China ACM Reports 116% Increase in Gross Profit and 120% Increase in Operating Income for the Third Quarter of Fiscal 2009

Generates Net Income of $2.3 Million or $0.16 per Diluted Share for the Fiscal Third Quarter of 2009

NEW YORK and BEIJING, May 15 /PRNewswire-FirstCall/ – China Advanced Construction Materials Group, Inc. (“China ACM”) (OTC Bulletin Board: CADC), a leading provider of ready-mix concrete in China, today announced financial results for the three months ended March 31, 2009.

Mr. Xianfu Han, Chairman and Chief Executive Officer, stated, “China ACM has continued to experience year-over-year growth in revenue and net income as well as rapid margin expansion. In our fiscal third quarter, revenue increased to $9.3 million from $6.8 million during the comparable period last year, with higher margin manufacturing services and technical services contributing to our growth. As a result, gross margins for our fiscal third quarter increased to 41.9% from 26.5%, and our operating margin increased to 33.2% from 20.6% for the same period last year. Net income for the fiscal third quarter was $2.3 million versus $1.3 million during the fiscal third quarter of 2008. We remain on track to achieve net income of at least $9 million for fiscal 2009.”

Mr. Han continued, “The Chinese government announced its $586 billion stimulus package in November of 2008, with much of the money allocated toward infrastructure projects, a key focus of China ACM. Among the many infrastructure projects on the Chinese government’s agenda is the building of high speed railways through the year 2020 intended to better service the large population of Chinese citizens located outside major cities. This initiative is expected to consume 120 million tons of cement, as the network of track is set to increase by 41,000 kilometers over the next 11 years at a cost of approximately $730 billion. The Chinese government and many of the large general contractors are long-standing customers of China ACM. As a result, our company is now involved in over six such railway projects, with associated revenue of $19.7 million, in and around the Beijing area, the most recent additions being the Guizhou-Guangzhou Railway and the Jin-Qin High Speed Railway. Our investment in portable concrete facilities, combined with our solid reputation, quality products and services and competitive pricing, have placed us in a strong position to win railway projects and also fits our strategic plan of expanding outside the Beijing area. We continue to bid on projects of this type and have already begun benefiting from the Chinese government’s stimulus package.”

Revenue for the three months ended March 31, 2009 was $9.3 million, as compared to $6.8 million for the three months ended March 31, 2008. Gross profit was $3.9 million for the three months ended March 31, 2009, as compared to $1.8 million for the three months ended March 31, 2008, representing gross margin of approximately 41.9% and 26.5%, respectively. Net income for the three months ended March 31, 2009 increased to $2.3 million, or $0.16 per diluted share, compared to net income of $1.3 million, or $0.15 per diluted share, for the same quarter last year.

As of March 31, 2009, the company had cash of $870,140, restricted cash of $666,954, working capital of $8.0 million, and no long-term debt.

Conference Call

China ACM will also host a conference call at 8:00 a.m. Eastern Time on Friday, May 15, 2009. During the call, Mr. Xianfu Han, Chairman and Chief Executive Officer, Mr. Weili He, Vice Chairman and Chief Operating Officer, and Gene Hsiao, Chief Financial Officer, will discuss the Company’s quarterly performance and financial results.

The telephone number for the conference call is (201) 689-8035. A live webcast of the call will also be available on the company’s website, www.china-acm.com or the new China ACM IR Hub at: http://www.agoracom.com/IR/chinaacm. To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software.

The webcast will be archived on the site as well as the China ACM IR Hub, and investors will be able to access an encore recording of the conference call for seven days by calling (201) 612-7415 and entering account #286, ID #323153. The encore recording will be available two hours after the conference call has concluded.

About China ACM

China ACM, founded in 2002 and based in Beijing, China, is a leading producer of advanced construction materials for large scale commercial, residential, and infrastructure developments. The company is primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmental construction projects. The company also aims to develop and produce new and innovative environmentally conscious construction materials.

China ACM provides materials and services through its seven ready-mix concrete plant network covering Beijing metropolitan area. China ACM owns one plant, leases two plants and has technical services and preferred procurement agreements with four other independently-owned plants. China ACM is ISO 9001 (product quality), ISO 14001 (environmental safety), and ISO 18001 (employment environment safety) certified. Additional information about the company is available at www.china-acm.com.

This press release contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, and other factors. Additional Information regarding risks can be found in the Company’s Annual Report on Form 10K and in the Company’s recent report on Form 8K filed with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

    Contact:
    Crescendo Communications, LLC
    David Waldman or Klea Theoharis
    Tel: (212) 671-1020
    Email: ir@china-acm.com
    Web: http://www.china-acm.com

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                          CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2009 AND JUNE 30, 2008

                                   ASSETS

                                          March 31, 2009  June 30, 2008
                                            (Unaudited)      RESTATED

    CURRENT ASSETS:
          Cash                                $870,140    $1,910,495
          Restricted cash                      666,954       913,092
          Marketable securities                 58,451        61,767
          Accounts receivable, net of
           allowance for doubtful accounts
           of $357,810
           and $224,924 as of March 31,
           2009 and June 30, 2008,
           respectively                     14,856,208     9,365,486
          Inventories                          777,548       237,836
          Short term loan receivable         1,465,000      -
          Other receivables                  1,008,368       505,968
          Prepayment                         3,940,771     3,240,394
            Total current assets            23,643,440    16,235,038

    PLANT AND EQUIPMENT, net                15,237,656    16,730,220

    OTHER ASSETS:
          Accounts receivable (non-current),
           net of allowance for doubtful accounts
           of $664,503 and $411,061 as of March 31,
           2009 and June 30, 2008,
           respectively                      7,529,760     4,753,006

            Total assets                    46,410,856    37,718,264

                      LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
          Short term loans                  $4,723,893    $4,271,222
          Accounts payable                   5,875,554     6,293,553
          Customer deposits                     10,751       165,434
          Other payables                       280,182       254,259
          Other payables - shareholder         763,634       880,302
          Accrued liabilities                  411,168       145,207
          Taxes payable                      3,468,297     1,073,237
          Interest payable                     155,200       -
            Total current liabilities       15,688,679    13,083,214

    COMMITMENTS, CONTINGENCIES, AND SUBSEQUENT EVENT

    REDEEMABLE PREFERRED STOCK ($0.001
     par value, 873,000 and 875,000 shares
     issued and outstanding) net of
     discount of $717,822 and $1,168,548
     at March 31, 2009 and June 30, 2008,
     respectively, liquidation preference
     of $8.00 per share and accrued
     dividends                               6,266,178     5,831,452

    SHAREHOLDERS' EQUITY:
     Preferred stock $0.001 par value,
      1,000,000 shares authorized, 873,000 and
      875,000 redeemable preferred shares
      issued and outstanding, and classified
      above outside shareholders' equity
      above, liquidation preference of $8.00
      per share and accrued dividends as of
      March 31, 2009 and June 30, 2008             -             -
    Common Stock, $0.001 par value,
     74,000,000 shares authorized, 10,508,000
     and 10,525,000 shares issued and
     outstanding, as of March 31, 2009 and June
     30, 2008, respectively                     10,508        10,525
    Paid-in-capital                         12,777,188    12,722,260
    Contribution receivable                 (1,210,000)   (1,210,000)
    Retained earnings                        8,011,906     3,257,276
    Statutory reserves                       2,172,408     1,452,779
    Accumulated other comprehensive
     income                                  2,693,989     2,598,466
    Deferred compensation                          -         (27,708)
      Total shareholders' equity            24,455,999    18,803,598

          Total liabilities, redeemable
           preferred stock, and shareholders'
           equity                         $ 46,410,856   $37,718,264

          CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
         FOR THE NINE MONTHS AND THREE MONTHS ENDED MARCH 31, 2009 AND 2008
                                     (UNAUDITED)

                                   Nine months ended     Three months ended
                                        March 31,             March 31,
                                   2009        2008       2009        2008

    REVENUE:
          Sales of concrete   $16,382,049 $19,841,164   $6,544,484 $6,790,646
          Manufacturing
           services             5,301,154        -       1,304,615     -
          Technical services    1,471,583        -         431,456     -
          Mixer rental          1,992,520        -         995,939     -
          Marketing cooperation    94,167        -              32     -
           Total revenue       25,241,473  19,841,164    9,276,526  6,790,646

    COST OF REVENUE:
          Cost of concrete     12,147,067  15,538,513    4,592,863  4,988,211
          Manufacturing
           Services             1,803,356        -         510,268     -
          Technical services      119,742        -          22,059     -
          Mixer rental            602,485        -         265,442     -
          Marketing cooperation    38,720        -              13     -
           Total cost of
            revenue            14,711,370  15,538,513    5,390,645  4,988,211

    GROSS PROFIT               10,530,103   4,302,651    3,885,881  1,802,435

    SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES    2,079,257   1,033,958      809,777    404,692

    INCOME FROM OPERATIONS      8,450,846   3,268,693    3,076,104  1,397,743

    OTHER (EXPENSE) INCOME, NET
          Other subsidy income  1,300,992   1,190,159      470,971    407,434
          Non-operating expense,
           net                   (201,531)    (36,655)    (118,343)    (9,264)
          Interest income           4,777         -            937      -
          Interest expense       (640,544)   (215,532)    (194,200)   (67,963)
            Total other income,
             net                  463,694     937,972      159,365    330,207

    INCOME BEFORE PROVISION FOR
     INCOME TAXES               8,914,540   4,206,665    3,235,469  1,727,950

    PROVISION FOR INCOME TAXES  2,516,707     422,521      941,477    422,521

    NET INCOME                  6,397,833   3,784,144    2,293,992  1,305,429

    Dividends and accretion on
     redeemable preferred stock   923,575         -        305,443    -

    Net income available to common
     shareholders               5,474,258   3,784,144    1,988,549  1,305,429

    RECONCILIATION OF
     COMPREHENSIVE INCOME:
          Net income            6,397,833   3,784,144    2,293,992  1,305,429
          Unrealized (loss) gain
           from marketable
           securities              (3,316)      5,223       15,901    (18,220)
          Foreign currency
           translation
           adjustment              98,839   1,539,290      (39,340)   644,374

    COMPREHENSIVE INCOME       $6,493,356  $5,328,657   $2,270,553 $1,931,583

    EARNING PER SHARE:
          Basic                     $0.52       $0.43        $0.19      $0.15
          Diluted                   $0.46       $0.43        $0.16      $0.15

    WEIGHTED AVERAGE NUMBER OF
     SHARES:
          Basic                10,525,066   8,809,583   10,525,200  8,809,583
          Diluted              14,024,081   8,809,583   14,021,832  8,809,583

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008
                                  (UNAUDITED)

                                                      2009          2008
    CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income                               $6,397,833   $3,784,144
          Adjustments to reconcile net income to
           net cash (used in) provided by operating
           activities:
            Depreciation                            1,611,255      815,689
            Stock-based compensation expense           66,619       -
            Bad debt expense                          383,581        3,136
          Changes in operating assets and liabilities
            Accounts receivable                   (14,505,340)   7,298,441
            Inventories                              (538,551)      32,838
            Other receivables                        (998,078)     703,888
            Other receivables - related parties        -              (218)
            Prepayment                                (83,374)    (328,836)
            Accounts payable                        5,365,721   (9,139,259)
            Other payables                             25,142      363,910
            Accrued liabilities                       265,272      (94,066)
            Customer deposits                        (155,310)       -
            Taxes payable                           2,389,830      385,422
              Net cash provided by operating
               activities                             224,600    3,825,089

    CASH FLOWS FROM INVESTING ACTIVITIES:
          Disbursement on short term loan          (1,464,500)
        Purchase of equipment                         (50,423)     (15,665)
              Net cash used in investing
               activities                          (1,514,923)     (15,665)

    CASH FLOWS FINANCING ACTIVITIES:
        Principal payments of short term loan      (6,961,984)  (5,679,400)
        Proceeds from short term loan               7,398,231    3,404,168
        Other payables - shareholders                (117,160)     -
        Preferred dividends paid                     (317,649)     -
        Restricted cash                               246,138      751,000
              Net cash provided by (used in) financing
               activities                             247,576   (1,524,232)

    EFFECTS OF EXCHANGE RATE CHANGE
     IN CASH                                            2,392      125,468

    DECREASE (INCREASE) IN CASH                    (1,040,355)   2,410,660

    CASH, beginning of period                       1,910,495    1,424,883

    CASH, end of period                              $870,140   $3,835,543

SOURCE China Advanced Construction Materials Group, Inc.