Xinhua Far East China Ratings Downgrades the Issuer Rating of Ningbo Bird to BB-

Xinhua Far East China Ratings Downgrades the Issuer Rating of Ningbo Bird to BB-

April 05, 2006

    HONG KONG, April 5 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings (Xinhua Far East) today downgraded the
issuer credit rating of Ningbo Bird Co., Ltd. (`Bird' or
`the Company', SH A 600130) from BB+ to BB-.  Its rating
outlook remains negative.

    The downgrade was prompted by Bird's poor performance
in 2005 and its limited financial flexibility in what is an
increasingly challenging operating environment.  Xinhua Far
East anticipates it will be difficult for Bird to improve
its performance and enjoy upside potential in the medium
term given the tough market environment. 

    The conditions in China's handset sector worsened in
2005, with intensifying competition as a result of stagnant
growth in domestic sales, heavy inventories, the release of
new brands, and the inflow of Original Design Manufacture
(ODM) products in the sector.  Heavy price cutting is the
main tool used to promote sales, while manufacturing costs
are rising as a result of consumer demand for more
sophisticated mobile handsets functions.  R&D and
promotional costs have also risen as a result of reduced
fashion cycle for cellular phones.

    The operating conditions are even more challenging for
domestic cellular phone makers.  International brands
continue to take market share in China and, in 2005, they
held 59.4% of the market, according to Ministry of
Information Industry figures.  As a result of localized
product designs, competitive pricing, and stronger
technology, international brands have not only consolidated
their share of the high-end segment, but have also broken
into the mass/medium-end market. 

    The downgrade action also reflects Bird's poor
operating results and its limited ability to withstand a
market downturn.  Although Bird remains in a leading
position, when compared to its domestic peers, its turnover
fell 5.3% yoy in 1-3Q05, while its EBIT margin declined to
negative 4.0% for 1-3Q05 from 2.7% in 2004.  Meanwhile, the
Company also announced huge loss estimation for full-year
2005. 

    The downgrade for Bird also reflected deteriorated
financial flexibility.  Although Bird reduced its inventory
in 2005, the effect has had little overall effect given its
mounting inventory, which has accumulated over the years. 
Moreover, with handset fashion changing quickly, the market
value of the remaining inventory is questionable.  When
excluding inventory (which accounted for 41.4% of current
assets by September 2005), Bird's current asset to current
liability ratio was just 0.78 at that time.

    In addition, Xinhua Far East expects the upside
potential for Bird is limited in the foreseeable future. 
While exports increased to 43.9% of Bird's turnover in
1H05, the generally lower profit margin in overseas markets
will only reduce the Company's overall profitability.  The
Company is facing stronger international brands, which have
superior distribution channels internationally.  The
approaching 3G era is unlikely to bring Bird much benefit,
given its limited investment exposure, low market demand in
the initial stages, and the fact there are different
distribution channels for 3G handsets.

    About Xinhua Far East China Ratings

    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China. It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd. Shanghai Far East became a
Xinhua Finance partner company in 2003 and the first China
member of The Association of Credit Rating Agencies in Asia
in December 2003. 

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards. Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies. It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market. For more
information, see www.xfn.com/creditrating.

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 21 news bureaus
and offices in 18 locations across Asia, Australia, North
America and Europe.  For more information, please visit
http://www.xinhuafinance.com. 

    About Shanghai Far East Credit Rating Co., Ltd

    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China.  It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China.  The company
is a pioneer in conducting bond-rating business in China. 
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years. With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion.  For more information, see
http://www.fareast-cr.com.

    About Ningbo Bird Co., Ltd.

    Ningbo Bird Co., Ltd. is principally engaged in
cellular phone manufacturing.  Its largest shareholder is
Ningbo Electronic Information Group Co., Ltd. which holds a
28.125% stake in the Company.  In 2004, Bird's turnover was
RMB10.246 billion, while shipments were reported as 13.657
million, of which 3.377 million were exported.

    For the rating report summary, please visit
www.xinhuafinance.com/creditrating.

    For more Information, please contact: 

     Joy Tsang
     Corporate & Investor Communications Director
     Xinhua Finance
     Tel:   [phone]
            [phone]
            [phone]
     Email: [e-mail]

     David Leeney
     Taylor Rafferty (IR/PR Contact in US)
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua Far East China Ratings