Revenues and Earnings:

The decreases were directly related to decreases in sales in the company’s various business lines – down 6.6% in tobacco BOPP, 26.2% in coated film, 45.3% in anti-counterfeit film, and 80.6% color printing, coupled with a decrease in the sale prices of its products. Shiner’s margins were negatively impacted by the opening of a new facility in Zhuhai, although the company believes that the current costs associated with the opening of this facility will be outweighed by its long-term benefits.

The decrease in sales year over year was attributable to two major events during the latter part of 2008 – the global economic financial crisis and melamine milk scare, which affected the entire packaged food industry in China. As a result of the decrease in sales caused by these unforeseen events, Shiner was overstocked in a number of raw materials that were purchased at higher prices in the third and fourth quarters of 2008. The company has, during the first four months of 2009, depleted these reserves and is currently taking advantage of lower pricing capabilities to restock these raw materials.

Shiner is currently seeing an increase in sales across most of its business lines and believes that the melamine crisis has been contained. The company believes that this trend will continue going forward. Further, the company believes its results of operations will be positively impacted by the recent opening of its new plant in Zhuhai. This facility contains technology that is expected to increase the company’s operational efficiencies and lower its unit cost. The Zhuhai plant began operating on a trial basis in 2008 and went fully operational on April 2, 2009.

Management Comments:

Jian Fu, Shiner’s chief executive officer said, “although the first quarter was economically challenging for us, we have recently seen positive signs from our major clients. The market is recovering faster than we thought and we believe the implementation of the recently enacted China Food Safety Law beginning in June will attract new clients to us. We see tremendous opportunity for us going forward.” Jian Fu continued, “we are also beginning to see signs of growth in new markets, including the United States and Canada. We provide high quality coated film at competitive prices as compared to major US coated film producers. Our international sales have great potential.”