China ACM

April 28, 2011 07:55 ET

China ACM Announces $3.9 Million in New High Speed Rail Contracts; Brings All 25 of 25 Portable Plants Under Contract

BEIJING--(Marketwire - Apr 28, 2011) - China Advanced Construction Materials Group, Inc. (NASDAQ: CADC) ("China ACM"), a leading provider of eco-friendly ready mix concrete and related technical services in China, today announced it has been awarded two high-speed rail (HSR) contracts valued at $3.9 million. The Company's Manufacturing Services Division 25 portable plants are now all under contract.

The contracts were awarded to the Company's Manufacturing Services business segment and are being fulfilled with premium ready-mix concrete (RMC) from its portable plants. This division reported a gross margin of 31 percent for the quarter ended Dec. 31, 2010 compared with its blended gross margin of 19 percent.

China ACM was awarded both contracts by CCCC Tunnel Engineering Co., Ltd., a subsidiary of Beijing-based China Communications Construction Company Limited (HKSE: 01800), for its premium RMC manufacturing and related engineering services on the Hukun Passenger Dedicated Line in Jiangxi Province.

Combined, they will require approximately 530,000 cubic meters of RMC and are valued at $3.9 million. They are estimated for completion in the second quarter of Fiscal Year 2012.

The first contract is for Yujiang (#3 and #4); Section 3, Jiangxi, Division 2, in Jiangxi Province. It is valued at approximately $2.3 million and will require about 330,000 cubic meters of China ACM premium RMC.

The second contract is for Dongxiang (#5); Section 3, Jiangxi, Division3, in Jiangxi Province. It is valued at approximately $1.6 million and will require about 200,000 cubic meters of China ACM premium RMC.

On February 24, China ACM announced it had added two new portable plants, increasing its total plants from 23 to 25, and that both new plants use machinery the Company had pre-paid $1.3 million for by spending $1.3 million of its accounts receivable (AR) last year.

Commenting on the contracts, Mr. Xianfu Han, China ACM Chairman and Chief Executive Officer, said, "Already in the current fiscal year, we have increased our number of Manufacturing Service portable plants by nine, or 56 percent, from 16 to 25. Reaching contracted production for all 25 of our 25 portable plants is an important milestone."

"We provide our patented, premium RMC for the world's most demanding commercial and industrial applications such as HSR that meets increasingly stringent environmental regulations for our use of recycled RMC ingredients and an overall low carbon footprint. For that, combined with our unrivalled chemical and technical engineering expertise and responsive service -- we are rewarded with growing demand and premium pricing power," Mr. Han added.

China ACM estimates the total addressable market just for HSR RMC at $15 billion over the next 10 years. 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 the end of 2012. This includes newly built high-speed links and existing track that will be upgraded to accommodate trains running 200-250 km/hour. Over the next 10 years, the Ministry of Railways plans to construct an additional 34,000 km of railway track in the country (more than half of which will be HSR), more closely linking the Central and Western regions to coastal provinces.

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 engineering services model, the Company has won work on numerous high profile projects including the 30,000 km China HSR expansion, the Olympic Stadium Bird's Nest, Beijing South Railway Station, Beijing International Airport, National Centre for Performing Arts, CCTV Headquarters, Beijing Yintai Building and U.S. and French embassies.

Founded in 2002, Beijing-based China ACM provides its materials and services through its network of fixed ready-mix concrete plants covering the Beijing metropolitan area. It also has technical consulting services and preferred procurement agreements with other independently-owned plants across China. Additionally, the Company owns numerous portable plants deployed in various provinces across China primarily to major high speed rail projects. More information about the Company is available at

Forward-Looking Statements
This press release contains statements that are forward-looking in nature, including statements regarding the Company's competitive position and product and service offerings. These statements are based on current expectations on the date of this press release and involve a number of risks and uncertainties, which may cause actual results to differ significantly from such estimates. The risks include, but are not limited to, the degree of market adoption of the Company's product and service offerings; market competition; dependence on strategic partners; and the Company's ability to manage its business effectively in a rapidly evolving market. Certain of these and other risks are set forth in more detail in "Item 1A. Risk Factors" in China ACM's Annual Report on Form 10-K for the fiscal year ended June 30, 2010. China ACM does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.

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