Cathay Forest Announces Third Quarter Results

TORONTO, ONTARIO, Nov 09 (MARKET WIRE) --
Cathay Forest Products Corp. ("Cathay Forest" or the "Company") (TSX
VENTURE: CFZ) is pleased to announce its financial results for the
interim period ended September 30, 2009 and cumulative nine months of its
financial year 2009. All amounts in this release are expressed in
Canadian dollars unless otherwise stated.

Third Quarter Financial Highlights

-- Revenue for the quarter increased 319% over 2008, and 175% in the
first nine months of 2009 to $44,515,820

-- Cathay achieved Net Income for the quarter of $2,585,614 and a Net
Loss of $595,157 for the first nine months of the year

-- Basic Earnings per Share at $0.023 and (0.005) YTD

-- Cash Flow from Operating Activities $(937,922), and $985,944 YTD

Significant Events

-- Subsequent to September 30, 2009, the Company received the forest
valuation from Poyry Forest Industry Pte Ltd ("Poyry") indicating an
asset valuation of US $176 million. The Company commissioned this report
to provide an independent assessment of its managed forestry assets
portfolio and to establish market value of its assets for purpose of the
required conversion to International Financial Reporting Standards in
2011.

-- Appointment of Chief Operating Officer- Dr. Run-Peng Wei on September
29, 2009

-- The Company acquired a 40.0% interest in Eco-Energy China Group Inc.
in July 2009.

Three Months ended Nine Months ended
September 30, September 30,
Operating Results 2009 2008 2009 2008
(unaudited) (unaudited)
-----------------------------------------------------------

Revenue $23,304,614 $5,560,299 $44,515,820 $16,196,572
Cost of Sales 17,753,915 4,701,152 37,039,936 14,064,351
-----------------------------------------------------------
Gross Profit 5,550,699 859,147 7,475,884 2,132,221
-----------------------------------------------------------

Net Income (Loss) $2,585,614 $(538,719) $(595,157)$(1,759,213)
-----------------------------------------------------------

Net Income (Loss)
per Share $0.023 $(0.005) $(0.005) $(0.016)
-----------------------------------------------------------

Financial Highlights

Revenue

Total revenue increased 319% to $23.3 million in the third quarter of
2009 mainly due to the sale of standing poplar from the Shengtai
plantation property which amounted to $11.9 million. The sale of bamboo
from the Jiangxi property amounted to $2.3 million.

Revenue from our log importing and harvesting operations amounted to $9.1
million during the third quarter in 2009 an increase of 62% from $5.5
million in the same period in 2008.

Log importing and harvesting operations comprised 39% of total revenue
for the third quarter of 2009, compared to 100% in the same period last
year. The change of percentage reflects Cathay's ability to now
capitalize on its fast growth poplar plantations and standing timber
reserves in China.

Expenses

General and Administration Expenses increased from $0.4 million in the
third quarter of 2008 to $1.2 million in the same period in 2009, due
primarily to the additional expenses incurred as a result of the
inclusion of the Russian operations in 2009 and the additional expenses
incurred as a result of the continuing growth of the company. Operations
in Russia did not begin until the fourth quarter in 2008.

Selling and marketing expenses increased $0.08 million from the third
quarter of 2008 to the same period in 2009 as a result of additional
resources employed in conjunction with the higher sales activities
associated with the importing operations.

Amortization increased to $0.79 million from $0.5 million as a result of
additional fixed assets employed in the Russian operations.

Income from Operations

Income from operations amounted to $2.6 million in the third quarter of
2009 from $(0.5) million in Q3 2008, as result of the factors outlined
above.

Cash Flow from Operating Activities of Continuing Operations

Net cash provided from operating activities improved from $(1.8) million
in the third quarter 2008 to $(0.9) million in the same period in 2009.
The improvement was due to operating net income offset by increases in
accounts receivable and deposits on accounts. For the nine month period
ending September 30, 2009 the cash provided from operating activities
totaled $1.0 million representing a $12.8 million improvement over the
same period in 2008.

Capital Expenditures

Most of our capital expenditures were for the continuing development of
our infrastructure in Russia. For the nine month period ending September
30, 2009, capital expenditures amounted to $1,495,387. Cathay Forest does
not anticipate any significant capital expenditures in the last quarter
of 2009.

All statements, other than statements of historical fact, in this news
release are forward-looking statements that involve various risk and
uncertainties, including, without limitation, statements regarding the
future plans and objectives of Cathay Forest. We caution readers not to
place undue reliance on these statements as a number of important factors
could cause actual results and future events to differ materially from
the plans, objectives, expectations and intentions expressed in such
forward-looking statements. Except as required under applicable
securities laws, Cathay Forest assumes no obligations to update
forward-looking statements should circumstances or management's estimates
or opinions change.

The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy of this release.

Contacts:
Cathay Forest Products Corp.
Ermo Ou
Vice President
(416) 226-7269
Ermo.ou@cathayforest.com

Cathay Forest Products Corp.
Anthony Ng
Chief Executive Officer
(416) 226-7269
Anthony.ng@cathayforest.com

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