China TransInfo announced on September 7th, 2009 the launch of PalmCity, China’s first multi-city, real-time traffic website and mobile platform. Coverage will first be offered in the cities of Beijing, Shanghai, Chongqing, Chengdu and Wuhan. The technology behind the service is based primarily on GPS sensors installed in taxis along with roadside sensors. PalmCity allows mobile phone and Internet users to check real-time traffic conditions as well as street closure information and, in Chengdu, even available parking spots. With the number of motorists and mobile phone users in China rising so dramatically, PalmCity should position China TransInfo to exploit this trend.

On September 15th, 2009, the company announced an agreement to acquire a 37.15% equity stake in Beijing UNISITS Technology Co. Ltd ("UNISITS"), a provider of traffic engineering systems for expressways in China. UNISITS has total coverage of over 8,000 kilometers of expressway in over 20 provinces. 2008 reported revenue was approx. $32.2 million. Under the terms of the agreement, China TransInfo, via a variable interest entity, will pay roughly $6.5 million in cash in exchange for a perpetual option to acquire the 37.15% stake. According to China TransInfo Chairman and CEO, Mr. Shudong Xia, “By leveraging UNISITS' large presence in the expressway market with our leadership in the urban transportation market, we can better penetrate markets for our current products and services. Furthermore, this partnership will also help us to gain access to expressways real time traffic information, tapping China's expressway information services market.” Given the potential synergies and implied valuation of less than 0.6x 2008 gross revenue and less than 5x 2008 net income (of $3.8 million), the investment could provide shareholders with a very generous return.

Commentary prepared by Henry Sandberg