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China Kangtai Cactus Biotech, Inc. Reports Third Quarter 2007 Financial Results

Net Income up $1,036,024, or 89%, for the nine months ended September 30,


HARBIN, China, Nov. 26 /Xinhua-PRNewswire-FirstCall/ -- China Kangtai Cactus Bio-tech Inc. (OTC Bulletin Board: CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based consumer products, filed its quarterly report on SEC Form 10QSB on November 19, 2007 and reported unaudited results for the period ended September 30, 2007. All results reported are in U.S. dollars.

For the three months ended September 30, 2007 net sales increased $1,145,545, or 41%, from $2,809,927 in 2006 to $3,955,472 in 2007. Net income for the September 30, 2007 quarter was $783,508, slightly lower than expected due to an increase in "provision for returns and doubtful accounts" of $188,348 and "income tax expense" of $109,073. Excluding these factors, net income would have increased more than 22%.

For the nine months ended September 30, 2007, net sales increased $2,694,828, or 37%, from $7,350,067 in 2006 to $10,044,895 in 2007. Net income for the same nine-month period increased $1,036,024, or 89% from $1,158,017, or $0.07 per share, in 2006 to $2,194,041, or $0.12 per share, in 2007.

Jinjiang Wang, Chief Executive Officer of China Kangtai Cactus Bio-tech Inc., commented, "The continued growth in our most recent quarterly results is attributable to a growing demand for our high quality cactus-based consumer products throughout China, as well as our continuing efforts to expand our production and distribution to better meet the market demand. The results demonstrate again that China Kangtai is a constantly profitable and growing company in a lucrative specialty food and beverage sector in China, which has huge growth potentials."

The company recognizes the fact that accounts receivable have increased to $4,673,504. However, the company believes this is a temporary phenomenon and is a result of company's fast expansions into new markets and aggressive marketing strategies.

During 2007, the company signed five new distributors, in addition to nine existing distributors. In order to encourage the existing distributors to order more products and the new distributors to enter new markets, the company provides them with incentives on top of the terms in the standard distribution agreements, including extended credit periods on outstanding balances. These strategies have proven to be effective in bringing about substantial sales growth by allowing quick entry into new markets and further penetration of existing markets.

These distributors are large trading companies with good credit ratings. Because the collection experiences with these distributors have been satisfactory, the company believes the possibility of delinquent accounts is very low and that the level of accounts receivable will decrease significantly towards the end of the year. Notwithstanding these facts, the company still increased the allowances significantly and, therefore, reduced book net income.

The company increased spending this quarter on advertising in new markets, new product R&D and IR campaigns. The company also incurred extra expenses on auditor fees for the three amended 10QSBs for 2006. While these expenses impacted the bottom line for the quarter, some of them are non-recurring and many represent higher than normal costs.

Despite the small drop in the net margin this quarter for the reasons discussed above, the company still has a healthy gross margin of almost 36% and a net margin of 20% for the quarter, and the company expects gross and net margins to continue to significantly improve.

China Kangtai is well on its way to comfortably beat its growth projections for the year of 2007. The company has conservatively projected to grow its revenues and earnings at a minimum rate of 30% annually without any external financing, but this year the company expects to realize a growth rate substantially higher than projected.

CEO Jinjiang Wang concluded, "Our company remains focused on creating more product categories and lines for distribution and is adopting a new distribution strategy to quickly and more efficiently penetrate new markets in China. With 15 product patents and 16 pending approval, China Kangtai is the dominant leader in the cactus-based consumer product sector in China."

About China Kangtai Cactus Bio-tech, Inc.

China Kangtai Cactus Bio-tech Inc. is market-leading cactus grower and producer of cactus-related products with over 387 acres of plants and an active R&D group that holds 15 product patents and is seeking another 16 in a variety of product categories. China Kangtai's high-quality products are sold throughout China in supermarkets, food stores, hotels and restaurants through a growing distribution network that has currently covered 14 provinces and 4 municipalities.

Cautionary Statement Regarding Forward-Looking Information

This press release contains forward-looking information about China Kangtai Cactus Bio-tech that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward- looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Kangtai Cactus Bio-tech future performance, operations and products.

This forward-looking information should be considered only in connection with "Risk Factors" in China Kangtai Cactus Bio-tech's quarterly report on Form 10QSB filed with the SEC on November 19, 2007, and its other current and periodic reports filed with the SEC. China Kangtai Cactus Bio-tech assumes no obligations to update any forward-looking statements or information set forth in this press release.

For more information, please contact:

Ren Hu

Vice President

China Kangtai Cactus Bio-tech, Inc.

Tel: +1-201-887-0415



SOURCE China Kangtai Cactus Bio-Tech, Inc.
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