioned expense	0	620
Other current assets	19,118	0
	------------------	------------------
Current assets	83,958	118,569
Fixed assets	20,678	21,508
Long term investment	398,722	402,222
Other assets	0	0
	------------------	------------------
Total assets	503,358	542,299
	=============	=============
Short loans	110,000	104,000
Bills payable	0	0
Accounts payable	17,400	24,376
Salaries payable	0	0
Shares payable	0	0
Welfares payable	726	1,989
Taxes payable	-1,640	59
Other Accounts payable	175,755	177,715
Withdraw the expenses in advance	0	0
Other current liabilities	4,155	6,062
	------------------	------------------
Current liabilities	306,396	314,201
Long term liabilities	0	0
Other liabilities	0	0
	------------------	------------------
Total liabilities	306,396	314,201
Equities	196,962	228,098
	------------------	------------------
Total liabilities & equities	503,358	542,299
	=============	=============

Income Statement

Unit: CNY’000

	As of Dec. 31, 2004	As of Dec. 31, 2005
Turnover	749,409	139,701
Cost of goods sold	506,187	123,845
Sales expense	100,851	6,691
Management expense	42,695	9,207
Finance expense	25,193	10,178
Profit before tax	82,257	1,718
Less: profit tax	24,048	569
Profits	58,209	1,149

Important Ratios

=============

	As of Dec. 31, 2004	As of Dec. 31, 2005
*Current ratio	0.27	0.38
*Quick ratio	0.25	0.27
*Liabilities to assets	0.61	0.58
*Net profit margin (%)	7.77	0.82
*Return on total assets (%)	11.56	0.21
*Inventory /Turnover ×365	4 days	86 days
*Accounts receivable/Turnover ×365	6 days	31 days
*Turnover/Total assets	1.49	0.26
* Cost of goods sold/Turnover	0.68	0.89

PROFITABILITY: AVERAGE

l The turnover of SC appears fairly good in its line in 2004, but in 2005, SC’s main business is investing and managing its subsidiaries, so the turnover decreased a lot.

l SC’s net profit margin is fairly good in 2004, and fair in 2005.

l SC’s return on total assets is fairly good in 2004, and fair in 2005.

l SC’s cost of goods sold is fairly high, comparing with its turnover.

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a fair level in both years.

l SC’s quick ratio is maintained in a fair level in both years.

l The inventory of SC is maintained in a normal level.

l The accounts receivable of SC is maintained in a normal level.

l The short-term loan of SC appears TOO LARGE.

l SC’s turnover is in a fairly good level in 2004, but average in 2005, comparing with the size of its total assets.

LEVERAGE: AVERAGE

l The debt ratio of SC is low.

l The risk for SC to go bankrupt is low.

Overall financial condition of the SC: Fairly good.

SC is considered medium-sized in its line with fairly good financial conditions. The large amount of short-term loan could be a threat to SC’s financial condition. A credit line up to USD1,000,000 would appear to be within SC’s capacities upon a periodical review basis.

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions