Investor Presentation

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Investor Presentation July 2008
2
Safe Harbor Statement

• Safe Harbor Statement Under the Private
  Securities Litigation Reform Act of 1995 Any
  statements set forth above that are not
  historical facts are forward-looking statements
  that involve risks and uncertainties that could
  cause actual results to differ materially from
  those in the forward-looking statements. Such
  factors include, but are not limited to, the
  companys ability to market existing and new
  products, ability to access to capital for
  expansion, and changes from anticipated levels of
  sales, future national or regional economic and
  competitive conditions, changes in relationships
  with customers, dependence on our flagship
  product profits and other factors detailed from
  time to time in the Company's filings with the
  United States Securities and Exchange Commission
  and other regulatory authorities. The company
  undertakes no obligation to publicly update or
  revise any forward-looking statements, whether as
  a result of new information, future events or
  otherwise. This presentation was developed by the
  Company, is intended solely for informational
  purposes and is not to be construed as an offer
  to sell or the solicitation of an offer to buy
  the Companys stock. This presentation is based
  upon information available to the public, as well
  as other information from sources which
  management believes to be reliable, but is not
  guaranteed by CHBT as being accurate nor does it
  purport to be complete. Opinions expressed herein
  are those of management as of the date of
  publication and are subject to change without
  notice.

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Equity Snapshot
Listed on the OTC Bulletin Board Symbol
CHBT Price
(07/11/08)
11.90 Market Cap
203.3 mil
Shares Outstanding
17.1 mil Revenue (ttm)
42.3 mil Net
Income (ttm)
14.2 mil Diluted EPS (ttm)
0.80 P/E (ttm)
14.9 P/S
(ttm)
4.8 P/B (ttm)
4.6 EV/EBITDA (ttm)
6.9
Insider / Institutional Ownership 60.2 /
35.9 Auditor BDO McCabe Co. Ltd. Fiscal Year
End March 31
Excluding a 3.4 million gain related to the
change in fair value of convertible notes
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Investment Highlights

• Strong revenue and profit growth with high
  margins
• Proprietary technology creates sustainable,
  decisive competitive advantages
• Strong brand with significant franchise value
• Rising demand for Chinas probiotics driven by
  increasing wealth and consumption of dairy
  products
• Entry into bulk additives market further propels
  growth
• Attractive valuation

5
Corporate Overview
Revenues
42.3
Net Income
( in Millions)
30.6
Mission Statement To become the dominant
supplier of naturally occurring probiotic
bacteria in China
21.9
14.2
10.9
8.4
FY2006
FY2007
FY 2008
Excluding a 3.4 million gain related to the
change in fair value of convertible notes

• One of the largest probiotics suppliers in China
• Shining is one of the most recognized brands in
  Shanghai
• Proprietary technology offers significant cost
  and product quality advantages
• 307 employees (03/31/2008)
• 60 retail centers in China 46 in Shanghai
  (03/31/2008)
• Operates in retail and bulk additive spaces

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What are Probiotics?

• Live microorganisms which, when administered in
  
• adequate amounts, confer a health benefit on
  the host
• World Health Organization
• Benefits of probiotics
• Improves health of G.I. tract
• Stimulates immune system
• Helps break down nutrients properly
• Reduces creation of toxins
• Reduces symptoms of lactose intolerance
• Decreases prevalence of allergy in susceptible
  individuals
• Reduces some risks associated with certain
  cancers
• 3 basic methods of delivery
• Dairy products
• Dietary supplements (capsules, tablets, or
  powders)
• Other food and beverages

Sample Bifido Bacteria, one kind of
probiotic
Source ww.usprobiotics.org
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Projected Rapid Growth

• Chinese Probiotic Usage and Growth (Metric Tons)

Source Domestic Probiotics Market Analysis and
Forecast Report by Beijing Leadership Management
Consulting Co. Limited
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Market Snapshot

• Chinese affluence drives demand for health food
• Demand for health food in China expected to reach
  9.7B by 2010
• (Source Pacific Bridge Medical)
• Demand for milk/yogurt increasing significantly
• Sales of yogurt drinks rose by 25 per year in
  2005 and 2006
• Chinese Bureau of Statistics forecasts tenfold
  increase in domestic dairy consumption,
  2007-2015
• U.S. banks investing in Chinese dairy industry
• Restricted use of antibiotics stimulates
  probiotic demand
• Over-prescription of antibiotics in China
• Chinese government is encouraging probiotics
  supplements to combat
• antibiotics abuse
• China has limited probiotics production capacity
• Current demand relies on imports from European
  manufacturers

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Current Key Products
Product
Key Components
Uses
Calms digestive system, enhances G.I. health and
protects / strengthens liver function
Shining Essence (49 of sales)
L. acidophilus B. bifidium
Monascus rice and L. acidophilus
Reduces high blood pressure, high blood sugar
levels and hyperlipidemia
Shining Signal (13 of sales)
B. adolescentis lentinusedodes
Shining Golden Shield (13 of sales)
Enhances the bodys immune system
Facilitates brain cell development and increases
alertness
Vitamin C, L. Arginine, and other amino acids
Shining Energy (11 of sales)
As of fiscal year ended March 31, 2008
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New Product Development

• Additives for Yogurt
• Essential to yogurt-based drinks
• One of the fastest-growing food product segments
  in China in 2005 and 2006
• Additives for Milk Powder
• Commonly added to infant formula
• Improve digestion in babies
• Additives for Other Products
• Ice creams
• Buns and bakery products

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Distribution Current and Planned
New Manufacturing Facility
Milk/Yogurt Products via Bulk Additives
Retailers / Pharmacies
Company-Owned Retail Centers
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Strategies for Growth

• 2 Pronged Strategy
• Health food business geographical expansion -
  300 Shining retail centers
• Launch food additive business
• Leveraging on
• Highly recognized Shining brand
• Our cost and quality advantage
• Strong RD capability introduce new and
  complementary products
• Growing demands for probiotics establish 150 mt
  / year production facility to capitalize on the
  market opportunity

Shining Retail Center
mt metric tons
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Retail Expansion Strategy

• 300 retail centers by March 31, 2009
• 550 square feet / center
• Initial investment about 40,000 per center
• Financed through operating cash flow
• Payback period lt 1 year

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Bulk Additive Strategy

• Launch Shining Probiotics for bulk additives
  line
• Produce bulk food additives for dairy and animal
  feed industries
• Commenced construction of 150 mt / year
  production facility in December 2007, to be
  completed in 2008 CY
• Products sold directly to major international and
  domestic dairy and food manufacturers
• Revenue potential of new
  plant 110 MM per year

CY Calendar Year mt metric tons
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New Industry-Leading Facility

• The only probiotics plant currently in
  development in China that will be able to meet
  the domestic demand for bulk additives Initial
  revenue opportunity at Phase I capacity 110MM
  / year
• Phase 1 150 mt / year of production capacity
• Phase 2 scalable to 300 mt / year
• Production yield allows company to sell for as
  little as one-sixth competitors price while
  maintaining 70 gross margin
• Projected to be online in late 2008 CY

CY Calendar Year mt metric tons
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Proprietary Production Process
Bacteria-Based Activation

• Leading edge production technology
• Fermentation Very high production yield low
  production cost and high margins
• Superior probiotic strands Better functionality
  and product quality
• Micro-encapsulation Very long shelf life

Bacteria-Based Cultivation
Multistage Fermentation
Bacteria Extraction
Granule Emulsification
Freeze-Drying
Micro-Encapsulation
Double-Aluminum Packaging
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Management

• Mr. Jinan Song, Founder, Chairman and CEO
• Founder and CEO since 1999 Masters degree in
  politics and economics from Harbin Industrial
  University
• Mr. Raymond Li, CFO
• 20 years of finance experience in financial
  reporting, due diligence, MA activity, staff
  management and tax issues
• Ms. Eva Yan, Executive Vice President
• Participation in formulating corporate
  development plans, implementing internal control
  procedures, and presentations in business
  negotiations.
• Mr. Henry Tai, VP of Corporate Development
• 20 years of experience in direct investments,
  corporate finance and auditing in Australia,
  China, Hong Kong and the United Kingdom
• Dr. Shuguang Fang, Chief Technology Officer
• 10 years of experience in bio-engineering team
  member of 863 strategic projects and national 9th
  -5 year and 10th- 5 year projects in China Ph.D.
  in Chemical Bio-engineering from East China
  University of Science and Technology
• Dr. Kai Ma, Director of Research and Development
• 10 years of experience in microbiology team
  member of the national 863 and 973 strategic
  projects Ph.D. in Microbiology from Institute of
  Microbiology of Chinese Academy of Sciences

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Strong Financial Performance
Net Sales ( in Million)
42.3
CAGR 43.2
30.6
21.9
14.4
FY 2005
FY 2006
FY 2007
FY 2008
Net Income ( in Million)
14.2
CAGR 37.5
10.9
8.4
Excluding a 3.4 million gain related to the
change in fair value of convertible notes
5.5
FY 2005
FY 2006
FY 2007
FY 2008
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Income Statement, 2006-2008
Excluding a 3.4 million gain related to the
change in fair value of convertible notes
The earnings per share figures reflect an
increase in weighted-average shares related to
the issuance of convertible notes in December
2007. The earnings per share figures reflect
an increase in weighted-average shares related to
the share exchange transaction in March 2006.
For Fiscal Years Ended March 31
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Balance Sheet
March 31
( in thousands)
2008 2007 2006
Cash and cash equivalents
64,310 26,992
19,841
Current assets
79,979 41,897
31,833
Total assets
93,792 44,580
33,427
3.0 2.0
1.5
Current ratio
Current liabilities
26,896 20,670
21,090
Total liabilities
49,396 20,670
21,090
44,395 23,910
12,337
Stockholders equity
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Attractive Valuation
Company
Ticker Market Trailing PEG
P/S EV /
Cap P/E (ttm)
(ttm) EBITDA
China-Biotics, Inc.
CHBT 203.3M 14.88
0.50 4.80 6.87
Martek Biosciences MATK
1.2B 27.76 2.16
3.55 14.78
Perrigo Co.
PRGO 3.3B 26.24
1.07 1.92 15.57
Shanghai Jiaoda Onlly Co., Ltd 600530.SS
261.8M 45.22 N/A
N/A
1.60
Nu Skin Enterprises Inc.
NUS 982.3M 21.40 1.07
0.83 8.14
Herbalife Ltd.
HLF 2.5B 12.58
0.73 1.10 6.96
AVERAGE (Excluding CHBT)
1.6B 26.64 1.26 1.80
11.36
Data as of July 11, 2008, Yahoo! Finance. and
www.jrj.com.cn
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Investment Highlights

• Strong revenue and profit growth with high
  margins
• Proprietary technology creates sustainable,
  decisive competitive advantages
• Strong brand with significant franchise value
• Rising demand for Chinas probiotics driven by
  increasing wealth and consumption of dairy
  products
• Entry into bulk additives market further propels
  growth
• Attractive valuation

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Contact Information
CCG Investor Relations Crocker Coulson,
President 1325 Avenue of the Americas, Suite 2800
New York, NY 10019 Phone (212)
245-1010 E-mailcrocker.coulson_at_ccgir.com Web
Site www.ccgir.com
China-Biotics Inc. Raymond Li, Chief Financial
Officer No. 999 Ningqiao Road, Jinqiao Export
Processing Zone, Pudong, Shanghai 201206,
China Phone [phone] Web Site
www.chn-biotics.com  
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Appendix Reconciliation of Non-GAAP Financial
Data
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Thank you. July 2008