Company Address:
China Kangtai Cactus Biotech Inc.
99 Taibei Road
Limin Economic\Tech. Zone
Heilongjiang Province
Harbin,
150025
China
 Phone:
011-86-451-5735-1189 ext 126
Fax:
011-86-451-5735-1551
 Website:
www.biocactus.com
 Ticker:
CKGT
 Exchange:
OTC BB
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99 Taibei Road • Limin Economic\Tech. Zone • Heilongjiang Province • Harbin • 150025 • China • www.biocactus.com
Investor Contact: Frank N. Hawkins, Jr. or Julie Marshall · Hawk Associates Inc. · (305) 451-1888 · www.hawkassociates.com
China Kangtai Cactus Biotech Q2 Revenue Up 34% to $8.7M; Net Income up 989% to $3M; First Half Year Revenue Up 45% to 14.3M; Net Income up 765% to $5.4M
China Kangtai Cactus Biotech Inc. (OTCBB: CKGT) is China's leading cactus grower and producer of cactus related products including nutraceuticals, health drinks, beer, wine, liquor, extracts and powders, nutritional food, livestock feed, fish feed and cigarettes. The com- pany has 31 product lines.

Culturally, Chinese believe in herbal-based medicine and dietary supplements, which some view as alter- native medicine. This belief is the impetus for cactus products' popularity in China and other parts of Asia. Cactus products provide health benefits and are used as auxiliary treatment to a variety of health issues, includ- ing diabetes, obesity, constipation, cholesterol, high blood pressure, low immunity and skin disorders.

Cactus contains over 18 amino acids, as well as carbohydrates, proteins, chief meal fibrin, carotene, vitamins C, E, vitamin K1, vitamins B1, B2, B6, and B12, nicotinic acid, folacin, calcium, phosphorus, iron, potassium, sodium, cobalt, molybdenum, magnesium, manganese, copper, zinc, nickel, iodine, and selenium.

Kangtai Cactus capitalizes on 18 patents and is currently seeking another 12. The company controls over 387 acres of cactus farms and maintains an active Research and Development (R&D) effort.

Kangtai’s highly regarded products are sold throughout China through a grow- ing distribution network in supermarkets, nutrition stores, department stores, hotels, restaurants and social clubs, as well as through direct corporate orders, seminars and conferences orders.

The company went public in the U.S. in August 2005 via a reverse merger.


Differentiators

Competitive Strengths


60% market share of China's edible cactus production –
The company’s 2009 production capabil- ity of edible cacti increased 33% to 19,184 tons grown in over 387 acres of farm land in Guangdong and Heilongjiang provinces. The company predominantly grows three species of cacti: Mexican Pyramid, Mexican Milpa-Alta and Mexican Queen. Cactus fruits are processed into juice, which is the basic ingredient for cactus nutritional drinks. The harvested edible cacti are processed into dry powder, which is the basic ingredient for cactus nutraceuticals and other products.

Strategic alliances with cooperative manufacturers –
In addition to its own cactus beverage and fruit wine production facilities, Kangtai has cooperative production agreements with five local pharmaceutical, food and beverage manufacturers to process and produce its products.

This strategy enables the company to fill orders quickly with short production runs and to reduce requirements for fixed asset investment. Kangtai provides raw materials, quality control guidelines and technical support while the processors provide other materials, processing facilities and labor to manufacture the cactus products for the company.

Active R&D –
The company's research and devel- opment facility, the Heilongjiang Sino-Mexico Cactus Development and Utilization Institute, is certified by the prestigious Heilongjiang Science & Technology Committee. The institute has inde- pendently developed many patented cactus-based nutraceuticals, nutritional food and drink product formulas and production processes.

Through these efforts, Kangtai has a strong new product pipeline that includes personal hygiene and cosmetic products, baby foods, hydration and energy drinks, animal nutrition and feed products. Cactus cattle feed and cactus fish feed have been generating rapidly growing revenues since July 2008. The company began marketing cactus hog feed and low nicotine and zero nicotine cigarettes in Q4' 2009.

Low cost regional distribution –
88% of Kangtai's sales are generated by 14 regional distributors that encompass over 200 distribution agents covering 12 of China's 23 provinces and two of China's four municipalities. The efficient use of distributors through annual contract has enabled the company to rapidly scale up sales into new markets at minimal cost. In addition, the company receives regular repeat orders from group consumers such as schools, factories, community organizations and government offices.

Recent News
China Kangtai Cactus Biotech Q2 Revenue Up 34% to $8.7M; Net Income up 989% to $3M; First Half Year Revenue Up 45% to 14.3M; Net Income up 765% to $5.4M
China Kangtai Cactus Announces $1M Equity Infusion from Kodiak Capital Group
China Kangtai Cactus Biotech Announces Acquisition of Tobacco Manufacturer
China Kangtai Cactus Biotech Q1 Revenue Up 66% to $5.5M; Adjusted Net Income up 20.5%; Reports Strong Cash Generation From Operations
China Kangtai Cactus Biotech Terminates Funding Agreement

    Risk Factors
  • Limited capital resources
  • Indeterminate growth of Chinese cactus market
  • Investor understanding of the cactus market
  • Investor confidence in Chinese stocks

The Outlook Kangtai's growth is driven by a diverse number of factors including:
  • Traditional Chinese belief in herbal based medicine and dietary supplements as an alter native to healthcare
  • Surging demand for “green & natural" products
  • Growing Chinese consumer disposable income and purchasing power for health & wellness products
  • Increasing acceptance of Kangtai's prod ucts by Chinese customers
  • Increasing awareness of cacti nutritional value
  • Unsaturated and fragmented cactus product market with little competition


    • CKGT’s short-term strategy is to expand production capacity and marketing efforts. CKGT is committed to remaining at the forefront of providing quality cactus-derived nutraceuticals, nutritional food, health drinks, liquor, extracts, livestock feed and fish feed.

    CKGT's longer-term strategy is to expand its market beyond China into South Korea, Singapore, Taiwan and other southeastern Asian countries.

    To accommodate this expansion CKGT entered into an Asset Purchase Agreement in August 2009 with the Local Government of Baisha Town, Taishan City, Guangdong Province to acquire land use rights of 181,854 square meters, with a useful life of 50 years.

    Management expressed satisfaction with its 2009 results noting that positive sales momentum helped generate nearly $8M in cash from operations. Nutraceuticals, which accounted for 40% of total sales were up 6%. Beverage sales reached 35% of total sales with a 73% increase. Cactus feed revenue was up 168% and packaged food salses rose 222%.

    The company said it was very pleased with the initial sales of its cigarette products, which are showing excellent initial acceptance by Chinese consumers.

    The company's guidance for 2010 calls for revenue growth of over 30% to nearly $35M. This guidance is forward looking and actual results may differ materially. These are the company's targets and not predictions of actual performance.

    Management
    President, CEO and Chairman of the Board of Directors-
    Jinjiang Wang

    General Manager and Director-
    Chengzhi Wang

    CFO and Director-
    Hong Bu

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