JADE ART GROUP: Q3 UPDATE

Jade Art’s revenues rise 13% sequentially.
Operating margins improve; liquidity
and macro concerns persist.

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Jade Art’s facilities were inoperative for a considerable period of the quarter as a result of the earthquake in the previous quarter. Despite loss of accessibility to the main supply road to the mine until late September, the company shipped 2,300 tons of jade in merely seven days of operations. The company attained a decent revenue growth of 13% q-o-q to $7.6 million. This clears Jade Art’s operational concern of business continuity and revenue generation ability. Though the management has downgraded fiscal 2008 earnings’ guidance, we expect operational efficiency in future quarters, now that full access to the mine has been restored.

While jade’s prospects remain strong, the current economic global turmoil and its impact on specifically, the Chinese economy, may limit consumer spending, possibly downsizing the demand for jade. A reduced order book and a faltering new order pipelines also pose a threat to the company’s revenue stream. We maintain our NEUTRAL rating under a Pessimistic Scenario until there is further clarity on Jade Art’s order pipeline.

OTC BB: JADA