SmallCapInvestor.com reporter Jennifer Schonberger is reporting from the 20th Roth Capital Partners Annual OC Growth Stock Conference this week in Dana Point, Calif. The conference features presentations from more than 300 small-cap companies.

Although Harbin Electric, Inc. (Nasdaq: HRBN) has been capitalizing on the industrialization of China with the help of its linear motor segment, its automobile segment is what will propel growth going forward, said Christy Shue, executive VP of finance and investor relations for Harbin, in an exclusive interview at the 20th annual Roth OC Growth Stock Conference this week in Dana Point, Calif.

The company has several new products in development, including a specialty micro motor used for automobile back-seat folding.

Typically, car seats need 15 to 20 electric motors to move the seats. In 2006, China made 6 to 7 million cars and 2008 promises to exceed that amount, said Shue.

“The market is new,” Shue said. “As automation has grown considerably since five years ago, many low-end cars are converting to automation and cars need motors to make things automated.”

Harbin entered the specialty micro-motors space for automobile interior applications when it acquired Taifu Auto Electric in July 2007. The company’s third quarter was the first quarter for which the acquisition was accretive to revenue, which comprised 27% of third-quarter sales.

According to Shue, Harbin is the only company of its kind that manufactures this type of motor.

“Proprietary technology is what enables us a competitive advantage,” she said. “There are currently no competitors for the products we offer.”

Although the company’s automobile segment will bolster growth going forward given the infantile stage of the automobile segment, the company’s linear motor sector will still contribute to revenue and net income growth in 2008. Shue would not comment on expectations for revenue growth in 2008, but says by 2010, Harbin expects to grow its revenues to $350 million.
 
For the third quarter, ended Sept. 30, 2007, the latest quarter for which data was available, the Chinese small cap recorded net income of $4.8 million, or $0.26 per share, compared with $4.3 million, or $0.24 per share reported in the third quarter of 2006.

Revenues for the quarter bolted 88% to $18.5 million from $9.8 million in the same quarter of 2006.

For fiscal 2007, two analysts surveyed by Thomson Financial are on average forecasting earnings of $0.99 per share on revenues of $65.63 million.

For fiscal 2008, two analysts surveyed by Thomson Financial are on average forecasting earnings of $1.47 per share on revenues of $102.04 million.

Harbin Electric will report its fourth-quarter results early to mid March.

Shares of Harbin Electric (HRBN) were down 0.77%, or $0.18, to $23.06 during morning trading. Shares of Harbin Electric have been trading in the range of $10.60 to $28 for the past 52 weeks.