SOURCE: Guanwei Recycling Corp.

April 14, 2010 08:30 ET

Guanwei Recycling 2009 Net Income Grew 102% on 86% Advance in Revenues Compared With 2008

Continuing Strong Demand for Recycled Plastic, 50% Growth in Customers and Doubling of Foreign Plastic Scrap Suppliers Set Stage for Another Year of Record Sales and Profits in 2010

FUQING CITY, CHINA--(Marketwire - April 14, 2010) - China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), Guanwei Recycling Corp. (OTCBB: GURC), announced today another year of record results, as revenues for the year ended December 31, 2009 climbed 86% to $47.26 million as compared to $25.43 million in 2008, and net income in 2009 increased to $6.45 million from $3.19 million in the prior year -- a gain of 102%. Reflecting the timing of the Company's November 2009 share exchange, reported EPS in 2009 was $0.49 based on 13,249,315 weighted average shares outstanding compared with $0.27 per share a year earlier on 12,000,000. Fully diluted EPS in 2009 based on 20,000,006 shares outstanding was $0.32.

Strengthened Prices, Customer Growth and Expanded Sources of Supply

Mr. Chen Min, Chairman and CEO of the Company, stated, "We are especially pleased with the strong advances in 2009, given the difficulties posed at the start of the year by the world economic crisis. As the year progressed, LDPE pricing recovered while we were able to maintain the significant cost advantage we have developed as a direct importer of plastic waste from European suppliers with strict adherence to the highest environmental standards in the industry."

Mr. Chen continued, "Raw material supply and procurement is the key enabling element in our industry for accelerating growth, and as previously reported, the relationships we built with major European suppliers during the height of the economic crisis resulted in a substantial strengthening and diversification of our plastic scrap supply sources. During the year we also greatly expanded our customer base, from 210 customers at the start of the year, to approximately 300 domestic customers in ten different industries going into 2010, setting a strong foundation for continuing growth."

2009 Recycled LDPE Tonnage Sold Increased 67.34%

Underlying the Company's strong revenue gain in 2009 was a 67.34% increase in the volume of recycled LDPE sold, from 23,350 tons in 2008 to 39,076 tons in 2009. Among other things, the gain reflects the continued strong demand for recycled plastic in China, where plastic consumption greatly exceeds the amount produced. This has continued to boost the use of recycled plastic, which is significantly less expensive than "virgin" plastic, and has made China the number one producer in the world of recycled plastic.

The Company noted that the average selling price of recycled LDPE during 2009 was $998 per ton, down 3.11% from $1,030 per ton in 2008, reflecting the lower prices at the start of the year during the economic crisis. With stabilized crude oil prices and anticipated increasing virgin plastic prices, the Company expects to achieve better selling prices in 2010.

In 2009, the Company also saw a decrease in revenues from its sorted non-LDPE waste as it processed higher quality raw material with enhanced labor sorting skill resulting in a higher LDPE yield. The improved efficiency of the Company's production process generated a recycled LDPE product yield of 76.42% compared with 76.19% in 2008.

At year end 2009, the Company reported cash and cash equivalents of $7.3 million compared with $1.03 million as of December 31, 2008. Year end inventory was $6.8 million compared with $12.9 million at the end of 2008.

Favorable Outlook For 2010

"We have begun the new year in very strong shape," noted Mr. Chen, "with a diverse and secure supply of plastic waste that we obtain directly in Europe without the cost of middlemen and that we can transform into higher priced, high grade recycled LDPE at a lower cost than our competitors. We also have developed a broadened customer base, while emphasizing sales to the building and infrastructure industries, where there is strong government support for the industries and plastic products produced for them such as pipes and sheathing. In the face of continued very strong product demand, we are maintaining our focus on the bottom line through enhancements of our production process. As a consequence, we fully anticipate 2010 will be another year of new records in sales and earnings."

Description of Guanwei Recycling Corp.

Guanwei Recycling Corp. is China's largest manufacturer of recycled low density polyethylene (LDPE). Adhering to the highest "green" standards, it has generated rapid growth producing LDPE from plastic waste procured mostly in Europe for sales to customers in ten different industries in China. The Company is one of the few plastic recyclers in China that has been audited by TUV Rheinland Cert GmbH for compliance with German pollution and environmental standards, which allows the Company to procure high quality plastic waste directly from Germany and other European countries (Spain and Holland), with no middlemen, which permits highly economic production of the highest grades of LDPE. Guanwei is a publicly traded Company in the U.S. quoted on the OTC Bulletin Board. Additional information on the Company is available at www.guanweirecycling.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

                       GUANWEI RECYCLING CORP.
     CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                     (Expressed in US dollars)

                                                 Year Ended December 31,
                                                   2009           2008
                                               ------------   ------------

Net Revenue                                    $ 47,263,803   $ 25,430,714

Cost of Revenue                                  36,830,700     20,292,530
                                               ------------   ------------
Gross profit                                     10,433,103      5,138,184

Selling and administrative expenses               1,575,041        984,000
                                               ------------   ------------
Income from operations                            8,858,062      4,154,184

Interest income                                      11,422          6,797
Interest expenses                                   (78,669)      (100,664)
Exchange (loss) gain, net                           (28,843)       232,998
                                               ------------   ------------
Income before income taxes                        8,761,972      4,293,315

Income taxes                                      2,315,031      1,103,734
                                               ------------   ------------

Net income                                     $  6,446,941   $  3,189,581
                                               ============   ============


Comprehensive Income:

  Net income                                   $  6,446,941   $  3,189,581

  Other comprehensive income
  - Foreign currency translation adjustments         34,369        304,272
                                               ------------   ------------


Comprehensive income                           $  6,481,310   $  3,493,853
                                               ============   ============

Earnings per share attributable to
 shareholders of Guanwei Recycling Corp.
  - basic and diluted                          $       0.49   $       0.27
                                               ============   ============

Weighted average number of shares of common
 stock used in computing basic and diluted
 earnings per share                              13,249,315     12,000,000
                                               ============   ============

Contact Information

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