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China Sun Bio-chem Issues Profit Warning

Source: China Sun Bio-chem Technology Group Company Ltd
20/01/2009

19 January 2009 - The Board of Directors of China Sun Bio-chem Technology Group Company Ltd. cautions that the Group expects net loss to be reported for the fourth quarter of FY2008.

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This was mainly attributable to the following factors:

1. the global financial crisis since the second half of 2008 have resulted in a global economic downturn which have affected the local demand of fast moving consumer goods which used corn starch as raw material. It has resulted lower selling price and gross margin for corn starch sales despite corn kernels price started to decrease in 4Q FY2008.

2. losses continued to incur from the start up phases of the Group’s two new businesses involving the production of corn starch at Tieling Wanshunda Starch Co., Ltd., and ethanol at Sky Bright (Shenyang) Ethanol Co., Ltd. The losses were due to lower than expected average utilisation rates at the 2 plants in 4Q FY2008, which resulted in higher unit fixed cost allocation. The selling price of ethanol was further hit by the significant decrease in oil price which caused less demand from customers who used ethanol as raw material to produce certain chemicals for industrial uses.

The Directors expect to release the Group’s results for the year ended 31 December 2008 by 27 February 2009 where further details of the Group’s performance will be provided.

The Board believes that the domestic market for the Group’s products remains soft in the first half of 2009 with the impact of the current global financial crisis. Baring unforeseen circumstances, following the progress of the application of various economic stimulation policies set the PRC Government to improve domestic demand, sales and profitability will likely to improve in the second half of 2009.



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