Winner Medical Group Reports 19% Increase in Net Sales for Third Quarter Fiscal 2007

SHENZHEN, China, Aug. 10 /Xinhua-PRNewswire/ -- Winner Medical Group Inc. (OTC Bulletin Board: WMDG), today reported consolidated financial results for the third quarter and nine months ending June 30, 2007 for fiscal year 2007.

Third Quarter Results

Consolidated third quarter net sales increased 18.86% to $17.77 million from $14.95 million in the third quarter of fiscal 2006. Consolidated gross profit for the third quarter of fiscal year 2007 was $4.39 million, a slight increase over gross profit for the third quarter of fiscal year 2006. Third quarter gross margin in 2007 was affected by an appreciation in the Chinese RMB to U.S. dollar ratio and higher labor costs in some areas.

Net income for the third quarter was $1.45 million, or $0.033 per basic and diluted share, compared to net income of $1.52 million, or $0.034 per basic and diluted share, for the third quarter last year. Net income was impacted by higher interest expenses due to higher debt volume related to new construction and the purchase of productivity enhancing equipment as well as higher research and development costs.

Jianquan Li, Chairman and Chief Executive Officer of Winner Medical, remarked, "Our net sales increase in the third quarter was primarily generated by increased number of orders from our larger clients, particularly in Europe. We have also experienced greater sales volume in the United States and Chinese markets. Given our success, we plan to continue to allocate greater resources to servicing our larger clients' needs with our customized products. We are especially pleased with our overall achievements in sales, since we shifted our focus away from lower-margin products and exited certain business lines in favor of more profitable items and new products that we believe will drive future expansion."

"We are committed to supporting sustainable and profitable growth," continued Mr. Li. "We have increased our investments in research and development and look forward to seeing increased sales orders for new products introduced in 2006, while we ramp up production for our innovative PurCotton line. In the coming year, our market expansion strategy will involve greater efforts particularly in Greater China and the Middle East."

The following table illustrates the sales revenues generated in the third quarter of fiscal year 2007 in the major geographic areas in which Winner Medical sells its products. The table also provides the percentage of total revenues generated in each region.

All amounts, other than percentages, in millions of U.S. dollars

Three Months Percentage of Three Months Percentage of

Ended Total Ended Total

on 06/30/07 Revenues on 06/30/06 Revenues

Europe 6.66 37% 6.36 43%

Japan 3.02 17% 4.16 28%

America 3.14 18% 1.53 10%

China 3.07 17% 1.80 12%

Other 1.88 11% 1.10 7%

Total 17.77 100% 14.95 100%

As of June 30, 2007, Winner Medical had cash and cash equivalents of approximately $3.9 million with working capital of approximately $13.7 million and stockholders' equity increasing to approximately $58.6 million.

Nine Month Results

Net sales for the nine months ended June 30, 2007 totaled approximately $48.77 million, representing approximately a 3.24% increase over net sales of approximately $47.24 million reported in the comparable period of last year. Customers in Europe, America and China generated higher sales compared with the same period last year. Gross profit for the 2007 nine-month period declined slightly due to appreciation of the Chinese RMB to the U.S. dollar, and a rise in some labor expenses relative to the year ago period.

Net income for the nine months ended June 30, 2007 was approximately $4.14 million, or $0.09 per basic and diluted share, compared with net income of approximately $4.54 million, or $0.11 per basic and diluted share, in the same fiscal 2006 period. Administrative expenses rose approximately 10.7% in the 2007 fiscal nine months due to increased research and development expenses, higher amortization of new internal management control software and systems, and higher expenses due to greater control procedures to meet requirements being a public company.

WINNER MEDICAL GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three months ended Nine months ended

June 30 June 30

2007 2006 2007 2006

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

US$ US$ US$ US$

Net sales 17,772,176 14,951,712 48,770,857 47,236,275

Cost of sales (13,382,573) (10,596,058) (37,072,134) (34,993,729)

Gross profit 4,389,603 4,355,654 11,698,723 12,242,546

Other operating

income, net (48,225) (12,705) 263,326 201,154

Selling, general and

administrative

expenses (2,692,916) (2,633,463) (7,722,040) (7,361,512)

Income from operations 1,648,462 1,709,486 4,240,009 5,082,188

Interest income 5,355 15,494 15,664 26,914

Interest expense (113,391) (34,828) (290,752) (215,303)

Equity in earnings of

50 percent or less

owned persons 50,204 (6,278) 135,749 10,618

Income before income

taxes and minority

interests 1,590,630 1,683,874 4,100,670 4,904,417

Income taxes (93,387) (156,151) 102,765 (381,182)

Income before minority

interests 1,497,243 1,527,723 4,203,435 4,523,235

Minority interests (45,081) (9,551) (65,828) 16,581

Net income 1,452,162 1,518,172 4,137,607 4,539,816

Other comprehensive

income

Foreign currency

translation

difference 893,823 125,351 2,142,637 326,333

Comprehensive income 2,345,985 1,643,523 6,280,244 4,866,149

Net income per share

- basic 0.03 0.03 0.09 0.11

- diluted 0.03 0.03 0.09 0.11

Weighted average

common stock

outstanding

- basic 44,677,171 44,673,136 44,677,171 42,505,944

- diluted 44,677,171 44,676,103 44,677,171 42,506,933

WINNER MEDICAL GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30 September 30

2007 2006

(Unaudited)

US$ US$

ASSETS

Current assets:

Cash and cash equivalents 3,876,150 4,319,579

Accounts receivable, less

allowances for doubtful accounts

of US$15,354 and US$20,347 at June

30, 2007 and September 30, 2006,

respectively 10,232,461 7,513,013

Amounts due from affiliated

companies 319,241 480,900

Inventories 11,778,740 11,329,520

Prepaid expenses and other current

assets 6,331,455 6,182,472

Income taxes recoverable 65,231 7,533

Total current assets 32,603,278 29,833,017

Property, plant and equipment, net 43,195,852 35,800,530

Investment in an equity investee 1,382,606 1,062,135

Intangible assets, net 36,109 38,731

Prepaid expenses and deposits 235,673 224,391

Deferred tax assets 203,141 195,610

Total assets 77,656,659 67,154,414

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term bank loans 9,585,713 5,437,050

Accounts payable 5,047,657 4,196,874

Accrued payroll and employee

benefits 1,212,224 1,184,779

Customer deposits 419,568 269,965

Other accrued liabilities 2,266,141 2,379,849

Amount due to a stockholder 0 1,556

Amounts due to affiliated companies 27,893 203,999

Dividend payable 0 504,317

Income taxes payable 319,823 556,647

Total current

liabilities 18,879,019 14,735,036

Deferred tax liabilities 4,580 4,410

Total liabilities 18,883,599 14,739,446

Commitments and contingencies

Minority interests 204,944 149,496

Stockholders' equity:

Common stock, par value $0.001 per

share;

authorized 495,000,000 stock, stock

issued and outstanding June 30, 2007

-- 44,677,171 shares; September 30,

2006 -- 44,677,171 shares 44,677 44,677

Additional paid-in capital 30,259,597 30,237,197

Retained earnings 22,628,808 19,182,866

Statutory reserves 1,914,344 1,222,678

Accumulated other comprehensive

income 3,720,690 1,578,054

Total stockholders'

equity 58,568,117 52,265,472

Total liabilities and

stockholders' equity 77,656,659 67,154,414

About Winner Medical

Winner Medical is a holding company comprised of eight wholly owned manufacturing and distribution facilities, two joint venture factories and one trading company. Winner Medical is primarily engaged in the development, manufacturing and distribution of high-quality cotton disposable medical dressings and disposable products. Winner Medical's products include surgical dressings, dressing packs, wound care dressings, protective products, medical instruments, dental products and hygiene products for the institutional and home care markets. Winner Medical products are manufactured in China and sold domestically and abroad, in countries and areas such as Japan, Germany, Italy, the Netherlands, Australia, France, the United States, South America, Africa and the Middle East. Winner Medical is one of few Chinese companies licensed by the U.S. Food and Drug Administration to ship finished, sterilized products directly to the U.S. market. To learn more about Winner Medical, visit Winner Medical's web site http://www.winnermedical.com .

Forward-looking Statements

This press release contains certain statements that may include

"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding Winner Medical and its subsidiary companies' business strategy, plans and objective and statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although Winner Medical believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Winner Medical's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Winner Medical's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to Winner Medical or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Winner Medical does not assume a duty to update these forward-looking statements.

For more information, please contact:

Company -- China

Annie Chen

Secretary of the Board

Tel: +86-755-2806-6858

Email: annie.chen@winnermedical.com

U.S. Investor Relations

Anne Pang

College Hill

Tel: +1-605-610-4278

Email: anne.pang@collegehill.com