Xinhua Far East Downgrades Shenyang Jinbei Automotive Co Ltd from BB to C Issuer Rating

Xinhua Far East Downgrades Shenyang Jinbei Automotive Co Ltd from BB to C Issuer Rating

March 23, 2006

    HONG KONG, March 23 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings today downgraded Shenyang Jinbei
Automotive Co Ltd ("Jinbei Auto" or "the
Company", SH A 600609) from a BB to a C domestic
currency issuer credit rating.

    The downgrade was prompted by the large amount of
overdue loans reported in the Company's 2004 annual and
2005 interim results.  Overdue loans were reported to be
RMB684 million in 2004, representing 33.2% of gross debt.
Overdue loans rose further to RMB696 million and reached
35.7% of gross debt in 1H05, with most of the overdue loans
from 2004 remaining unpaid.  Xinhua Far East believes that
Jinbei Auto's repayment capacity has been materially
impaired, considering that its cash reserve (unpledged
portion) is lower than its total overdue loans.

    Xinhua Far East also notes the deteriorating profit
margins of both Jinbei Auto and its major subsidiaries,
especially Brilliance Jinbei, which makes it very difficult
for the Company to enhance its credit profile.  The risks in
its contingent liabilities further aggravate the problem.

    As competition has intensified in China's auto market,
Jinbei Auto's profitability has continued to decline in
recent years, in contrast to its rising light-vehicle
sales.  Six of its major consolidated subsidiaries - one of
which has been shut down - reported losses (or slender
profits) over the past three years.  To make matters worse,
Brilliance Jinbei, a JV between Jinbei Auto and Brilliance
China Automotive Holdings Ltd ("CBA"), formerly
the Company's cash cow, also reported weak performance in
2004 and 1H2005. Xinhua Far East expects that CBA, as a
self-branding domestic manufacturer, might become further
cornered in China's sedan market and face considerable
liquidity risks should its convertible bond holders execute
redemption options on the bond. There is little chance for
Jinbei Auto to notably boost its profitability and cash
flow in the next couple of years.

    In its 2005 half year report, the Company reported
RMB361 million in contingent liabilities, which originated
from loan assurances to its subsidiaries and unrelated
companies.  Based on the poor performances of most of
Jinbei Auto's subsidiaries and the comparatively stagnant
economy in the regions in which related companies operate,
Xinhua Far East anticipates that these contingencies will
lead to significant risk.

    A major light-vehicle producer in China, Jinbei Auto
sold 18,300 light lorries in 2004, giving it a 2.4% market
share; it also sold 62,100 light cars, giving it 15.8%
market share. Through its JV with CBA, Jinbei Auto also
produces the Zhonghua sedan, sales of which came to 10,000
units in 2005, down 8.93% YoY.  The JV reported RMB432
million and RMB287 million in losses in 2004 and 1H05
respectively.

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

    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 http://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 .

    For more Information, please contact: 

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

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

SOURCE  Xinhua Far East China Ratings