Cogo Reports Highest Ever Quarterly Revenue

                 Cogo Reports Highest Ever Quarterly Revenue

- Q3 Net Revenue: $216.4 million in accordance with Generally Accepted
Accounting Principles ("GAAP") (a year-over-year increase of 47.8%) and
Diluted Earnings per share ("EPS") attributable to Cogo Group, Inc. of $0.01
GAAP and $0.11 Non-GAAP (a year-over-year decrease of 31.3% Non-GAAP)

- Completion of the purchase of certain Cogo subsidiaries for $78 million by
CEO and Chairman Jeffrey Kang.

PR Newswire

SHENZHEN, China, Nov. 15, 2012

SHENZHEN, China, Nov. 15, 2012 /PRNewswire/ -- Cogo Group, Inc. (NASDAQ: COGO)
("Cogo" or the "Company"), one of the leading gateways for global
semiconductor companies to access the industrial and technology markets in
China, today announced unaudited financial results for its third quarter ended
September 30, 2012. The Company reported quarterly revenue of $216.4 million,
up 47.8% year-over-year compared to $146.4 million reported in the third
quarter of 2011.

Jeffrey Kang, CEO and Chairman of Cogo, commented, "During the third quarter
of 2012, we continued to see strong revenue growth across all of our
end-markets, particularly among our blue chip customers. The credit situation
for our SME customers remains tight and the increase in revenue to SME
customers continues to negatively affect our gross margin and we continue to
see higher operating costs as we attempt to drive scale in this uncertain
macro environment. Still, we managed to stay solidly profitable. In the
quarter, Cogo grew its customer base by nearly 10% from the prior quarter to
2,300."

Mr. Kang continued, "Additionally, from September 24, 2012 to November 14,
2012, Cogo purchased 302,164 shares of its common stock, as a clear
demonstration of the Company's belief that shares of Cogo are under-valued and
trading at approximately 40% of the Company's tangible book value of over
$6.00 per share."

Mr Kang said, "Finally, I am pleased to announce that my purchase of certain
Cogo subsidiaries for $78 million was completed today. I believe that this
will be an important milestone towards demonstrating the legitimacy of Cogo's
financial assets."

Financial Results

Net income attributable to Cogo Group, Inc. for the third quarter of 2012 was
$0.5 million, down 77.4% from $2.3 million reported in the same period in
2011, with Non-GAAP net income attributable to Cogo Group, Inc. of $4.0
million, down 32.2% from $5.9 million reported for the same period in 2011.
Diluted EPS attributable to Cogo Group, Inc. on a U.S. GAAP basis was $0.01,
and Non-GAAP Diluted EPS attributable to Cogo Group, Inc. was $0.11, down by
83.3% and 31.3% respectively from the third quarter of 2011.

Key Financial Indicators

(all numbers in USD thousands, except share data)
                                            Q3 2012^(1) Q3 2011^(1) Percentage
                                                                    Change
                                            (unaudited) (unaudited)
Net Revenue                                 $216,443    $146,428    47.8%
Cost of Sales                               $202,941    $131,269    54.6%
Gross Profit                                $13,502     $15,159     -10.9%
Operating Expenses                          $10,874     $11,813     -7.9%
Net Income attributable to Cogo Group, Inc. $519^(2)    $2,296      -77.4%
Diluted EPS attributable to Cogo Group,     $0.01       $0.06       -83.3%
Inc.
Non-GAAP Diluted EPS attributable to Cogo   $0.11       $0.16       -31.3%
Group, Inc.



    The US dollar ("USD") amounts are calculated based on the conversion rate
(1) of $1 to RMB6.2848 as of September 30, 2012 and $1 to RMB6.3780 as of
    September 30, 2011.
    Included in the Q3 2012 net income attributable to Cogo Group, Inc. was
    $2.7 million of share-based compensation expenses recognized in accordance
(2) with Accounting Standards Codification ("ASC") 718, Compensation-Stock
    Compensation and $0.8 million of amortization of intangible assets and
    related deferred taxation. Non-GAAP net income attributable to Cogo Group,
    Inc. was $4.0 million.

Revenue Review

Revenue for the third quarter was $216.4 million, an increase of 47.8%
compared to $146.4 million reported for the same period in 2011. The revenue
breakdown includes: $82.3 million, or 38.0% of total sales for digital media,
representing a 40.7% increase year-over-year; $94.7 million, or 43.8% of total
sales for telecommunications equipment, representing a 63.6% increase
year-over-year; and $39.4 million, or 18.2% of total sales relating to
industrial business, representing a 31.3% increase year-over-year. The Company
did not record any services revenue in the third quarter of 2012 or 2011. The
Company is currently participating in what management believes to be some of
the fastest growing industrial end-markets in China, including the smart grid,
wind power, smart meter, automotive, high-speed railway and medical equipment
sectors. Over time, the Company expects to expand into other verticals in the
industrial business end-market, such as electronic security.

Customers Update

In the third quarter of 2012, blue-chip customers accounted for approximately
72% of the Company's total revenue, down from approximately 74% for the same
period in 2011. Small and medium enterprise ("SME") customers accounted for
the remaining approximately 28% of total revenue in the quarter. Management's
goal is to achieve 50% of total sales from SME customers in the longer term.
It is expected that gross margins in our SME business will remain higher than
our blue-chip customers in the future.

Cost of sales, which includes the aggregate purchase of components from
suppliers, was $202.9 million compared to $131.3 million in the third quarter
of 2011, representing an increase of 54.6% year-over-year. Gross profit for
the third quarter was $13.5 million, down 10.9%, compared to $15.2 million
during the third quarter of last year. Gross margin for the third quarter of
2012 was 6.2%, compared to 10.4% reported for the third quarter of 2011.

Operating expenses, including selling, general and administrative, and
research and development expenses, totaled $10.9 million, down 7.9%, compared
to $11.8 million reported for the third quarter of 2011.

Income from operations was $2.6 million, a decrease of 21.5% from $3.3 million
reported in the same period of 2011. Operating margin for the third quarter of
2012 was 1.2% compared to 2.3% for the third quarter of 2011. Excluding the
effects of share-based compensation expenses and amortization of intangible
assets and related deferred taxation, operating margin would have been 2.9%
for the third quarter of 2012, compared to 4.8% for the same period in 2011.
The effective tax rate for the third quarter of 2012 was 13.0%, compared to
14.4% for the same period in 2011. Noncontrolling interests' share of income
was $1.3 million for the third quarter of 2012 as compared with $0.3 million
for the third quarter of 2011.

Net income attributable to Cogo Group, Inc. for the third quarter of 2012 was
$0.5 million or Diluted EPS attributable to Cogo Group, Inc. of $0.01 on a
U.S. GAAP basis, compared to net income of $2.3 million, or Diluted EPS
attributable to Cogo Group, Inc. of $0.06, in the third quarter of 2011.
Included in the third quarter of 2012 was $2.6 million attributable to
share-based compensation expenses and $0.8 million attributable to
amortization of intangible assets and related deferred taxation. Excluding
share-based compensation expenses and amortization of intangible assets and
related deferred taxation, the Non-GAAP net income would have been $4.0
million, or $0.11 Non-GAAP Diluted EPS attributable to Cogo Group, Inc. for
the third quarter of 2012. The weighted average number of shares used in the
calculation of diluted EPS was 36.8 million compared to 36.3 million in the
third quarter of 2011.

For the nine-month period ended September 30, 2012, the Company reported
revenue of $581.1 million, an increase of 49.0% as compared to the $390.0
million reported during the nine-month period ended September 30, 2011. Gross
profit was $38.9 million, a decrease of 17.6% from the $47.2 million reported
during the nine-month period ended September 30, 2011. Gross margin was 6.7%
of sales, compared to a gross margin of 12.1% for the same period last year.
Net operating expenses were $30.1 million, a decrease of 9.6% as compared to
$33.3 million for the same period last year. Income from operations was $8.8
million, a decrease of 36.7% from the $13.9 million reported during the prior
year period. The Non-GAAP operating margin, excluding share-based compensation
expense and amortization of intangible assets, was 3.4%, as compared to 6.7%
for the same period last year, as a result of decreased gross margin. The
Company had an effective tax rate of 12.2% compared to 11.5% during the prior
year period. Non-controlling interests' share of income was $3.0 million as
compared to $1.2 million during the same period last year. Net income
attributable to Cogo Group, Inc. for the nine-month period was down 66.6% at
$3.6 million from the same period last year.

Balance Sheets and Cash Flows
Total cash, including pledged bank deposits, was $162.7 million at the end of
the third quarter of 2012, up from $159.5 million as of December 31, 2011.
Bank borrowings increased to $137.1 million as of September 30, 2012, up from
$135.7 million as of December 31, 2011. The Company has a current ratio of 2.5
to 1 and generated negative operating cash flow of $8.2 million during the
third quarter of 2012, largely due to an increase in accounts receivable and
inventory necessary to drive expected future business growth opportunities.

Inventories increased from $52.0 million as of December 31, 2011 to $59.4
million as of September 30, 2012 as the Company prepares for seasonal order
strength in the second half of 2012 from its rapidly growing customer base.
Inventory turnover days was 27 days in the third quarter of 2012 compared to
31 days in the fourth quarter of 2011. Accounts receivable decreased from
$149.6 million as of December 31, 2011 to $143.5 million as of September 30,
2012 and the Days Sales Outstanding decreased from 80 days as of December 31,
2011 to 61 days. Accounts payable decreased from $19.3 million at the end of
2011 to $16.4 million as of September 30, 2012 and Days Payable Outstanding
decreased significantly from 11 to 7 days sequentially. Cogo's cash conversion
cycle decreased from 100 days in the fourth quarter of 2011 to 81 days in the
third quarter of 2012.

Total equity was $256.4 million as of September 30, 2012, an increase of 6.2%
from $241.5 million as of December 31, 2011. During the third quarter of
2012, the Company repurchased 38,935 shares. The Company continues to view
share buybacks as a strategic use of cash.

About Cogo Group, Inc.:
Cogo Group, Inc. (Nasdaq: COGO) is one of the leading gateways for global
semiconductor companies to access the rapidly growing Industrial and
Technology sectors in China. Through its unique business-to-business services
platform, Cogo designs customized embedded solutions using technology from
suppliers including Intel, Broadcom, Xilinx, SanDisk, Freescale, Atmel and
others for a customer base of 2,300 Chinese OEMs/ODMs. Cogo's customer list
includes approximately 100 blue-chip companies, including ZTE, BYD and NARI,
as well as nearly 2,200 Small and Medium Enterprises (SMEs). The Company
serves a broad list of rapidly growing end-markets in China, including 3G
Smartphones, Tablets, Automotives, High-Speed Railway, Smart Meter/Smart Grid,
Healthcare and High Definition Television ("HDTV").

For further information:
Investor Relations
www.cogo.com.cn/investorinfo.html
communications@cogo.com.cn
H.K.:  +852 2730 1518
U.S.:  +1 (646) 291 8998
Fax:  +86 755 2674 3522

Safe Harbor Statement:
This press release includes certain statements that are not descriptions of
historical facts, but are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
and Exchange Act of 1934. These forward-looking statements may include
statements about our proposed discussions related to our business or growth
strategy such as growth in digital media, telecommunications and industrial
applications businesses, as well as our potential acquisitions which are
subject to change. Such information is based upon expectations of our
management that were reasonable when made, but may prove to be incorrect. All
such assumptions are inherently subject to uncertainties and contingencies
beyond our control and upon assumptions with respect to future business
decisions, which are subject to change. For further descriptions of other
risks and uncertainties, see our most recent Annual Report filed with the
Securities and Exchange Commission (SEC) on Form 20-F, and our subsequent SEC
filings. Copies of filings made with the SEC are available through the SEC's
electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

About Non-GAAP Financial Measures:
To supplement Cogo's unaudited consolidated financial results presented in
accordance with GAAP, Cogo uses the following measures defined as Non-GAAP
financial measures by the SEC: 1) Non-GAAP net income attributable to Cogo
Group, Inc. which is net income attributable to Cogo Group, Inc. excluding
share-based compensation expenses and amortization of intangible assets and
related deferred taxation, and 2) Non-GAAP diluted EPS attributable to Cogo
Group, Inc., which is diluted EPS excluding share-based compensation expenses
and amortization of intangible assets and related deferred taxation. The
presentation of these Non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for the financial information
prepared and presented in accordance with GAAP. For more information on these
Non-GAAP financial measures, please see the table captioned "Unaudited
Reconciliation of Non-GAAP measures to the most comparable GAAP measures" set
forth at the end of this release.

Cogo believes that these Non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by excluding
share-based compensation expenses and amortization of intangible assets and
related deferred taxation that may not be indicative of its operating
performance from a cash perspective. Cogo believes that both management and
investors benefit from referring to these Non-GAAP financial measures in
assessing its performance and when planning and forecasting future periods.
These Non-GAAP financial measures also facilitate management's internal
comparisons to Cogo's historical performance and liquidity. Cogo computes its
Non-GAAP financial measures using the same consistent method from quarter to
quarter.

Cogo believes these Non-GAAP financial measures are useful to investors in
allowing for greater transparency with respect to supplemental information
used by management in its financial and operational decision making. A
limitation of using Non-GAAP net income attributable to Cogo Group, Inc.,
Non-GAAP diluted Earnings Per Share attributable to Cogo Group, Inc., Non-GAAP
income from operation and Non-GAAP operating margin is that these Non-GAAP
measures exclude share-based compensation expenses and amortization of
intangible assets and related deferred taxation that have been and will
continue to be for the foreseeable future a recurring expense in our business.
Management compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from each Non-GAAP measure. The
accompanying tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to Non-GAAP financial
measures.

Tables Attached





FINANCIAL INFORMATION

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2012

and December 31, 2011
                                                                     December
                                                                     31,
                                                 September 30, 2012  2011
                                                 USD'000  RMB'000    RMB'000
Assets
Current assets:
Cash                                             83,215   522,987    572,364
Pledged bank deposits                            79,500   499,642    431,695
Accounts receivable, net                         143,545  902,150    941,798
Bills receivable                                 11,883   74,683     39,889
Inventories                                      59,362   373,079    327,482
Income taxes receivable                          282      1,774      1,932
Prepaid expenses and other receivables           13,481   84,725     51,507
Total current assets                             391,268  2,459,040  2,366,667
Property and equipment, net                      3,278    20,599     17,891
Land use rights, net                             3,036    19,080     —
Intangible assets, net                           21,502   135,133    154,105
Other assets                                     101      633        21,325
Total Assets                                     419,185  2,634,485  2,559,988
Liabilities and equity
Current liabilities:
Accounts payable                                 16,396   103,047    121,538
Bank borrowings                                  137,075  861,487    854,234
Income taxes payable                             2,506    15,747     16,046
Accrued expenses and other liabilities           3,306    20,776     22,593
Total current liabilities                        159,283  1,001,057  1,014,411
Deferred tax liabilities                         3,548    22,297     25,427
Total liabilities                                162,831  1,023,354  1,039,838
Equity
Common stock:
Par value: USD0.01
Authorized: 200,000,000 Shares
Issued: 42,635,821 shares in 2012, 42,309,285
shares in 2011
 Outstanding: 33,848,068 shares in 2012,        535      3,360      3,340
33,560,467 shares in 2011
Additional paid in capital                       227,710  1,431,112  1,382,521
Retained earnings                                92,737   582,836    560,234
Accumulated other comprehensive loss             (20,236) (127,181)  (128,254)
                                                 300,746  1,890,127  1,817,841
Less cost of common stock in treasury, 8,787,753 (51,003) (320,542)  (320,025)
in 2012, 8,748,818 shares in 2011
Total Cogo Group, Inc. equity                    249,743  1,569,585  1,497,816
Noncontrolling interests                         6,611    41,546     22,334
Total equity                                     256,354  1,611,131  1,520,150
Total liabilities and equity                     419,185  2,634,485  2,559,988







COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income and

Comprehensive Income for the three months ended September 30, 2012 and 2011
                                            Three Months ended September 30,
                                            2012       2012         2011
                                            USD'000    RMB'000      RMB'000
Net Revenue
Product sales                               216,443    1,360,302    933,919
Service revenue                             -          -            -
                                            216,443    1,360,302    933,919
Cost of sales
Cost of goods sold                          (202,941)  (1,275,443)  (837,234)
Cost of service                             -          -            -
                                            (202,941)  (1,275,443)  (837,234)
Gross profit                                13,502     84,859       96,685
Selling, general and administrative         (6,860)    (43,114)     (50,302)
expenses
Research and development expenses           (4,024)    (25,293)     (25,059)
Other operating income                      10         59           23
Income from operations                      2,628      16,511       21,347
Interest expense                            (1,070)    (6,725)      (6,322)
Interest income                             514        3,232        4,066
Earnings before income taxes                2,072      13,018       19,091
Income tax expense                          (269)      (1,688)      (2,745)
Net income                                  1,803      11,330       16,346
Less net income attributable to             (1,284)    (8,070)      (1,705)
noncontrolling interests
Net income attributable to Cogo Group, Inc. 519        3,260        14,641
Earnings per share attributable to Cogo
Group, Inc.
Basic                                       0.01       0.09         0.40
Diluted                                     0.01       0.09         0.40
Weighted average number of common shares
outstanding
Basic                                                  36,731,113   36,317,706
Diluted                                                36,768,927   36,317,706
Comprehensive income:
Net income                                  1,803      11,330       16,346
Other comprehensive income
Foreign currency translation adjustments    (285)      (1,790)      (2,461)
                                            1,518      9,540        13,885
Comprehensive income
Less: comprehensive income attributable to  (1,333)    (8,377)      (1,663)
noncontrolling interests
Comprehensive income attributable to Cogo   185        1,163        12,222
Group, Inc.







COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income and

Comprehensive Income for the Nine Months ended September 30, 2012 and 2011
                                             Nine Months ended September 30,
                                             2012      2012        2011
                                             USD'000   RMB'000     RMB'000
Net Revenue
Product sales                                581,083   3,651,990   2,487,562
Service revenue                              -         -           -
                                             581,083   3,651,990   2,487,562
Cost of sales
Cost of goods sold                           (542,165) (3,407,396) (2,186,731)
Cost of service                              -         -           -
                                             (542,165) (3,407,396) (2,186,731)
Gross profit                                 38,918    244,594     300,831
Selling, general and administrative expenses (18,765)  (117,937)   (141,315)
Research and development expenses            (11,646)  (73,191)    (71,185)
Other operating income                       285       1,788       17
Income from operations                       8,792     55,254      88,348
Interest expense                             (2,997)   (18,835)    (13,184)
Interest income                              1,728     10,859      10,875
Earnings before income taxes                 7,523     47,278      85,949
Income tax expense                           (918)     (5,770)     (9,858)
Net income                                   6,605     41,508      76,091
Less net income attributable to              (3,008)   (18,906)    (7,439)
noncontrolling interests
Net income attributable to Cogo Group, Inc.  3,597     22,602      68,652
Earnings per share attributable to Cogo
Group, Inc.
Basic                                        0.10      0.62        1.83
Diluted                                      0.10      0.62        1.81
Weighted average number of common shares
outstanding
Basic                                                  36,380,971  37,457,578
Diluted                                                36,393,668  37,878,587
Comprehensive income:
Net income                                   6,605     41,508      76,091
Other comprehensive income
Foreign currency translation adjustments     180       1,136       (5,981)
                                             6,785     42,644      70,110
Comprehensive income
Less: comprehensive income attributable to   (3,018)   (18,969)    (7,311)
noncontrolling interests
Comprehensive income attributable to Cogo    3,767     23,675      62,799
Group, Inc.







COGO GROUP, INC. and SUBSIDIARIES



UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP
MEASURES
                                                        Three Months ended
                                                        September 30,
                                                        2012        2011
                                                        $'000     $'000
Net Income
     GAAP net income attributable to Cogo Group, Inc.   519         2,296
     Share-based compensation expenses                  2,682       2,943
     Amortization of intangible assets and related      840         613
     deferred taxation
     Non-GAAP net income attributable to Cogo Group,    4,041       5,852
     Inc.
Income from operation
     GAAP income from operations                        2,628       3,346
     Share-based compensation expenses                  2,682       2,943
     Amortization of intangible assets                  1,006       734
     Non-GAAP income from operation                     6,316       7,023
Operating Margin
     GAAP operating margin                              1.2%        2.3%
     Non-GAAP operating margin                          2.9%        4.8%
Earnings per share                                      $           $
 GAAP net income attributable to Cogo Group, Inc. per   0.01        0.06
 common share-Diluted
 Non-GAAP net income attributable to Cogo Group, Inc.   0.11        0.16
 per common share-Diluted
Weighted average number of common shares outstanding
 Basic                                                  36,731,113  36,317,706
 Diluted                                                36,768,927  36,317,706





SOURCE Cogo Group, Inc.

Website: http://www.comtech.com.cn