China ACM

June 23, 2010 09:10 ET

China ACM Awarded $3.4 Million China High-Speed Rail Contract

Company's Manufacturing Services New Business Pipeline Reaches Record Levels

BEIJING--(Marketwire - June 23, 2010) -  China Advanced Construction Materials Group, Inc. (NASDAQ: CADC) ("China ACM"), a leading provider of ready-mix concrete and related technical services in China, today announced that China Rail Engineering Group has awarded the Company a contract valued at $3.4 million.

China ACM is providing its premium ready-mix concrete (RMC) manufacturing services for a section of the Hangzhou to Ningbo high-speed passenger railway (HSR) in Zhejiang Province. The project, which is contracted by the Company's Manufacturing Services business segment, requires 460,000 cubic meters of its premium RMC and is expected to be completed in the first half of 2011. The Company's rapidly growing Manufacturing Services segment reported gross margins of 59 percent and 48 percent, for the three-month and nine-month period ending March 31, 2010, respectively.

"We're pleased to see strong growth in our backlog of China HSR projects," said Mr. Jeremy Goodwin, President and Chief Financial Officer of China ACM. "We increased our manufacturing services capacity by 33 percent with the addition of four new portable RMC plants during the third fiscal quarter, bringing our total number of portable plants to 16. We have a record volume of HSR contracts in our new business pipeline and, with our new portable plants being brought on line, we will capitalize on these new opportunities."

"As the massive Chinese Railway expansion continues, China ACM is gaining momentum as the go-to firm for the most demanding projects requiring high performance, premium RMC," said Mr. Xianfu Han, China ACM Chairman and Chief Executive Officer. "Our patented, premium RMC, used in HSR and other technically complex projects, merits premium pricing as it carries a 100-year warranty, double the industry average of 50 years."

"The dynamics of the China railway build out should drive sustainable growth for China ACM for many years to come. Analysts report that China's 6,552 km high-speed railway system is the longest in the world, and is expected to double to 13,000 km by 2012. This includes newly built high-speed links and existing track that has been upgraded to accommodate trains running 200-250 km/hour. According to the Ministry of Railways (MOR), railway construction last year created about six million jobs and generated demand for 20 million tons of steel and 120 million tons of cement. Over the next 10 years, the MOR plans to construct an additional 34,000 km of railway track in the country (of which 18,000 km will be HSR), more closely linking the Central and Western regions to coastal provinces," Mr. Xianfu Han added.

According to recent media reports, China is looking to invest an additional $102 billion to speed up the construction of high speed railway systems in the country. The state wants to add 4,613 kilometers of high speed railways to the 10,000 km lines already under construction. At the 2010 China (Changchun) International Rail Transit and Urban Development Forum, the government said it wants to add to the current Beijing-Harbin, Harbin, co-Fu, Jing Wu, Shanghai-Nanjing and many other lines. China will also further expand and improve the railway network layout, expand the scale of the western road network, improve the road network in the eastern part of the structure, and is planning a new 10,000 km railway.

About China ACM
China ACM is a leading producer of advanced, certified eco-friendly ready-mix concrete (RMC) and related technical services for large scale, high-speed rail (HSR) and other complex infrastructure projects. Leveraging its proprietary technology and value add services model, the Company has won work on numerous high profile projects including the 30,000 km China HSR expansion, the Olympic Stadium Birds' Nest, Beijing South Railway Station, Beijing International Airport, National Centre for Performing Arts, CCTV Headquarters and U.S. and French embassies.

Founded in 2002, Beijing-based China ACM provides its materials and services through its network of five ready-mix concrete plants covering the Beijing metropolitan area. Of those five plants, it owns one and leases four. It also has technical services and preferred procurement agreements with five other independently-owned plants across China. Additionally, the Company presently owns 16 portable plants deployed in 10 provinces across China. Currently, its total RMC production designed capacity is in excess of 11 million cubic meters annually. Additional information about the Company is available at

Forward Looking Statements
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.

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