China Kangtai Cactus Provides Shareholder Update and Q4 Guidance

Company Cites Strong Revenue and EPS, Surging Cash Flow and Healthy Margins

HARBIN, China--(BUSINESS WIRE)--China Kangtai Cactus Biotech Inc. (OTCBB:CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based products in China, issued guidance for the fourth fiscal quarter ending December 31, 2010 and provided additional comment about the company’s status and plans for further growth.

“Our company generated cash flow from operations for the nine months of $6.9 million. We fully expect this to increase because we completed the $8 million patent payment at the end of August and our operating margins should remain in the 33% range.”

In an open letter to shareholders, China Kangtai Cactus CEO Mr. Jinjiang Wang said, “We are nearing the end of our most successful year ever. Our profitable growth is accelerating as Chinese consumers and farmers increase their use of our cactus products. Fourth quarter revenue will reach a record $12.2 million. This will represent a revenue gain of 43% over revenue of $8.5 million in 2009. For the year, we are anticipating revenue of $36.0 million, a gain of 35% over 2009 revenue of $26.5 million. Although we are not yet prepared to provide specific EPS guidance for the quarter, we can point out that earnings per share in the first nine months of 2010 were $0.38 per diluted share and we currently expect good profitability in the fourth quarter.

“This shows that our valuation is extremely low and represents exceptional value for investors. The average P/E for fast growing profitable Chinese companies trading on the U.S. capital markets is approximately 8.85. Our current trailing twelve-month price to earnings ratio is 3.78.

“Our company generated cash flow from operations for the nine months of $6.9 million. We fully expect this to increase because we completed the $8 million patent payment at the end of August and our operating margins should remain in the 33% range.

“Our growth is driven by several important factors. Our cigarette business is growing even faster than we originally expected. For the first nine months cigarette revenue was $1.7 million up from $42,000 in the first nine months of 2009. In the third quarter of 2010, cigarette revenue was nearly $660,000. We believe we are going to continue to see robust growth in this segment of our business.

“Our other two strong growth segments are cactus feed, which was up 67% in the third quarter and beverages, still our largest segment, which was up 37% in the third quarter to $3.9 million. Our ability to continue to scale up our various business segments is positive,” Mr. Wang said.

About China Kangtai Cactus Biotech, Inc.

China Kangtai Cactus Biotech, Inc. is a leading grower, developer, producer, and marketer of cactus-derived products, including nutraceuticals, nutritious food, health and energy drinks, beer, wine and liquor, extracts and powders, and animal feed. China Kangtai controls over 387 acres of plants and maintains an active R&D group that holds 18 product patents and is seeking another 12. China Kangtai's high-quality “green” products are sold throughout China via a distribution network that covers 12 of China's 23 provinces and two of China's four municipalities. More information may be found at http://www.biocactus.com or via e-mail: [e-mail].

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This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.