China Sun Group High-Tech Co. Provides Operational Update, Reaffirms Guidance

DALIAN, China, March 4, 2011 /PRNewswire-Asia-FirstCall/ -- China Sun Group High-Tech Co. (OTC Bulletin Board: CSGH) ("China Sun Group" or the "Company"), a vertically integrated supplier of raw materials for rechargeable Lithium–ion (Li-ion) batteries in China, today provided an operational update and reaffirmed its guidance for its fiscal year ending May 31, 2011.

Operations

The Company has a strong position in the production of cobaltosic oxide, an important material used in the production of lithium ion batteries that power such devices as laptop computers and cellphones.  The Company believes it has now established itself as a quality leader in the production of Lithium Iron Phosphate (LIP).  This product is a key material for the anode component of lithium ion batteries used in hybrid and electric vehicles.  The Company's new "Senkun," brand of Lithium Iron Phosphate, was awarded the "National Quality Trustworthy Products" designation by Nation High Tech Quality Supervising Committee in October, 2010.

The Company began LIP production in Oct 2009 and now has 500 tons per annum of production capacity in place from 3 production lines.  The Company has provided samples of LIP to approximately 32 Lithium Ion battery manufacturers and has received one major contract to date from Henan Huanyu Sai Er New Energy Technology Co., Ltd. for approximately 470 tons per annum and 7 smaller contracts from additional customers.

The Company is in the process of adding two more lines that will increase LIP capacity to more than 1000 tons per annum in December 2011 and the Company anticipates that the first line will be in set up phase in March, testing and initial production phase in April and fully operational before the end of May 2011.

In the context of further demand for lithium ion batteries and their components driven by China's goal of building one million electric vehicles by 2015, the Company is targeting eventual LIP capacity expansion to 4,000 tons per annum and is also planning to launch its own production of electric-car batteries by 2013.

Production

The Company is experiencing strong interest and increasing demand from battery manufacturers.  The preliminary estimate of tons of LIP shipped for the third fiscal quarter ending February 28, 2011 is 205 tons, bringing tons shipped of LIP for the first 9 months of fiscal 2011 to 518 tons. The preliminary estimate of tons shipped for the Company's established cobaltosic oxide product for the third fiscal quarter of 2011 is 304 tons compared to 267 tons for the same period a year ago, bringing tons shipped of cobaltosic oxide for the first 9 months of fiscal 2011 to 889 tons.

Financial Outlook

The Company reiterates its previous guidance of 2011 fiscal year revenues in the range of $56 million to $58 million, and non-GAAP adjusted net income to be in the range between $10 million and $11 million, excluding the cost of share-based consultancy fees.

On the basis of the Company's current cash balances and outlook for the upcoming calendar year, the Company believes it has sufficient cash resources to fund the expansion of its LIP lines to 1,000 tons per annum as detailed above.

Funding for additional expansion and vertical integration beyond 1,000 tons of LIP, may, depending on timing, require additional capital for acquisitions and/or capital expenditures.

"Looking back for the past three quarters of fiscal year 2011, the new product – LIP has brought the Company a greater profit and contribution, and we are very encouraged by the prospects for our business, given our leading market positions, technological resources and levels of customer demand," said the Company's Chief Executive Officer, Mr. Guosheng Fu.  "With our excellent management and operations, we believe we can continue to target ambitious growth as we increase China Sun Group's production capacity to meet market demand.  At the same time we are dedicated to pursuing the highest standards of responsibility as a public company to prepare for upgrading to a major stock exchange in the future."

About China Sun Group High-Tech Co.

China Sun Group High-Tech Co. ("China Sun Group") produces anode materials used in lithium ion batteries. Through its wholly-owned operating subsidiary, Dalian Xinyang High-Tech Development Co. Ltd ("DLX"), the Company primarily produces cobaltosic oxide and lithium cobalt oxide. According to the China Battery Industry Association, DLX has the second largest cobalt series production capacity in the People's Republic of China. Through its research and development division, DLX owns a proprietary series of nanometer technologies that supply state-of-the-art components for advanced lithium ion batteries. Leveraging its state-of-the-art technology, high-quality product line and scalable production capacity, the Company has recently diversified into the manufacture of LIP and plans to forward integrate to manufacture power Li-ion batteries.  For more information, visit http://www.china-sun.cn.

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 expected growth in sales of LIP due to China's expanding 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.

SOURCE China Sun Group High-Tech Co., Ltd.