Update on Asia Automotive Acquisition (AAAC.OB)

I would like to present an additional information on Asia Automotive Acquisition (AAAC.OB). For the most part, it is based on the proxy statement filed by the company one month ago. Here is the link:

http://www.sec.gov/Archives/edgar/data/1332552/000133255207000027/proxytest4.txt

Now, some important points from this proxy:

First, comparison to the other companies in the industry, according to the board:

Overall the Company examined 65 automotive supplier firms traded on United
States stock exchanges.Subsequently eight companies were selected based on
their single or dual focus technical competency which is similar to that
of Hunan Tongxin. Additionally, we analyzed gross and net Income margins
and revenue growth rates. The board then examined the forward price earnings
ratios of these companies. The median and mean forward price earnings ratios
for the eight companies were 17.7 and 22.4, respectively. The board used
this range of price earnings ratios as the most representative.

The board made several assumptions in deriving statistics about Hunan Tongxin
that were used solely for the purpose of management's determining a value of
Hunan Tongxin. Investors should not place any weight on these projections,
because any projection is subject to many assumptions, some or all of which
may not be correct or occur as assumed. The assumptions were for the
projection of net income for 2007. The net income assumption for fiscal year
2007 was $9.5 million. The projected net income for 2007 was determined to be
reasonable in light of the net income for 2006 of approximately $5.7 million,
and the level of existing and new contracts at the time the assessment was
made. The level of contracts has increased significantly from 2006 to 2007.
Hunan Tongxin has long-term debt of approximately $5.2 million and and cash
and marketable securities of approximately $5.9 million as of June 30, 2007
and it is assumed that it will not leverage the business going forward.

The starting point was to determine enterprise value of Hunan Tongxin, which
was derived by the following formula: enterprise value equals market
capitalization, plus long term debt, plus preferred equity, minus cash and
cash equivalents. Using this formula, the board of directors arrived at a
projected enterprise value for Hunan Tongxin of $169,100,000 for 2007. This
was derived using a market capitalization of $168,150,000 an amount
determined by taking the fair market comparable capitalization using an
implied market capitalization equal to a comparable price earnings ratio of
17.7 multiplied by the assumed earnings of Hunan Tongxin for 2007 of
$9,500,000. There is anticipated to be no additional long-term debt in 2007
over the existing $5,300,000 and no preferred equity issued and outstanding
in Hunan Tongxin. Cash and cash equivalents of Hunan Tongxin for 2007 were
assumed to be $5,900,000 resulting from Hunan Tongxin's ongoing operations.

Based on the assumed 6,380,250 shares that will be outstanding upon
completion of the Equity Acquisition, the Board computed a per share price
of $26.50, or approximately $19.06 above the redemption value of AAAC's
common stock (approximately $7.60). Stockholders should note that these
evaluation computations are not predictions of the actual market price of
AAAC either upon consummation of the transaction or at any time after that.

The AAAC board of directors believes because of the financial skills
and automotive background of all of its directors, it was qualified to
make this analysis itself and conclude that the acquisition of Hunan Tongxin
met this 80% test requirement without recourse to an independent source.
The entire AAAC board of directors is comprised of directors with extensive
experience in analyzing acquistion targets and assessing their future values.
AAAC officers William R. Herren and Rudy Wilson have been involved in
identifying and completing seven investment projects in China with over $250
million in direct investment while employed at General Motors. David J.Brophy,
leads the University of Michigan's Private Equity and Entrepreneurship Center
and brings considerable independent expertise in this area. Donald L. Runkle
brings experience from numerous global acquisitions during his tenure at
Delphi Automotive.


Now, the background of the company being acquired:

BACKGROUND

Hunan Tongxin is the largest independent Chinese supplier of Engineered
Vehicle Body Structures ("EVBS") capable of providing products for both
light and commercial vehicles in addition to designing, fabricating and
testing dies used to stamp automotive body panels. EVBS consists of
exterior body panels including doors, floor pans, hoods, side panels,
fenders. Hunan Tongxin also manufactures complete cab structures for
commercial vehicles. Hunan Tongxin's components must meet exacting
dimensions for fit and finish before they are assembled and finally
painted. These capabilities enable Hunan Tongxin to participate
effectively in all sectors of the Chinese automotive market including
light and commercial vehicles.


STRATEGY

Hunan Tongxin captured approximately 7% of the independent EVBS market
in 2005 and plans to increase its share to 20% by 2010. It anticipates
entering the North American and European collision parts aftermarket
based on what it perceives to be products that are comparable to those
of other automotive suppliers but selling at prices that will give it
a competitive advantage.

Hunan Tongxin's goal is to become one of the world's premier EVBS
companies.

The principal elements of its core business strategies are so
follows:

* Maintaining its leadership position in China's EVBS

* Enhancing the leadership position in die design and fabrication.

* Increasing value added content for cab assembly.

* Focusing on high-value EVBS design services

Since 2004 Hunan Tongxin had successfully expanded to the following
Southeast Asia exports markets:

* Vietnam EVBS market

* Cambodia EVBS market



More updates will come soon....