China Liansu Posts Solid Growth in the First Half of 2010 Net Profit Rose 189.2% to RMB 483 Million

HONG KONG, Aug. 30 /PRNewswire-Asia/ --

Financial Highlights

China Liansu Group Holdings Limited ("China Liansu" or the "Company", together with its subsidiaries, the "Group", stock code: 2128 ), today announced its interim results for the six months ended 30 June 2010 ("the Period").

During the Period, the Group delivered steady operating and financial performance. Turnover was RMB 3,323 million, representing an increase of 78.8% over the corresponding period in 2009. Gross profit for the six months ended 30 June 2010 was RMB882 million, representing an increase of 143.6% over the corresponding period in 2009. Basic earnings per share was RMB 0.21. The board of directors does not recommend the payment of an interim dividend for the six months ended 30 June 2010. The sustainable growth benefited from the Group's large-scale production operations, nationwide sales network, a comprehensive range of product offerings with strong brand recognition and research and development capabilities.

Mr. Wong Luen Hei, Chairman, Executive Director and Founder of the Company, said "With increasing social awareness of energy saving and environmental protection, the government has introduced a series of policies to encourage and support the use of plastic pipes. Plastic pipes are increasingly replacing pipes made of conventional materials such as, concrete and metal as important construction materials. In addition, the acceleration of urbanization in China, the use of plastic pipes in place of conventional pipe systems and the continuing growth of substantial infrastructure investments in China have driven a sustained increase in the demand for plastic pipes. Starting from 2009, the Chinese government has promulgated a series of regulatory and fiscal policies targeted specially towards curbing the level of investment in the real estate sector. Since such measures are aiming at curbing the overheated property prices by increasing the supply of residential houses, there has been no material adverse effect on the sales volume and selling prices of our products to our real estate customers for the Period under review.

The Group placed great emphasis on production and operation while proceeding with project construction. During the Period, total sales volume were approximately 351,000 tonnes, representing an increase of 75.5% over the same period last year. Gross profit margin rose 7ppts compare to same period of last year and reached 26.5%. The increase of gross profit margin was attributable to the increase of the average selling prices and the decrease of the average raw material cost during the Period, as the Group has continuously improved production efficiencies and expanded production scale and market share. The Group is able to maintain a certain level of bargaining power in negotiating the selling price of its products and maximize discounts on purchasing price of all raw materials through centralized procurement.

Benefiting from an expanded production scale and a continuous improvement in production efficiency and productivity, as of the end of June 2010, the Group's overall semi-annual production efficiency reached 75.9%, effective semi-annual production capacity rose to approximately 540,000 tonnes, and designed semi-annual production capacity had reached approximately 1,020,000 tonnes. The expansion of production capacity and the further extension of market coverage have provided strong momentum for the expansion of the Group and had a profound effect on operation of its distribution network.

China Liansu has effectively realized its national production network with 11 plastic pipes and pipe fittings production bases in operation which are located in eight different provinces in China. In addition, the Group is constructing two additional production bases in Changchun and Urumqi. With the broad distribution network of production base, the Company enhanced the sales efficiency to capture the targeted market and reach its customers. It also enabled the Company to provide prompt delivery and service to customers with significantly reduced delivery costs. The Group planned to begin the operations of these two production bases in the fourth quarter of 2010 and the first quarter of 2011 respectively, with foreseen production capacities reaching 34,000 tonnes and 66,300 tonnes respectively in 2012.

Looking ahead, Mr. Wong Luen Hei, Chairman, Executive Director and Founder of the Company, said, "Since our establishment, China Liansu has focused on creating a Chinese reputable brand and has built up good reputation in this regard. The Group's objective is to strengthen our leading position in the PRC plastic pipes market through the "Liansu" brand, and enter the new areas by expanding its distribution network coverage. Reinforcing its penetration into existing markets, the

Group will continuously accelerate building "Liansu" brand so as to increase customer satisfaction and loyalty. In the future, the Group will continue to actively participate in large infrastructure projects to further strengthen our cooperation with government authorities, public utility entities and well known enterprises and enhance its corporate image. We will also increase our spendings on advertising activities and commence targeted marketing activities, with a plan to apply for more intellectual properties. The Group will continue to expand its sphere of business. In addition to organic growth, we will consider to seek new business opportunities and expand our operations through acquisitions, in order to bring greatest returns to the investors."

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