DALIAN, China, Sept. 14 /PRNewswire-Asia-FirstCall/ — China Xiu-Shui, Ltd. (OTC Bulletin Board: CSGH) (“China Xiu-Shui Group” or the “Company”), today announced results for the fourth quarter and fiscal year ended May 31, 2010.

 Fourth Quarter 2010 Highlights:
 -- Revenue increased 13.7% over the prior year quarter to $11.0 million
 -- Operating margin of 28.5%
 -- Net profit margin of 21.1%
 -- Earnings per diluted share of $0.04
 Fiscal Year 2010 Highlights:
 -- Revenue increased 11.2% over the prior fiscal year to $41.2 million
 -- Operating margin of 28.0%
 -- Net profit margin of 20.9%
 -- Earnings per diluted share of $0.16


“I am pleased both with the growth of our legacy products and with the launch of our Lithium Iron Phosphate segment during the past fiscal year. With China Xiu_Shui’s high quality production control and strong R&D team, we will be looking to expand our share of what we believe will a growing market as China develops new clean energy businesses and provides government and municipal support. In addition, the first phase of our development of a Power-li battery business, beginning in October 2010, will be an exciting start to our potential entry into a downstream industry where there is opportunity to add customer value and therefore increase margins to the benefit of shareholders,” said Mr. Bin Wang, Chief Executive Officer of China Xiu_Shui Group.

Fiscal Fourth Quarter 2010 Results

Revenue for the fourth fiscal quarter of 2010 was $11.0 million compared to revenue of $9.6 million in the prior year period, an increase of 13.7%. The increase was attributable to higher customer demand and the introduction of a new product, lithium iron phosphate, which was not offered in the prior year period.

Gross profit for the quarter was $3.6 million or 32.7% of revenues compared to $3.4 million or 35.3% of revenues in the same quarter a year ago. The reduction in gross margin was largely due to an increase in the cost of raw materials.

Operating income for the fourth fiscal quarter of 2010 was $3.1 million compared to operating income of $3.1 million in the prior year period, an increase of 0.6%. The increase in operating income resulted from higher gross profit and reduced sales and marketing expenses because of the absence of one-time marketing expenses incurred in the prior year quarter relating to product testing for purposes of certification by our customers, offset by higher general and administrative expenses due to one-off repair and maintenance in the fiscal fourth quarter of 2010.

Net income for the fourth quarter of 2010 was $2.3 million, or $0.04 per diluted share, which was approximately equal to the $2.3 million, or $0.04 per diluted share, in the prior year period.

Safe Harbor Statement

The statements contained herein that are not historical facts are considered “forward-looking statements.” Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, statements regarding the Company’s ability to become a leading anode material supplier for Li-ion batteries used in the new energy automobile industry are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, the effect of political, economic, and market conditions and geopolitical events; legislative and regulatory changes that affect our business; the availability of funds and working capital; the actions and initiatives of current and potential competitors; investor sentiment; and our reputation. We do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by any forward-looking statements. The factors discussed herein are expressed from time to time in our filings with the Securities and Exchange Commission available at http://www.sec.gov .

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