- Third Quarter Sales Rose 44%, Gross Margin 41% -

- Teleconference to Begin Monday, November 10, 2008, at 8:30 a.m. EST -
  
    BEIJING, Nov. 8 /Xinhua-PRNewswire/ -- China Agritech, Inc. (OTC Bulletin Board: CAGC) ("China Agritech" or "the Company"), a leading national-level liquid and granular organic compound fertilizer manufacturer and distributor in China, today announced its net income for the third quarter ended September 30, 2008, increased 35.3% to $3.5 million from the same period last year.  Earnings per diluted share rose 40% to $0.14 as compared with the same period last year.
  
    Financial Highlights
  
    Third Quarter of 2008 vs. the same period of 2007

    -- Net sales increased 43.8% to $16.7 million

    -- First sales of granular fertilizers generated $3.6 million, or 21.5% of
       net sales

    -- Net income rose 35.3% to $3.5 million

    -- Earnings per share rose 40.0% to $0.14

    Nine Months of 2008 vs. the same period of 2007
  
    -- Net sales rose 26.6% to $38.1 million

    -- Net income increased 7.1% to $7.6 million

    -- Earnings per share were $0.31, compared with $0.34 last year
  
    Operational Highlights
  
    -- Commenced production of granular fertilizers; contributed 21.5% of net
       sales

    -- Mr. Yau-Sing Tang appointed as Chief Financial Officer in October 2008

    -- Three independent directors appointed to the board in October 2008

    "I am pleased to report a robust quarter on both the top and bottom lines," said Mr. Yu Chang, Chairman and Chief Executive Officer of China Agritech.  "The demand for liquid organic compound fertilizers remained solid, and we successfully marketed and sold granular compound fertilizers for the first time in the third quarter.  Our strategy for the rest of the year and continuing into 2009 is to enhance our payment-collection efforts and focus on customers with strong balance sheets, while actively pursuing government production licenses for the three granular plants that we are building in various regions of China."

    Mr. Chang continued, "The Chinese government's new rural reform which was announced mid-October will ensure the safety, efficacy and environmental friendliness of crop production in China.  With that in mind, we continue to be bullish on China's $1.5-billion green food market, which will drive the growth of organic fertilizers, both liquid and granular.  We reaffirm our guidance for the year 2008."
  
    Third Quarter of 2008 Results

    For the third quarter of 2008, the Company recorded net sales of $16.7 million, a 43.8% increase from the same period of last year.  Net sales for the first time included revenue from a new product, granular fertilizer, which accounted for 21.5%.

    Excluding granular fertilizer products, sales of liquid fertilizers increased 13.1% from the same period of last year, benefiting from continued efforts to establish new markets in the central and southern regions of China.

    Gross profit rose 9.7% to $6.8 million from the same period of last year.  Gross margin was 40.7%, compared with 53.3% in the same period of last year.  The decrease in gross margin was mainly because of the introduction of granular fertilizers that we began to produce through a third-party manufacturer in September 2008.  Gross margin for the liquid fertilizers was 48.3% in the third quarter of 2008.

    Selling expenses rose 31.4% to $1.1 million from the same period of last year.  As a percentage of net sales, they were 6.5% compared with 7.1% in the same period of last year.  The increase was mainly attributable to additional compensation paid to sales personnel as well as a rise in transportation costs reflecting higher sales volume.

    General and administrative expenses rose 6.0% to $780,000 from the same period of last year.  As a percentage of net sales, they were 4.7% compared with 6.4% in the same period of last year.  The increase was mainly due to factory rental expenses related to the Company's new granular fertilizer plant in Beijing as well as increased compensation related to the addition of new members to the management team.

    Operating income rose 6.4% to $4.9 million from the same period of last year.

    The effective tax rate was 24.4%, compared with 36.3% in the same period of last year.  The decrease was due to the change in Chinese tax laws, which took effect on January 1, 2008.

    Net income rose 35.3% to $3.5 million from the same period of last year.  Earnings per diluted share were $0.14, compared with $0.10 in the same period of last year.
  
    Nine Months of 2008 Results

    For the first nine months of 2008, net sales rose 26.6% to $38.1 million.  Gross profit increased 7.4% to $17.7 million.  Gross margin was 46.4%, compared with 54.7% in the same period of last year.  Total operating expenses increased 43.8% to $5.7 million.  Net income grew 7.1% to $7.6 million.  Earnings per diluted share were $0.31, compared with $0.34 in the same period of last year.  The decrease in EPS was because of the increase in the total number of diluted shares outstanding, which was 24,699,615 as of September 30, 2008.
  
    Liquidity Conditions

    As of September 30, 2008, the Company had cash and cash equivalents of $5.3 million, compared with $7.4 million at June 30, 2008.  Net working capital was $60.9 million, compared with $56.8 million at June 30, 2008.  Days of sales outstanding were 245 days.  Total shareholders' equity was $61.7 million, compared with $58.1 million at June 30, 2008.
  
    Operational Highlights

    In the third quarter of 2008, the Company commenced the production of granular fertilizer products via a third-party manufacturer, as it awaits the government production license for its own Beijing plant.  The Company expects to receive the license by the end of November 2008.

    On October 15, 2008, the Company announced that it renewed a sales and distribution partnership contract with Sinochem Fertilizer Co., Ltd. ("Sinochem") for RMB 64.9 million ($9.5 million), through the end of 2009.  Under the terms of the new contract, the Company will provide 1,200 tons of its premium, highly concentrated liquid organic compound fertilizer, Green Vitality, to Sinochem upon purchase orders.  The Company will also assist in marketing initiatives such as print and TV advertisements, promotional conferences and demos at retail shops.

    On October 22, 2008, the Company announced the appointment of three independent directors: Mr. Gene Michael Bennett, Professor Lunzhang Dai, and Mr. Hailin Zhang.  The Company also announced in conjunction with the appointments the resignation of Mr. Tao Liang from its board.  The Company's board now comprises five directors, a majority of whom are independent as defined by the NASDAQ marketplace rules.  In addition, the Company has established a fully independent audit committee, chaired by Mr. Bennett, as well as fully independent compensation and nominating and governance committees.

    On October 23, 2008, the Company announced the appointment of Mr. Yau-Sing Tang as Chief Financial Officer.  With the three new independent directors of the board, this will entitle China Agritech to receive $2 million from an escrow account, according to the Escrow Agreement in connection with the 2007 PIPE transaction.

    "Our new CFO and the new members of our board of directors bring us substantial depth and expertise in accounting, corporate finance and financial-reporting experience," said Mr. Chang.  "We look forward to drawing upon their expertise, and upon Mr. Tang's extensive contacts in the financial services industry, to strengthen our company, bring further value to our stockholders, and to improve our communication with the investor community."
  
    Business Outlook

    The Company reaffirms its expectation that revenue for the 2008 year will be in the range of $54 million to $56 million and net income will be in the range of $8.5 million to $9.0 million.

    These targets are based on the Company's current views on the operating and market conditions, which are subject to change.
  
    Conference Call Information

    The Company will host a conference call, to be simultaneously Webcast, on Monday, November 10, 2008, at 8:30 a.m. Eastern Standard Time, or 9:30 p.m. Beijing Time.  To participate, please call + 1 (877) 407-9205 (North America) or + 1 (201) 689-8054 (International).	

    A live Webcast of the conference call will be available on China Agritech's Website at http://www.chinaagritechinc.com .  Please visit the Website at least 15 minutes early to register for the Webcast and download any necessary audio software.

    A replay of the call will be available through Monday, November 17, 2008, at 11:59 p.m. EST.  To access, dial +1 (877) 660-6853 (North America) or +1 (201) 612-7415 (International).  Enter Account Number: 286 and Conference ID Number: 301974.
  
    About China Agritech, Inc.

    China Agritech, Inc. is engaged in the development, manufacturing and distribution of liquid and granular organic compound fertilizers and related products in China.  The Company has developed proprietary formulas that provide a continuous supply of high-quality agricultural products while maintaining soil fertility.  The Company sells its products to farmers located in 26 provinces of China.

    For more information about the Company, please visit http://www.chinaagritechinc.com .
  
    Safe Harbor Statement

    This release contains certain "forward-looking statements" relating to the business of China Agritech and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes, expects" or similar expressions, including but not limited to, statements regarding the continued demand for China Agritech's products, China Agritech's ability to sustain growth for the balance of the year and China Agritech's ability to generally meet all of its objectives.  Such forward-looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to product development, marketing, concentration in a single customer, raw material costs, market acceptance, future capital requirements, and competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected.  Certain of these risks and uncertainties are or will be described in greater detail in our filings with the SEC.  Except as required by law, China Agritech is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
  
                         Financial Tables to Follow


        CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

                                              SEPTEMBER 30,      DECEMBER 31, 
                                                  2008               2007
                                              (UNAUDITED)          (AUDITED)
                            ASSETS
    Current Assets
    Cash and cash equivalents                   $5,265,474       $11,841,221
    Restricted cash                              2,000,000         2,011,415
    Accounts receivable, net of allowance
     for doubtful accounts of  $248,881  
     and $227,981 at September 30, 2008  
     and December 31, 2007 respectively         44,930,728        22,695,039
    Inventories                                  9,654,932         3,508,741
    Advances to suppliers                        4,348,443        12,343,255
    Prepayments and other receivables            1,983,648         1,242,692
    
    Total Current Assets                        68,183,225        53,642,364
    Property and equipment, net                  4,627,915         3,798,958
    
    Construction in progress                       877,800                --
    
    
    Total Assets                               $73,688,940       $57,441,322
    
          LIABILITIES AND STOCKHOLDERS'S EQUITY
    
    Current Liabilities
    Accounts payable                            $3,297,290           $41,146
    Accrued expenses and other payables          1,571,938         1,047,721
    Amount due to related parties                       --           352,505
    Taxes payable                                2,365,178         1,650,243
    
    Total Current Liabilities                    7,234,406         3,091,614
    
    Minority Interest                            4,719,389         3,465,724
    
    Commitments                                         --                --
    
    Stockholders' Equity
    Common stocks; $0.001 par value,     
     100,000,000 shares authorized,      
     24,699,615 shares issued and        
     outstanding as of September 30,2008 
     and December 31,2007                           24,700            24,700
    
    Additional paid in capital                  26,135,913        26,135,914
    Statutory reserve                            5,644,918         4,299,653
    Accumulated other comprehensive      
     income                                      5,851,996         2,578,107
    Retained earnings                           24,077,618        17,845,610
    
    Total Stockholders' Equity                  61,735,145        50,883,984
    
    Total Liabilities and Stockholders'  
     Equity                                    $73,688,940       $57,441,322



       CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS

                             THREE-MONTH PERIODS        NINE-MONTH PERIODS    
                             ENDED SEPTEMBER 30,        ENDED SEPTEMBER 30,
                               2008         2007         2008         2007

    Net sales              $16,674,095  $11,595,798  $38,083,747  $30,074,430
    Cost of sales           (9,896,393)  (5,415,761) (20,429,067) (13,631,864)
    Gross profit             6,777,702    6,180,037   17,654,680   16,442,566
    Operating expenses               
    Selling expenses        (1,084,382)    (824,695)  (3,016,586)  (2,229,480)
    General and           
     administrative       
     expenses                 (779,840)    (736,424)  (2,703,731)  (1,748,581)
    Total operating       
     expenses               (1,864,222)  (1,561,118)  (5,720,317)  (3,978,061)
    Income from operations   4,913,480    4,618,919   11,934,364   12,464,505
    Other income (expense)      43,452      (50,296)     (28,870)     (54,621)
    Interest income             22,006        3,467       85,902       37,763
    Exchange gain (loss)        54,955      (32,680)     (47,562)     (32,696)
    Total other income    
     (expense)                 120,413      (79,509)      (9,470)     (49,554)
    Income before income  
     taxes and minority   
     interest                5,033,894    4,539,410   11,943,834   12,414,951
    Provision for income  
     taxes                  (1,225,991)  (1,648,340)  (3,375,985)  (4,452,532)
    Income before minority
     interests               3,807,902    2,891,070    8,567,848    7,962,419
    Minority interests        (345,579)    (333,392)    (990,577)    (885,469)
    Net income               3,462,323    2,557,678    7,577,271    7,076,950
    Other comprehensive   
     income
    Foreign currency      
     translation          
     adjustment                158,711      522,622    3,273,889    1,354,428
    Comprehensive income     3,621,034    3,080,333   10,851,160    8,431,378
    Basic and diluted     
     weighted average     
     shares outstanding     24,699,615   24,397,658   24,699,615   20,914,208
    Basic and diluted net 
     earnings per share           0.14         0.10         0.31         0.34



     CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENTS

                                                        SEPTEMBER 30,
                                                   2008              2007
    Cash flows from operating activities:
        Net income                              $7,577,272        $7,076,949
    Adjustments to reconcile net income  
     to net cash used in operating       
     activities:
     Stock based compensation                           --            51,484
     Minority interest                             990,578           885,469
     Depreciation and amortization                 470,198           259,542
     (Increase) decrease in current       
      assets:
     Accounts receivable                       (22,235,689)      (17,070,111)
     Inventories                                (6,146,191)       (4,033,019)
     Advances to suppliers                       7,994,813         7,717,799
     Prepayments and other receivable             (740,955)          (89,244)
     Due from shareholders                              --            22,507
     Increase (decrease) in current       
      liabilities:
     Accounts payable                            3,256,144          (157,478)
     Taxes payable                                 714,935         1,096,563
     Accrued expenses and other payables           171,714         1,050,860
    Net cash used in operating activities       (7,947,183)       (3,188,679)
    
    Cash flows from investing activities:
     Acquisition of property & equipment        (1,299,156)       (1,459,705)
     Construction in progress                     (877,800)           (3,009)
     Restricted cash                                11,415                --
    Net cash used in investing activities       (2,165,541)       (1,462,714)
    
    Cash flows from financing activities:
    Amount held in escrow account                       --        (2,000,000)
    Issuance of shares for cash                         --        13,484,478
    Net cash provided by financing       
     activities                                         --        11,484,478
    
    Net (decrease) in cash and cash      
     equivalents                               (10,112,724)       (6,833,085)
    
    Effect of exchange rate change on    
     cash and cash equivalents                   3,536,977           428,879
    
    Cash and cash equivalents, beginning 
     of year                                    11,841,221         6,430,009
    
    Cash and cash equivalents, end of    
     year                                        5,265,474        13,691,973
    
    Supplement disclosure of cash flow   
     information:
    Income taxes paid                            3,362,504         3,595,008
                                                                            
    Noncash Investment and Financing     
     Activity:
    Offset of amounts due to/from        
     stockholders                                  330,032                --

 
SOURCE  China Agritech, Inc.