CMDS China Med

    China Medstar Limited ("Medstar" or the "Company")               

                                Trading Update                                 

The Company today announces a trading update ahead of the publication of the
interim results of the Company for the 6 months ended 30 June 2007.

The Company has an encouraging pipeline of installations in relation to
diagnostic and treatment centres within a number of medical centres and
hospitals within China. From this pipeline the Company has entered into formal
contracts for eight new diagnostic and treatment centres during 2007. The
Directors believe that from the contracts signed, the Company will be able to
launch six new diagnostics and treatment centres and one further HIFU centre by
the end of the year. The Directors therefore expect to have 21 diagnostic and
treatment centres and two HIFU centres by the end of the current year. The
Company's Trading Division is in advanced negotiations on two equipment sales
and hopes to pursue additional opportunities as they arise.

As in previous years the Company expects to have a strong second half bias to
its financial performance. However despite the positive operational performance
of the Company, revenue for the first six months of the year will be
significantly below expectations. Principally this is in connection with a key
equipment sale expected to be now recognised in the second half of the
financial year and as a result of discussions with a key diagnostic and
treatment centre in relation to the terms of an existing contract. Due to the
discussions on the terms of the contract, the Company has been unable to
recognise revenue from that contract until an agreement is formalised. It is
hoped that this will happen before the end of the year. The Directors will
update shareholders once the equipment sale and the contract discussions are
finalised.

Additionally the Company has experienced a reduction in both gross and
operating margins. The gross margins have been principally affected by the
recognition of cost, but not as yet revenue, in the diagnostic and treatment
centre in which the Company is in discussions (as detailed above). Operating
margins have also been reduced by higher than expected operating and
administrative expenses.

The Directors intend to undertake a number of actions in order to position the
Company for the financially important final quarter. This action will focus
principally on new installations, a resolution of the contract discussions as
identified above and a cost control programme to be monitored by the
non-executive directors alongside the finance director. Despite these actions
and the anticipated stronger financial performance of the Company during the
second half of the year, there can be no certainty that net profit will be in
line with market expectations for the year ended 31 December 2007. Further
guidance will be provided in the interim results which the Company expects to
announce no later than the last week of September.

                                                               7 September 2007

Enquiries:

China Medstar Ltd                      Tel: +86 (10) 5825 6867

Dr Cheng Zheng, Chairman and CEO/ Yap Yaw Kong, CFO

Evolution Securities China

Nick Martin                            Tel: +44 (0) 20 7220 4850

Evolution Securities                   Tel: +44 (0) 20 7071 4300

Tom Price/Bobbie Hilliam

Nexus Financial Ltd                    Tel: +44 (0) 20 7451 7050

Nicholas Nelson/Kathy Boate



END

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