CESV China Energy Savings Technology (MM)

Dutton Associates continues coverage of China Energy Savings Technology (Nasdaq:CESV) reducing its rating to neutral. The 13-page report by Dutton senior analyst Richard W. West, CFA, is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. China Energy Savings Technology made two significant announcements on January 17, 2006. The first announcement dealt with a management change; Sun Li resigned as Chairman and CEO "to pursue his own business and personal interests." Mr. Li remains the largest stockholder in China Energy through his security holdings in New Solomon Consultants Ltd. Upon Mr. Li's resignation The Board of Directors immediately appointed Kwun Luen Siu to the positions of Chairman of the Board and Chief Executive Officer. Mr. Siu was referred by Sun Li and reviewed by the Board of Directors of China Energy before being appointed to the positions. Mr. Siu served as the Responsible Director of Forex, Futures and Securities under Securities and Futures Commission of Hong Kong, Chairman of Supervisory Committee of the Chinese Gold and Silver Exchange Society of Hong Kong, and Managing Director of Dashin Group in Hong Kong. The second announcement dealt with a proposed offering of $50.0 million of preferred stock. Interestingly, before Sun Li's resignation, Mr. Siu introduced a financial investment group to China Energy. Today, China Energy announced that it signed an underwriting agreement with this full service financial investment group to raise $50.0 million through a private placement of preferred stock. The funds raised will be used to finance acquisitions of new infrastructure and energy ventures. China Energy will file a S-3 Registration with the SEC upon placement of the financing. Considering the major change in management and the possible raising of $50.0 million of new capital, we are temporarily reducing our rating to Neutral. We will reconsider our rating upon reviewing the S-3 Registration that will detail the structure of the preferred stock. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 28 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 120 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid before commencement of our research activities. We received $20,000 from the Company for 2 reports and requisite Research Notes commencing 9/25/2005, and do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way relate to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.