AUTOCHINA INTL (GREY:AUTC)

AutoChina International Limited

670,693 Ordinary Shares

This prospectus relates to 670,693 ordinary shares of AutoChina International Limited (“AutoChina”), a Cayman Island exempted company, that may be sold from time to time by the Selling Shareholders named in this prospectus.

The prices at which the Selling Shareholders may sell their shares will be determined by the prevailing market price for the shares or pursuant to privately negotiated transactions. Information regarding the Selling Shareholders and the times and manner in which they may offer and sell the shares under this prospectus is provided under “Selling Shareholders” in this prospectus.

AutoChina will not receive any of the proceeds from the sale of the shares under this prospectus.

AutoChina’s ordinary shares have been quoted on the OTC Bulletin Board under the symbol AUTCF since February 28, 2012. On May 9, 2014, the closing sale price of the ordinary shares was $17.80. You are urged to obtain current market quotations of AutoChina’s ordinary shares before purchasing any of the shares being offered for sale pursuant to this prospectus.

AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOMEAND COMPREHENSIVE INCOME

(in thousands except share and per share data)

Management Discussion and Analysis

Revenue

Revenues for the year ended December 31, 2013 were $658.1 million, an increase of 97.6% from $333.1 million in the prior year period, as a result of a significant increase in commercial vehicles revenue due to the increase in the volume of new vehicle leases.

Commercial vehicles revenue increased by 138.5%, which was primarily due to an increase in the volume of new vehicle leases during the year. AutoChina’s commercial vehicle sales, servicing, leasing and support business recorded 11,902 new leases in the year ended December 31, 2013, compared to 5,385 new leases in the year ended December 31, 2012. The increase in commercial vehicles revenue was also contributed to by an increase in average price per vehicle from $46,200 per vehicle in 2012 to $49,900 per vehicle in 2013. The Company repossessed 758 vehicles whose lessees had defaulted on installment payments, sold 763 of these vehicles and other vehicles repossessed in prior periods, and realized losses relating to 30 vehicles during the year ended December 31, 2013. In comparison, there were 789 vehicles repossessed, 611 vehicles sold and 18 loss vehicles recognized in the year ended December 31, 2012. The increase in commercial vehicle sales, servicing and leasing was primarily due to a general stabilization in the economy that led to favorable investment sentiment for prospective purchasers of commercial vehicles.

Revenues from value-added services (diesel, tire and insurance financing services) totaled $129,000 during the year ended December 31, 2013 compared with $650,000 during the prior year. During 2013, AutoChina continued to tighten the credit requirements for customers of the value-added services as a way to manage default risk, which led to a decrease in value-added services revenues. In addition the Company has de-emphasized the services and may eventually retire them. As of December 31, 2013, over 260 tire outlets and over 80 fueling stations participate in the program. Meanwhile, commencing July 2011, AutoChina restructured its second-hand commercial vehicle program and began offering leasing arrangements to approved customers. We recognized the second-hand vehicle leasing arrangements as a direct financing lease and leased 284 second-hand vehicles during fiscal 2013 compared with 824 second-hand vehicles leased in fiscal 2012. Revenue generated from second-hand commercial vehicle leasing arrangements during the year ended December 31, 2013 was $634,000, compared to $2,684,000in the prior year.

We recognize revenue from membership fees during the term of our customer’s lease as lease revenue. We also charge service and support fees on a monthly basis when the services are rendered. Once the lease term ends (in June of 2010 the leases for our first customers began to end), a customer can elect to continue to participate in our service and support network, and we will also charge service and support fees on a monthly basis when the services are rendered. As of December 31, 2013 there were owners of 1,217 vehicles that continue to pay for services after the termination of the direct financing and sales-type lease, representing a retention rate of approximately 3.7%.

Finance revenue decreased 37.8% as a result of the decrease in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect in the year ended December 31, 2013 compared to fiscal 2012. Insurance revenue increased 42.5% compared to the prior year, as a result of the continued growth of the new direct insurance agency business that commenced in late 2011.

Property lease and management revenues totaled $501,000 in the year ended December 31, 2013 and represent the revenues of the office leasing business. This business commenced operations during the third quarter of 2013 and therefore there were no revenues during the year ended December 31, 2012.

Income (loss) from Continuing Operations and Net Income

Income (loss) from continuing operations and net income in the year ended December 31, 2013 was $11.8 million, as compared to $23.5 million in year ended December 31, 2012, representing a decrease of 49.8% from the same period in 2012. The decrease primarily resulted from the decreased gross profit generated from commercial vehicles and increased operating expenses during the year.

Q1 2012 Financial Highlights

• Total revenues of $103.1 million, compared to $136.2 million
• Gross profit of $24.5 million, compared to $23.2 million
• Net income of $8.0 million, compared to a net loss of $27.4 million (which included loss on change in fair value of earn-out obligation)
• Adjusted net income of $8.0 million, compared to $11.0 million
• Adjusted EBITDA of $16.2 million, compared to $18.2 million

Market Review

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “During the first quarter of 2012, we remained focused on expanding our store network and service and finance offerings despite difficult market conditions. Sales of heavy-trucks in China were generally affected by weaker than expected economic growth as well as seasonality in the first quarter due to the Chinese New Year. Despite these conditions, we have continued to stick closely to a thorough credit screening process for our new truck lease agreements, which has been evidenced by our continued low-default rate. We are also working to diversify our service offerings to our current and potential customers across China. This includes cost-effectively expanding our new insurance agency business, sale-leaseback program, value-added services (tires, fuel), and growing our network of financing and service centers. While we have encountered difficult market conditions, we feel that these initiatives will position the Company for long term success.”

SHIJIAZHUANG, Hebei Province, China--(BUSINESS WIRE)--AutoChina International Limited (“AutoChina” or the “Company”) (OTC: AUTCF), China’s largest commercial vehicle sales, servicing, leasing, and support network, today responded to the Securities and Exchange Commission’s (“SEC”) lawsuit against the Company and 11 investors, alleging that the Company deliberately manipulated trading in its shares to create the appearance of a liquid and active market.

AutoChina has reviewed the SEC’s complaint and believes that it is without merit. The Company intends to defend against the claims vigorously and believes that all of the evidence it is aware of contradicts the SEC’s allegations. AutoChina continues to work closely with its legal counsel and advisors to defend the Company.

SHIJIAZHUANG, China--(BUSINESS WIRE)--AutoChina International Limited (“AutoChina” or the “Company”) (AUTCF.PK), China’s largest commercial vehicle sales, servicing, leasing, and support network, today announced that its Board of Directors has declared a one-time special cash dividend in the amount of $0.25 per share. The total amount of cash distributed in the dividend is expected to be approximately $5.9 million. The cash dividend will be paid on or around February 15, 2012, to all shareholders of record as of the close of business on February 8, 2012.

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “We are pleased to declare the Company’s first dividend. Though the past year has been challenging on a corporate level, AutoChina remains committed to our employees, customers, and shareholders. We continue to focus on methods to further evolve our business, and feel that we can expand our business opportunities while returning capital to the loyal shareholders who have continued to stand by the Company. We appreciate and are sincerely grateful for their faith in AutoChina over the past year.”

Company Announces Three-for-Two Stock Split in the Form of a Stock Dividend

The Company also announced that its Board of Directors has declared a three-for-two stock split to be effected in the form of a stock dividend after the completion of the aforementioned special cash dividend. The stock dividend will be payable on February 16, 2012, to shareholders of record as of the close of business on February 8, 2012. Fractional shares will be rounded down to the nearest whole share, and no cash will be payable in lieu thereof. Upon completion of the stock split, the number of outstanding shares of the Company's common stock will be approximately 35.3 million shares.

SHIJIAZHUANG, China--(BUSINESS WIRE)-- AutoChina International Limited (“AutoChina” or the “Company”) (OTC: AUTCF.PK - News), China’s largest commercial vehicle sales, servicing, leasing, and support network, today reported its second quarter financial results ended June 30, 2011, and third quarter and nine month financial results ended September 30, 2011 (see attached tables). AutoChina also filed restated financial results for the first quarter ended March 31, 2011.

Q2 2011 Financial Highlights

•  Total revenues of $185.8 million, a decrease of 7.2% from $200.3 million in the prior-year period
• Adjusted net income excludes any non-cash charges from the Earn-out Share Provision, see “Non-GAAP Financial Measures” below) of $13.6 million, compared to adjusted net income of $10.9 million
• Adjusted EBITDA of $23.7 million, compared to $19.2 million

Q3 2011 Financial Highlights

•  Total revenues of $168.6 million, an increase of 18.9% compared to $141.8 million in the prior-year period
• Adjusted net income of $11.9 million, compared to adjusted net income of $9.4 million
• Adjusted EBITDA of $21.8 million, compared to $19.0 million

Nine Month Financial Highlights

•  Total revenues of $490.7 million, an increase of 6.2% compared to $462.2 million in the prior-year period
• Adjusted net income of $36.6 million, compared to adjusted net income of $26.6 million
• Adjusted EBITDA of $63.8 million, compared to $50.9 million

Operational Highlights and Guidance

•  3,446 commercial vehicles leased in the second quarter of 2011, and 3,126 in the third quarter of 2011
• 9,131 commercial vehicles leased for the nine-month period
• Expects to lease between 10,000 and 12,000 vehicles in 2011; operate at least 500 stores by the end of 2011
• Company continues to expand geographic base and service offerings, sees continued margin expansion

Company Provides Financial Guidance for Year Ending December 31, 2011

•  Expects revenues of between $575 million and $625 million
• Expects adjusted net income of between $37 million and $42 million
  

Management Comments

Mr. Li stated, �Though the past year has been challenging on a corporate level, AutoChina remains committed to our employees, customers, and shareholders. We continue to focus on methods to further evolve our business. In addition to providing flexible lease options, we are also enhancing our service offering, including expanding the sale-leaseback program. This program allows new and existing AutoChina customers who need to generate funding quickly to pay the sale-leaseback over time and better manage their cash flow. We also established a Company-owned insurance agency in October 2011 for the purpose of conducting a motor vehicle insurance agency business in the future. We plan to commence the motor vehicle insurance agency business in the first quarter of 2012. Although we have encountered a general slowdown from the robust heavy-truck sales growth of 2010, we expect that China�s continuing economic development will continue to drive demand for commercial vehicles in the future. Our entire Company is focusing on what has made AutoChina successful since its founding�reliably and efficiently providing a nationwide sales and support network for our customers in China. We believe our value proposition to these small business owners provides cost efficiencies that are valued in this economic climate. Thanks to the support of our employees, vendors, and customers, we expect to continue providing quality service to our clientele and growth in the future. We again thank all of AutoChina�s loyal shareholders for their support over the past year.�

SHIJIAZHUANG, China--(BUSINESS WIRE)--AutoChina International Limited (“AutoChina” or the “Company”) (OTC: AUTC), China’s largest commercial vehicle sales, servicing, leasing, and support network, today announced that it is continuing to work closely with its advisors to seek all appropriate means to expedite the process of filing its Form 20-F for the year ended December 31, 2010, prior to its Nasdaq hearing date, which has been rescheduled to December 1, 2011. On November 2, 2011, the Company received a letter from Nasdaq stating that, in addition to the Company not being in compliance with Listing Rule 5250(c)(1), Nasdaq determined that certain trading activity in the Company’s ordinary shares raised public interest concerns which could be an additional basis for delisting the Company’s securities pursuant to Nasdaq Listing Rule 5101. The Company will address these additional concerns at the appeals hearing.

There is no assurance that the Company will succeed in regaining compliance by the Nasdaq hearing date or in appealing Nasdaq’s delisting determination. Since October 4, 2011, the Company’s shares have been suspended from trading on Nasdaq and have traded on the OTC Pink market.

Company Revises Financial and Operating Guidance for 2011 

The Company also announced that it is adjusting its financial and operational guidance for the year ending December 31, 2011, due to the normalizing of demand in China’s heavy truck market. The Company is adjusting its revenue guidance to between $575 million and $625 million (from $900 million to $950 million) and its adjusted net income (which excludes any non-cash charges from the Earn-out Share Provision related to the Company’s acquisition of its business in 2009) guidance to between $37 million and $42 million (from $52 million to $57 million). For the year ended December 31, 2010, the Company had revenues of $622.1 million and adjusted net income (which excludes any non-cash charges from the Earn-out Share Provision related to the Company’s acquisition of its business in 2009) of $37.5 million.

The Company now expects to lease between 10,000 and 12,000 vehicles (from approximately 20,000 vehicles) in 2011, but still expects to operate at least 500 stores by the end of 2011.

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “China’s commercial vehicle market saw extraordinary growth during the past couple of years, driven by the country’s robust economic development and government stimulus efforts. In 2011, China’s economic growth has begun to stabilize, and the national government has made attempts to control inflation. As a result, the short-term impact on the commercial vehicle market in China, particularly the heavy truck market, has been significant. According to China Automotive Review, 591,300 heavy-duty trucks sold in China from January to July 2011, a decrease of 9.6 percent from the prior-year period. ACT Research estimates that China’s heavy-duty market will grow less than 1 percent year over year in 2011. As a result, we have adjusted our financial and operational guidance for 2011 and will continue to monitor the market environment closely.”

Mr. Li concluded, “Despite these near-term headwinds, we remain optimistic about the heavy truck market’s long-term prospects and continue to expect growth in our business. We also continue to seek new means of diversifying our revenue stream. We are excited by the initial success of our sale-leaseback program and will research additional markets where AutoChina’s large store network may provide a tangible advantage.”

SHIJIAZHUANG, China--(BUSINESS WIRE)-- AutoChina International Limited (“AutoChina” or the “Company”) (NASDAQ:AUTC - News), China’s largest commercial vehicle sales, servicing, leasing, and support network, today announced that on July 15, 2011, the Company received a written notification from the Nasdaq Stock Market stating that it is not in compliance with the filing requirements for continued listing under Nasdaq Marketplace Rule 5250(c)(1). The Nasdaq notification, which the Company expected, was issued in accordance with standard Nasdaq procedures due to the Company not filing its Annual Report on Form 20-F for the year ended December 31, 2010 with the U.S. Securities and Exchange Commission (“SEC”) within the required time period

Nasdaq has provided the Company until August 15, 2011 to submit a plan to regain compliance, and the Company expects to be able to meet that deadline. Once a plan of compliance is submitted, Nasdaq will review that submission, and, if it determines that the plan is acceptable, the Company will have up to 180 days from the date it was due to file the Form 20-F for the year ended December 31, 2010, including its audited financial results, to regain compliance.

Rodman and Renshaw on AUTC                         7/01/2011

AUTC: Rating Under Review

20-F Annual Report Deadline Missed: SEC requires foreign issuers to file their 20-F within six months of their fiscal year end. For AUTC this would imply a June 30, 2011 deadline for year ending on December 31, 2010. The company has missed this deadline, and announced that it will file a form 12b-25 for an extension. Management has attributed this delay to a dispute on the accounting treatment over the company’s earn-out shares. Press release also stated that the company is seeking guidance from Office of the Chief Accountant (OCA) of SEC, and potentially have to restate its 2009 historical financial statements. Additionally management discloses that the company is currently under an investigation conducted by SEC, and management is fully cooperating with SEC in providing information needed. Given the company’s inability to file its 20-F in a timely manner we are removing our financial projections for AUTC and putting our rating on the company Under Review from our prior Market Perform rating. We will revisit our rating upon receiving further clarity / updates from management and SEC.

Company Description: AutoChina International Limited (Nasdaq: AUTC) is a commercial vehicle sales and leasing company in China that primarily operates through its wholly owned subsidiary, AutoChina Group Inc. (ACG). The company completed the sale of its automobile dealership business for a total cash consideration of $68.8 MM on December 14, 2009. AUTC has been focused on expanding its commercial vehicle financing network and value added services across China. According to the company’s SEC filing and press releases, as of March 31, 2011, the company owns and operates a total of 318 commercial vehicle leasing centers in China. In 2010, AutoChina leased 12,561 units of trucks, a 66.1% increase from a year before.

Risks: a) Availability of finance, b) Risk associated with conducting business in China, c) Highly competitive nature of automotive sales and services industry, d) Risk associated with prevailing economic conditions, and e) Failure in expanding commercial vehicle financing center. f) Uncertainties around SEC investigation. g) Delay in 20-F filing and a potential restatement.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on AUTC                        6/29/2011

AUTC: Approaching 20-F Deadline

20-F Deadline: The deadline for AUTC to submit its annual filing for 2010 with the SEC is June 30, 2011. Management during its 1Q11 earnings conference call held on June 6, 2011 had indicated that the company was working towards meeting the filing deadline in a timely manner. We believe investors following the story are focused on this deadline as an important catalyst. In the current environment of heightened investor scrutiny towards small cap China names any development resulting in an untimely filing event could have a material negative impact on the stock.

Valuation: At current levels the stock is trading at ~13.6x to our FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~24.4x for similar companies listed in China and ~19.0x for the peer group listed in the US. The company’s growth strategy remains aggressive, which in our opinion requires substantial funding support. We maintain our Market Perform rating.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on AUTC                            6/7/2011

AUTC: 1Q11 Earnings Update

1Q11 Earnings: AUTC reported 1Q11 revenue and net income of $136.2 MM and $10.0 MM, with diluted EPS of $0.50, beating our expectations of $125.1 MM, $8.2 MM, and $0.37, respectively. Top-line grew by 12.8% Y-o-Y, while gross profit grew higher to $23.2 MM or 17.1% in gross margin, compared to $15.9 MM or 13.1% in 1Q10 and $24.9 MM or 16.0% in 4Q10. Net Income (from continuing operations) was $10.0 MM, compared to $6.2 MM in 1Q10. This yielded a diluted EPS of $0.50 given 20.1 MM diluted share count, compared to $0.33 in 1Q10.

Revenue Breakdown: During the quarter, commercial vehicle leasing and value-added services each contributed $116.6 MM and $19.6 MM in revenue, growing 5.0% and 103.9% y-o-y respectively. In commercial vehicle leasing segment, the company leased a total of 2,559 units of heavy trucks from its 318 stores across the country, resulting approximately 8.0 trucks per store and an average selling price of $45,581.

Blended Margins Continued to Improve: Overall gross profit reached $23.2 MM, a 46.6% y-o-y increase from 1Q10, representing a 17.1% gross margin, compared to 13.1% in 1Q10 and 16.0% in 4Q10. The continued margin improvement was primarily attributable to the contribution from higher-margin Services segment. Commercial vehicle leasing, the core business, in fact generated lower gross margin of 3.1% for the quarter compared to 5.6% a year ago and 3.8% in last quarter.

Used Vehicle Sales-Leaseback Program: AUTC announced that it has officially launched Used Vehicle Sales-Leaseback program, which the company has been trying since September 2010. The program allows truck owners to sell the vehicle to AUTC for cash and AUTC leases them to customers who seek cheaper leasing solutions. This enables the company to leverage its current store network to further diversify its service portfolio and penetrate in commercial vehicle market.

Guidance Reiterated: Management reiterated its FY11 financial guidance of $900 MM ~ $950 MM for top-line and $52 MM ~ $57 MM for bottom-line. Margin outlook remains positive with gross margin expectation around 15%~20% for the year. Management also indicated that it expects to timely file its 20-F by June 30, 2011.

Our Estimates: For 2Q11, we are now projecting $254.0 MM for revenue, $35.5 MM for gross profit, $12.2 MM for net income, and $0.53 for diluted EPS. Our full year estimates are $927.3 MM for top-line, $55.0 MM for bottom-line, and $2.24 for diluted EPS.

Valuation: At current levels the stock is trading at ~16.0x to our FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~20.0x for similar companies listed in China and ~18.6x for the peer group listed in the US. The company’s growth strategy remains aggressive, which in our opinion requires substantial funding support. We maintain our Market Perform rating.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Q1 2011 Financial Highlights

• Total revenues of $136.2 million, a 12.8% increase from $120.7 million in the prior-year period
• Improvement across all margins—gross margin up 4 percentage points to 17.1%, operating margin up 2.7 percentage points to 9.5%, and net margin up 2.2 percentage points to 7.3%, from the prior-year period
• Net income of $10.0 million, or $0.50 per diluted share, compared to net income of $6.2 million, or $0.33 per diluted share, in the prior-year period
• Adjusted EBITDA of $18.2 million, a 45.9% increase year over year

Market Overview

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “We were pleased to achieve double-digit growth on the top and bottom line during the first quarter, which is historically the Company’s slowest period due to seasonality caused by the Chinese New Year holiday. Since the latter half of 2010, we have seen demand in the heavy-truck market normalize from its previously high growth levels. In 2010, heavy truck sales in China rose by roughly 60% when compared to heavy truck sales in 2009. We feel this was an extraordinary jump over the historical growth in the market, driven in part by the effects of the government's stimulus program. However, we are still seeing steady growth in our sector. According to China Automotive Review, sales of heavy-duty trucks, including chassis and semi-tractor trailers, in the first quarter of 2011 totaled 299,436 units, up 8.4% from the first quarter of 2010. We believe that China’s continuing economic development will keep driving demand for commercial vehicles in the long term.”

AutoChina reiterates its previously announced financial guidance for 2011. The Company believes revenue from its commercial vehicle sales, servicing, leasing and support business will be between $900 million and $950 million and net income between $52 million and $57 million.

Rodman and Renshaw on AUTC                        5/05/2011

AUTC: 1Q11 Lease Numbers Lower Than Expected

1Q11 Lease Numbers Lower Than Expected: AUTC released its 1Q11 numbers for leased trucks and new store openings. The company opened a total of 18 new leasing stores during the quarter, and sold/leased 2,559 trucks. As per the announcement the company is now operating a total of 318 stores. This averages to 8 trucks leased per store during the quarter, compared to 180 total store numbers and 13.9 trucks leased per store in 1Q10, and 300 stores and 10.3 trucks per store in 4Q10. The company’s truck leases came in lower than our expectations; we were expecting 15 new store openings in 1Q11 with an average of 10 trucks per store, and a total of 3,150 trucks leased during the quarter.

Potential Headwinds: We believe this lower-than-expected truck leases for 1Q may partially be attributed to seasonality. However, we cannot overlook potential negative catalysts such as higher fuel costs and continued domestic tightening leading to a weaker demand for heavy trucks. NDRC raised gasoline and diesel prices three times by a total of 10% plus over the past 6 months amid severe inflation pressure in China. Truck drivers have been suffering from the rising fuel cost and lower profit in transportation leading to the recent unrest in Shanghai. We believe that pressure on drivers’ income and affordability may weigh on their willingness to enter the market. Additionally a tightening credit policy from PBOC may impose uncertainties on lessee’s interest cost and default rate, which may potentially negatively impact the company’s profit margin and cash collection.

Revising 1Q11 Expectations: Based on the new update, we are now revising our 1Q11 revenue projection from $136.9 MM to $125.1 MM. Our net income and diluted EPS expectations are now $8.2 MM and $0.37 per share, compared to our previous projections of $8.3 MM and $0.38 per share. Our revised full year projections for revenue, net income, and diluted EPS are $922.1 MM, $55.3 MM, and $2.20 per share, respectively, still in line with the company’s previously issued guidance of $900 MM~$950 MM for top-line and $52 MM~$57 MM for bottom-line.

Management Maintains Annual Guidance Management maintained their annual guidance of 20,000 truck leases in 2011. We will wait for the company’s quarterly conference call before making any changes to our annual expectations.

Maintain Market Perform Rating: At current levels the stock is trading at ~12.8x to our FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~16.6x for similar companies listed in China and ~22.1x for the peer group listed in the US. The company’s growth strategy remains aggressive, which in our opinion requires substantial funding support. We believe management is working on addressing this aspect of the story but so far the company has provided limited clarity on what options they will pursue. We maintain our Market Perform rating.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman abs Renshaw on AUTC                                        3/25/2011

AUTC: 4Q10 Earnings Update; FY11 Guidance Strong

4Q10 Results: AUTC reported 4Q10 revenue and net income of $155.8 MM and $10.9 MM, with diluted EPS of $0.54, beating our expectations of $150.2 MM, $8.6 MM, and $0.43, respectively. Top-line grew by 3.8% Y-o-Y, while gross profit stood at $24.9 MM or 16.0% gross margin, compared to $16.4 MM or 10.9% in 4Q09 and $22.9 MM or 15.9% in 3Q10. Net income (from continuing operations) was $10.9 MM, compared to $8.3 MM in 4Q09. This led to a diluted EPS of $0.54 given 20.1 MM diluted share count, compared to $0.47 in 3Q10.

3,076 Trucks Leased in 4Q, 28 Defaults: AUTC announced opening a total of 82 new leasing stores and leasing 3,076 trucks during 4Q10, compared to our expectations of 57 new stores and 3,575 trucks leased for the quarter. Per store truck leases for 4Q10 were ~10 trucks compared to ~13 in 3Q10.

Higher OpEx: During 4Q10, the company spent $2.5 MM in selling expenses and $5.9 MM in G&A, accounting for 1.6% and 3.8% of total quarterly revenue. This percentage compares to 0.9% and 1.9% of revenue in 4Q09 and 0.9% and 3.2% of revenue in the last quarter. The increased spending in operating expenses was primarily due to the fast expansion of AUTC’s leasing locations and associated headcount expenses.

FY11 Guidance: Management expects 20,000 vehicles to be leased in 2011, with a total of 500 stores under operation by the year end. According to this, the company is guiding for revenue and net income of $900 MM~$950 MM and $52 MM~$57 MM.

Revising Estimates: We are revising our estimates according to the updated financial guidance. For 1Q11, we now expect the company to generate revenue, net income, and diluted EPS of $150.8 MM, $8.3 MM, and $0.38. 1Q should be slow due to the holiday season in China, and we expect commercial vehicle market to pick up substantially in 2Q. For full year FY11, our projections are $930.1 MM, $55.4 MM, and $2.21, respectively. Our assumption for Vehicles Leased Per Store is approximately ~38 trucks/yr, compared to ~42 trucks/year/store in FY10.

Maintain Market Perform Rating: At current levels the stock is trading at ~16.0x to our FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~20.0x for similar companies listed in China and ~18.6x for the peer group listed in the US. The company’s growth strategy remains aggressive, which in our opinion requires substantial funding support. We believe management is working on addressing this aspect of the story but so far the company has provided limited clarity on what options they will pursue. We maintain our Market Perform rating.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

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Fourth Quarter Highlights:

• Total revenues of $155.8 million, compared to $150.1 million in the prior-year period
• Net income of $10.9 million, or $0.54 per diluted share, compared to net income of $23.8 million, or $1.77 per diluted share, in the prior-year period, which included $15.5 million of income, or $1.15 per diluted share, from discontinued operations (net income from continuing operations was $8.3 million, or $0.62 per diluted share, in the prior-year period)
• Adjusted EBITDA of $18.0 million, an increase of 36.8% year over year

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "We were pleased with the steady growth throughout our operations in the fourth quarter, in addition to a number of exciting developments that we announced during the period. We continued to expand in southern China, opening 82 stores and leasing 3,076 vehicles during the fourth quarter. We also announced the establishment of a new financial leasing company and the conversion of our existing wholly foreign-owned enterprise into a financial leasing company. These two financial leasing companies will allow us to lease commercial vehicles directly to our customers and represent the first steps in the transition away from our VIE holding structure."

• Company expects to lease approximately 20,000 vehicles in 2011 and operate at least 500 stores by the end of 2011
• Company believes revenue will be between $900 million and $950 million and net income between $52 million and $57 million for the year ending December 31, 2011

Company expects continued improvement in gross margin as finance and insurance revenues increase as a percentage of total revenues in each quarter

Rodman and Renshaw on  AUTC                                                  3/11/2011

AUTC: Revising Rating To Market Perform

Valuation Driven Ratings Change: We are revising our rating on AUTC from Market Outperform to Market Perform. This is a valuation driven ratings revision. AUTC stock closed at $39.50 yesterday up ~6.5% above our previous price target of $37.00 and almost 100% higher than its recent $20 lows. At our $37.00 price target we had been assigning the company a ~17.5x P/E multiple relative to our 2011 earnings estimates. This compared to peer group average FY11 P/E multiples of 17.1x and 11.6x for companies trading in China and the US. Our relatively higher multiple was driven by the company’s unique position and rapid growth in China. At current levels we are comfortable moving to a Market Perform rating. We will be looking to 4Q10 earnings conference call (scheduled for March 24, 2010) for 2011 guidance. We will revisit our rating on any material upside to our estimates.

Recent Volatility: AUTC has come under scrutiny recently where short interests have challenged AUTC’s business fundamentals, including the company’s (1) capital leasing accounting treatment (2) ownership structure (3) related party loans (4) dilutive earn-out provisions (5) management background. The volatility in the stock increased substantially as the shorts and management publicly issued rebuttals.

We believe management provided timely and adequate response to the issues raised. In our opinion, all the issues raised have been available for the market’s scrutiny since the SPAC was executed. We believe there now is clarity and confidence surrounding accounting treatment of revenues and earnings and expectations regarding potential dilution from future earn outs (the company cancelled its earn out provision post 2011). The corporate structure and management background / history will continue to remain a part of the AUTC story and investors will have to decide how to weigh these aspects from a risk perspective. However, one issue that we have highlighted in the past and management will have to provide clarity / visibility on is the funding aspect for the next phase of growth. We believe the company is cognizant of this and should be working on formulating a sound strategy.

Company Description: AutoChina International Limited (AUTC) is a leading commercial vehicle sales and leasing company in China that primarily operates through its wholly owned subsidiary, AutoChina Group Inc. (ACG). The company completed the sale of its automobile dealership business for a total cash consideration of $68.8 MM on December 14, 2009. AUTC has been rapidly expanding its commercial vehicle financing network. Since the launch of its commercial sales and leasing business in March 2008, the company has leased over 12,561 trucks. As of December 31, 2010, AUTC owns and runs 300 sales & leasing branches in China, with 143 new branches newly opened in FY2010.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on AUTC                                                        02/16/2011

AUTC: Earn-out Provision To Be Cancelled After 2011

Recap of Recent Developments: AUTC has come under scrutiny recently. An article published by a short seller challenging AUTC’s business fundamentals, including (1) capital leasing accounting treatment (2) ownership structure (3) related party loans (4) dilutive earn-out provisions (5) management background. The volatility in the stock increased substantially as the shorts and management publicly issued rebuttals. 

Minimizing Dilution: AUTC announced that it will cancel its earn-out provision after 2011, thus eliminating the associated dilution risk for current shareholders. Also, the current 2010 and 2011 earn-out conditions have been revised from a minimum of 30% y-o-y EBITDA growth to 70% in order for additional share issuance. The earn-out agreement was initially signed in April 2009 based upon AutoChina’s SPAC transaction, and the company was required to issue up to 20% more shares each year through 2013 to Chairman and CEO, Mr. Yonghui Li if the company achieves the EBITDA growth. 

Key Takeaways: We believe management has provided timely and adequate response to the issues raised. In our opinion, all the issues raised have been available for the market’s scrutiny since the SPAC was executed. We believe there now is clarity and confidence surrounding accounting treatment of revenues and earnings and expectations regarding potential dilution from future earn outs. The corporate structure and management background / history will continue to remain a part of the AUTC story and investors will have to decide how to weigh these aspects from a risk perspective. However, one issue that we have highlighted in the past and management will have to provide clarity / visibility on is the funding aspect for the next phase of growth. We believe the company is cognizant of this and should be working on formulating a sound strategy. 

Valuation: At current levels the stock is trading at ~12.4x and ~10.7x to our FY10 and FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~17.3x for similar companies listed in China and ~16.1x for the peer group listed in the US. We believe AUTC should command a multiple that is at a minimum in line with industry averages given the growth in its business and its leading position in the commercial auto financing market in China. We are maintaining our price target of $37, which translates to P/E of ~19.8x and ~19.6x to our FY10 and FY11 EPS estimates.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Read the February 3rd, 2011 letter to shareholders regarding recent allegations.

Rodman and Renshaw on  AUTC             01/26/2011

AUTC: 4Q10 Preview 

12,561 Trucks Leased in 2010: AUTC announced opening a total of 82 new leasing stores and leasing 3,076 trucks during 4Q10, compared to our expectations of 57 new stores and 3,575 trucks leased for the quarter. Per store truck leases for 4Q10 were ~10 trucks compared to ~13 in 3Q10. On a full year basis, the company leased a total of 12,561 vehicles in FY10, with 300 leasing branches under operation, reaching its goal of 12,000~13,000 trucks leased and 275 stores by year end 2010. This compares to 7,564 trucks leased and 157 stores for FY09.

Another Robust Year For Chinese Auto Market: The Chinese auto sector ended the year of 2010 with total production and sales volume of 18.3 MM and 18.1 MM units, representing Y-o-Y growth of 32.44% and 32.37%, respectively, making China the largest auto market globally again. Passenger Vehicles recorded production and sales volume of 13.90 MM and 13.76 MM for the year, growing by 33.8% and 33.2% from 2009, while Commercial Vehicles registered 4.4 MM and 4.3 MM units of production and sales, implying Y-o-Y growth of 28.2% and 29.9%, respectively.

Heavy Truck Sales Growth Outperformed Overall Market: In 2010 despite concerns about possible slowdown in China’s overall economy and construction activity the growth in heavy truck sector still outperformed the commercial vehicle market. In 2010, heavy truck sales reached 1.01 MM units, growing by 59.9% from 2009, compared to 3.86 MM units and 30.5% y-o-y growth in total truck sales and 4.3 MM units and 29.9% y-o-y growth in overall commercial vehicle market.

Cautiously Optimistic On Heavy Truck Market in 2011: As Chinese policy makers try to find a balance between fighting inflation and maintaining growth, interest rates could move around, therefore potentially adding some level of pressure on heavy truck leasing market. We will be looking for growth of heavy truck sales volume for 2011 to come in at a healthy 25%~30% range, still outperforming the overall auto sales volume of 10%~15% range, given continued expansion in road and highway coverage including rural areas and inter-city / province connections. The company’s recently added leasing stores should also provide support for growth in 2011.

4Q10 Preview: We have adjusted our 4Q10 financial projections to reflect the company’s recent update. For 4Q10 we now expect revenue, net income, and diluted EPS of $150.2 MM, $8.6 MM, and $0.43. For FY11, our estimates are $803.9 MM, $48.7 MM, and $2.12, respectively.

Valuation: At current levels the stock is trading at ~15.3x and ~12.9x to our FY10 and FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~15.5x for similar companies listed in China and ~17.1x for the peer group listed in the US. We believe AUTC should command a multiple that is in line with industry averages given the growth in its business and its leading position in the commercial auto financing market in China. We are maintaining our price target of $37, which translates to P/E of ~19.8x and ~19.6x to our FY10 and FY11 EPS estimates.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman & Renshaw on AUTC                                                     11/30/2010

Overview: AUTC reported 3Q10 revenue and net income of $143.5 MM and $9.5 MM, with diluted EPS of $0.47, compared to our expectations of $174.1 MM, $12.3 MM, and $0.61, respectively. Top-line grew by 41.4% Y-o-Y, while gross profit stood at $22.9 MM or 15.9% gross margin, compared to $10.3 MM or 10.1% in 3Q09 and $23.1 MM or 11.5% in 2Q10. Net income was $9.5 MM, compared to $7.0 MM in 3Q09. Diluted EPS was $0.47, compared to $0.60 in 3Q09 and $0.54 in 2Q10. The company ended the quarter with $27.8 MM in cash while accounts receivable and inventory stood at $16.8 MM and $0.8 MM. Deposits for inventory, including related parties, were $38.7 MM. Working capital as of September 30, 2010 was $99.5 MM, and short-term loan increased to $126.1 MM.

CITIC Trust Securitization Program: The company has engaged CITIC Trust to sell its truck leases through an investment trust products to investors for up to 60 MM RMB (~$9.1 MM) per month, which bears an annual interest rate of 9%. Management indicated that the current leasing contracts generate ~24% in IRR, and this securitization program will leave AUTC a ~15% spread. We believe this is a positive step for the company to secure external funding and reduce the liquidity risk while limiting potential dilution.

Share Buyback Execution: During the quarter AUTC executed its share repurchase program by buying back 27,000 shares of common stock for a total of $689,000. The program is expected to expire on February 2, 2010, and management expects to continue to execute on this front under the regulation rules.

Lowered Net Income Guidance: Management maintained its revenue guidance for FY10 at the range of $600 MM ~$650 MM, but lowered its net income guidance to the range of $34 MM ~$38 MM, from previously announced $42 MM ~$47 MM. This change was primarily due to an increase in down payments, which squeezed the margin charged on each lease.

Our Estimates: For 4Q10, we expect revenue and net income of $174.6 MM and $10.5 MM, with diluted EPS of $0.52. This implies full year revenue, net income, and EPS of $640.4 MM, $37.1 MM, and $1.87. For FY11, our estimates are now $721.8 MM, $43.5 MM, and $1.89, respectively.

Valuation: At current levels the stock is trading at ~13.4x and ~13.3x to our FY10 and FY11 earnings estimate, compared to an average forward FY11 P/E multiple of ~17.0x for similar companies listed in China and ~14.7x for the peer group listed in the US. We believe AUTC should command a multiple that is at a minimum close to industry averages given the growth in its business and its leading position in the commercial auto financing market in China. We are lowering our price target from $45 to $37, given that we are factoring in higher interest expenses for 2011 and assigning a valuation multiple that better reflects current industry averages. With the new price target of $37, the stock would trade at ~19.8x and ~19.6x to our FY10 and FY11 EPS estimates.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

AUTC made comments related to the company's following 2010 3rd quarter results and guidance:

Financial Highlights

• Total revenues of $143.5 million, up 41.4% from $101.5 million in the prior-year period
• Net income of $9.5 million, or $0.47 per diluted share, up 35.3% from net income of $7.0 million, or $0.60 per diluted share in the prior-year period, which included $2.0 million of income, or $0.17 per diluted share, from discontinued operations generated from the consumer auto business, disposed in December 2009
• Adjusted EBITDA of $18.8 million, an increase of 132.9% year over year

Guidance

• Company reiterates its expectation of leasing between 12,000 and 13,000 vehicles in 2010 and of operating at least 275 stores by the end of 2010
• Reiterates revenue guidance of between $600 million and $650 million
• Revises net income guidance to between $34 million and $38 million (from between $42 million and $47 million), primarily as a result of higher-than-anticipated down payments from customers and thus, lower interest income, slower-than-expected adoption of the Company’s higher-margin value-added services, and slightly lower-than-expected truck sales during the second half of 2010

Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “We continue to see rapid growth throughout our operations with triple-digit increases in revenue and net income. During the period, we continued to expand in southern China, opening 25 stores during the quarter and leasing 2,849 vehicles. We also secured additional bank financing with some of the largest and most reputable banks in China over the past four months, which has strengthened our capital position and helped us to continue purchasing trucks on behalf of our customers. Over the past 12 months, the largest contributor to AutoChina’s top-line growth has been its increased brand recognition throughout China. We model our business to be scalable and accessible, and thus far in 2010, our target market of small-scale entrepreneurial truck owner-operators has continued to grow. AutoChina assists its customers through the entire lifecycle of their commercial vehicle business, including financing for the purchase of the vehicle, tires, fuel, and insurance. We plan to continue to increase our service offering to provide even more tools to ensure the success of our customers.”

The revised outlook for 2010:

Mr. Li concluded, “We saw rapid growth in the heavy truck market in the first half of 2010. While the current market is still very strong, we saw a calming of this robust demand for heavy trucks in China during Q3, especially in relation to the year-over-year comparables. We attribute this slowdown partially to the summer seasonality inherent in Q3 and to our opening of fewer stores this quarter relative to last year’s third quarter. Despite this short-term cooling of demand, we are still confident in the market’s long-term prospects. Experts at ACT Research and China’s State Information Center have predicted that more than 1 million heavy-duty commercial vehicles will be sold in 2010, an increase of 62% from the 630,000 sold in 2009. As a result of a strong first six months and this continuing growth, we are reiterating our revenue and operational guidance for 2010. However, when we projected our net income for the year, we did not anticipate higher initial down payments from our customers. While this lowered the net income generated from the leases during the year, it also lowered AutoChina’s overall risk profile. In addition, we were expecting to assume a higher number of new truck leases and greater demand for the higher-margin value-added services in the second half of 2010. We have adjusted our internal projections, and, as a result, have also revised the corresponding net income guidance.”

Overview: AUTC reported 2Q10 revenue and net income of $201.5 MM and $10.9 MM, with diluted EPS of $0.54, compared to our expectations of $187.0 MM, $10.1 MM, and $0.54, respectively. Top-line grew by 219.7% Y-o-Y and 66.9% sequentially. Gross profit stood at $23.1 MM or 11.5% gross margin, compared to $4.8 MM or 7.6% in 2Q09 and $15.9 MM or 13.1% in 1Q10. The company generated $18.0 MM in operating income, implying an EBIT margin of 8.9%, higher than $3.3 MM in 2Q09 and $11.4 MM in 1Q10. Net income was $10.9 MM, compared to $3.79 MM in 2Q09. Diluted EPS was $0.54, compared to $0.38 in 2Q09 and $0.33 in 1Q10. The company ended the quarter with $30.5 MM in cash while accounts receivable and inventory stood at $3.5 MM and $0.6 MM. Deposits for inventory, including related parties, were $74.3 MM. Working capital as of June 30, 2010 was $55.2 MM, and short-term loan increased to $76.8 MM.

2Q Demand Strong; But Sees Modest Slowdown in 2H10: Due to a tightening credit policy in China aiming to rein the property market, we expect the growth in construction related transportation sector may moderate in 2H10. According to data released by China Automotive Technology Research Center, from January to July 2010, China’s total automobile production volume and sales volume reached 9.7 MM units and 8.2 MM units, implying a Y-o-Y growth of 39.4% and 28.6%, respectively. Industry average inventory days outstanding has been trending up since early this year, in July passenger vehicle inventory days outstanding was 60 days in average, up from June’s 57 days, while commercial vehicle inventory days outstanding grew from 49 days to 50 days in July. We believe this is signaling a slower sales growth for 2H10.

Raising Revenue Guidance: Management raised its full year revenue guidance to $600 MM~$650 MM from previously announced $550 MM~$600 MM and reiterated its net income guidance of $42 MM~$47 MM. Total vehicles leased are expected to reach 12,000~13,000 units, compared to the prior goal of 12,000 units.

Our Estimates: For 3Q10, we now expect $174.1 MM in revenue and $12.3 MM in net income, with diluted EPS of $0.61. For full year FY10, our estimates are $684.4 MM in top-line, $44.3 MM in bottom-line, and $2.21 in diluted EPS. We believe the guidance announced by management could still be proved conservative as the company has been consistently beating our expectations.

Valuation: Maintain Outperform Rating and $45 PT

At current levels the stock is trading at ~12.9x to our FY10 earnings estimate, compared to an average forward P/E multiple of ~21x for similar companies listed in China and ~15.5x for the peer group listed in the US. We believe AUTC should command a premium given the growth in its business and its leading position in the commercial auto financing market in China. We maintain our Outperform rating and price target of $45, which translates into ~20x to our FY10 EPS estimate.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request. Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice. Rodman & Renshaw, LLC may make a market in the securities being discussed. Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s). Member FINRA. Member SIPC.

Q2 2010 Financial Highlights:

• Total revenues of $201.5 million, up 219.7% from $63.0 million in the prior year period.
  
• Net income of $10.9 million, or $0.54 per diluted share, up 188.3% from net income of $3.8 million, or $0.38 per diluted share in the prior year period, which included $1.8 million of income from discontinued operations generated from the consumer auto business, which was disposed in December 2009.
  
• Adjusted EBITDA of $19.0 million, an increase of 119.6% year-over-year

Outlook for 2010

Mr. Li concluded, “The market for heavy trucks in China was very strong during the first half of 2010. As a result of higher than expected sales growth during the period, we expect to lease between 12,000 and 13,000 trucks for the year ending December 31, 2010, which is ahead of AutoChina’s previous guidance of at least 12,000. In the first four months of 2010, heavy truck sales in China grew 132% as compared to the same period last year, to 383,000 heavy-duty trucks. We remain confident about the long-term growth prospects for the heavy truck sector in China, and look forward to continuing to expand our unique commercial vehicle sales, servicing, leasing, and support business throughout the country.”

Through the first half of 2010, the Company achieved a faster than expected rate of truck sales. As a result, AutoChina is raising its revenue guidance range to $600 - $650 million from $550 - $600 million. The Company is also reiterating its net income guidance of between $42 million and $47 million, and expects continued gross and net margin expansion throughout the year as the contribution from finance and insurance income grows. The Company will continue to evaluate its financial projections on a regular basis and provide updates as necessary.