Energy Saving Equipment Sales Continue to Benefit from Rapid Growth Momentum

SmartHeat Inc., a market leader in China’s “green” technology, environmentally friendly energy savings industry, today announced record financial results for the quarter ended September 30, 2008.

SmartHeat generated revenue of $20.7 million in the quarter compared to $3.01 million in the same period in 2007, an increase of approximately 587%. This increase was primarily due to increased customer recognition and acceptance of SmartHeat brand quality products, deeper market penetration and strong customer demand as China mandates that businesses and municipalities adopt energy saving programs. SmartHeat expects this momentum to continue in 2008 and 2009.

Net income for the quarter was $4.3 million compared to $0.22 million for the corresponding 2007 period. The year to year increase in SmartHeat’s earnings was attributable in large part to larger economies of scale, combined with the growth in revenues and significantly improved operating efficiency.

James Jun Wang, SmartHeat’s CEO, commented: “We are pleased with our 3rd quarter financial results which demonstrate continued rapid growth in our business and the industry in general that we anticipated in early 2008. Our strong financial performance reflects execution of our growth strategies in a favorable market environment as China embraces more energy efficient products and mandates the use of environmentally friendly energy saving equipment. As a market leader, SmartHeat stands to benefit greatly from China’s “green” movement towards a clean environment. Our products reduce heat consumption and lower heating bills by as much as 50%. We are committed to delivering quality products to customers while creating greater value for our shareholders.”

SmartHeat, Inc. is a US company with its primary operations in China. SmartHeat is a market leader in China’s “green” technology heat energy saving industry. SmartHeat manufactures plate heat exchangers and compact plate heat exchanger units — the technology that helps to capture and recycle waste heat thus reducing fossil fuel related costs and pollution. SmartHeat’s products and technology have broad residential and industrial applications. China’s heat transfer market is currently estimated at approximately $2.4 billion with double digit annual growth according to China Heating Association.