Grand Power Logistics Group Inc.
TSX VENTURE : GPW

Grand Power Logistics Group Inc.

February 26, 2008 09:30 ET

Grand Power Achieves 2007 Targets and Sees Continued Strong Growth in 2008

CALGARY, ALBERTA AND HONG KONG--(Marketwire - Feb. 26, 2008) - Grand Power Logistics Group Inc. ("Grand Power" or the "Company") (TSX VENTURE:GPW), through its Hong-Kong based operating subsidiary, Grand Power Express International ("GPEI") is pleased to provide an update regarding the implementation of its growth strategy in 2007 and growth plan for 2008.

In 2007, the Company commenced the implementation of a growth strategy to leverage its strong base in airfreight to become a leading full-service end-to-end logistics provider in China by:

1. Expanding its core airfreight business;

2. Establishing a national logistics network in China;

3. Expanding into other segments of logistics including warehousing, and sea, rail and truck transport.

2007 Growth Strategy Highlights:

- Estimated revenue growth of approximately 60% to over $90 million compared with revenue of $59.2 million in 2006 with over 95% from its traditional air cargo business, primarily servicing exports of high value products from China.

- Expanded logistics network by establishing offices in five Chinese cities (Shanghai, Guangzhou, Shenzhen, Jiangmen, Chenghai) and Los Angeles to complement its Hong Kong and Macau offices and affiliates in Taipei and Bangkok. Shanghai will now be the China head office.

- Expanded head count to 164, up from 65 in 2006, including 79 back office staff and 20 sales staff. The back office staff hired in 2007 has enhanced the infrastructure to support further expansion of sales staff and revenues in 2008 and beyond.

- Grand Power's Hong Kong based subsidiary, GPEI, was granted a CATA (China Air Transport Association) Sales license (commonly known as a "Bronze License") in September 2007 which enabled GPEI to deal directly with carriers in China and operate its own warehouse and custom brokerage business in China.

- Established a bonded warehouse in Shanghai in November 2007.

In 2008, Grand Power plans to continue the successful implementation of its growth strategy by:

- Expanding the core airfreight business with a target of 60% revenue growth for 2008.

- Improving profitability of the core airfreight business. Grand Power plans to achieve this by increasing direct sales, thereby improving revenue per tonne and gross margins. Furthermore, Grand Power's gross margins will be enhanced by decreasing cost per tonne through the purchase of bulk space on selected airlines. The Company expects that net margins will increase through economies of scale as G&A is expected to decrease as a percentage of revenues.

- Expanding the logistics network in China by establishing offices in additional cities, including Tianjin, Xiamen and Beijing.

- Expanding the warehousing business in Shanghai and other key Chinese cities with major airports to grow warehousing revenues and facilitate the expansion into customs brokerage and warehousing for imports into China.

- Establishing entry into other logistics segments such as rail, sea and truck transport in China through selected acquisitions, joint-ventures and recruiting of experienced executives.

Statistics reveal that the Chinese logistics market generated revenues of US$7.38 trillion in 2006 grew by over 25% to $US10.27 trillion in 2007, and is estimated to reach US$28.78 trillion in 2013 (Frost & Sullivan); and even the largest of logistics providers have less than a 2% market share in any one area.

In 2007 and early 2008, Grand Power strengthened its sales management team to grow revenues and increase the proportion of revenue derived from direct sales to increase gross margins. Historically, most of the Company's revenue has been from wholesale airfreight co-loading which generates lower revenues per tonne than direct sales. Due to the Company's increased scale and infrastructure, it is well positioned to make the transition to a direct sales force. In the Shanghai office, a Director of Business Sales Development was hired in November 2007, whose prime focus is to increase the number of direct customers. The Shanghai office now has 47 employees. In January 2008, a General Sales Manager for direct customers was hired in the Hong Kong office. Each of these new sales managers has over 20 years of experience in the air freight logistics, and Grand Power is highly confident in their ability to grow revenues and improve margins. The Company's Shenzhen office has been in operation since April 2007 and now has 27 employees. In 2007, the Shenzhen office is estimated to have generated approximately $10 million in gross revenue; in 2008, with an established base and a full year, the company expects this strong growth in revenues to continue.

To further its strategy of establishing a national logistics network in China, Grand Power plans to open a number of offices in 2008. In the first half of 2008, offices are planned for Xiamen, Tianjin and Beijing. Xiamen is located in Southern China, and is the home to China's 7th largest port and 4th largest airport. The worldwide demand for electronics and high tech components that are manufactured in this region justifies Xiamen as an attractive base for operations. Tianjin is a major port in Northeast China located less than 200 km from Beijing, and is a sea transportation hub for international shipping. Beijing is developing four logistics parks with over $3 billion US dollars in investment in time for its hosting of the 2008 Olympics, in its efforts to become a major Northeast Asian air cargo hub. Offices in Tianjin, Xiamen and Beijing are expected to provide tremendous opportunities for increasing the number of direct customers for the company and to support its expansion into new sectors including sea freight and customs brokerage and warehousing.

In November 2007 Grand Power acquired bonded warehouse space at the Shanghai Pudong Airport, which it expects to be operational by March, 2008. This is in addition to the space which Grand Power currently leases directly outside the airport vicinity. With this space, the Company plans to expand its warehousing and customs brokerage businesses to expand revenues from direct customers, add new revenue streams and offer a more complete solution to importers to China.

"In 2007, Grand Power achieved its planned revenue growth, and continued to establish its foothold in China. In addition, we added 99 new support and sales staff to strengthen our platform for major expansion in 2008," said Mr. Ricky Chiu, President and CEO of Grand Power Logistics Group, "We have achieved our targeted critical mass in the airfreight wholesale co-loading area, and are now well positioned to increase revenues and margins by focusing on direct customers, negotiating lower freight costs and leveraging our support platform."

Mr. Chiu continued, "We are also encouraged by the demand for our services from some of our new and existing customers in other key cities in China, particularly Xiamen and Tianjin. We already have strong business relationships in those cities that will assist us with quickly establishing our presence and expanding our customer base. We are looking forward to a prosperous 2008, with continued strong revenue growth and expansion of our China logistics network, and believe we will enjoy the benefits of improved margins as we focus on growth and investment in more profitable segments such as warehousing, and sea, rail and truck transport."

About Grand Power Logistics Group Inc.

Grand Power Logistics Group Inc. operates principally through its wholly owned Hong Kong based subsidiary, Grand Power Express International Limited (GP Express) and provides air-freight forwarding and sea-freight services, customs brokerage, logistics, warehousing and distribution, as well as other value added services. GP Express has established operations in various regions, particularly in the Greater Pearl River Delta (GPRD), China's largest economic region. GP Express' Subsidiaries or Branch Offices in this region are located in Macau, Shenzhen, Guangzhou, Jiangmen and Chenghai. GP Express also operates in other regions through Subsidiaries and Branch Offices or Supporting Offices in Shanghai, Taipei, Bangkok and Los Angeles.

Forward-looking statements: Statements included in this press release that are not historical facts may be considered "forward looking statements". All estimates and statements that describe the Company's objectives, goals or future plans are forward looking statements. Forward-looking statements involve inherent risks and uncertainties where actual results could differ materially from those currently anticipated.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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