Exhibit 99.1
FOR IMMEDIATE RELEASE
Orient Paper, Inc. Reports Fourth Quarter and Full Year 2013 Results
BAODING, Hebei, China – March 25, 2014 - Orient Paper, Inc. (NYSE MKT: ONP) (“Orient Paper” or the “Company”), a leading manufacturer and distributor of diversified paper products in North China, today announced its financial results for the fourth quarter and full year 2013 ended December 31, 2013.
Financial Highlights:
| US$ million | | 4Q 2013 | | | YoY Change | | | FY 2013 | | | YoY Change | |
| Revenue | | | 35.2 | | | | -19.1 | % | | | 125.7 | | | | -16.8 | % |
| Revenue excluding PM11 | | | 35.2 | | | | -2.5 | % | | | 125.7 | | | | +2.6% | |
| Corrugating medium paper | | | 23.3 | | | | -24.6 | % | | | 80.9 | | | | -15.6 | % |
| CMP excluding PM11 | | | 23.3 | | | | -0.5 | % | | | 80.9 | | | | +44.6% | |
| Offset printing paper | | | 10.4 | | | | -11.1 | % | | | 39.8 | | | | -18.9 | % |
| Digital photo paper | | | 1.5 | | | | +66.7% | | | | 5.0 | | | | -19.7 | % |
| Gross profit | | | 7.2 | | | | +7.5% | | | | 23.3 | | | | -14.0 | % |
| Gross margin | | | 20.3 | % | | | +4.9pp3 | | | | 18.6 | % | | | +0.7pp3 | |
| Corrugating medium paper | | | 18.8 | % | | | +3.4pp3 | | | | 18.4 | % | | | -0.1 | pp3 |
| Offset printing paper | | | 23.0 | % | | | +7.3pp3 | | | | 18.6 | % | | | +2.5pp3 | |
| Digital photo paper | | | 25.6 | % | | | +15.0pp3 | | | | 12.2 | % | | | -3.0 | pp3 |
| Operating income | | | 5.32 | | | | +77.0% | | | | 18.8 | | | | -10.2 | % |
| Net income | | | 3.52 | | | | +75.0% | | | | 13.0 | | | | -11.6 | % |
| EBITDA | | | 7.1 | | | | +38.5% | | | | 26.9 | | | | -8.8 | % |
Note:
| (1) | PM1 suspended operation since December 31, 2012 for modernization |
| (2) | 4Q13 operating income and net income includes a US$0.8m share-based compensation |
| (3) | pp represents percentage points. |
Key Highlights for Fourth Quarter 2013:
| • | Gross profit up 7.5% YoY to $7.2 million and net income up 75.0% YoY to $3.5 million |
| • | PM6 monthly annualized utilization reached 86% in December 2013 |
| • | PM1 conversion expected to be completed months ahead of schedule during the second quarter of 2014 |
| • | PM8 construction progressing according to schedule |
Key Highlights for Full Year 2013:
| • | Achieved full year 2013 guidance with net income at $13.0 million and basic and diluted EPS at $0.71 |
| • | Revenue down 16.8% YoY to US$125.7 million due primarily to suspension of PM1 for renovation |
| • | Operating activities generated approximately $30 million cash, a company record high |
| • | Invested over $60 million in the development of the Wei County Industrial Park and our first tissue paper production line |
| • | Debt-to-equity ratio at 30.1% as of the end of 2013, maintaining a level well below industry average in China |
Mr. Zhenyong Liu, Chairman and Chief Executive Officer of Orient Paper, commented, “We have experienced a very eventful 2013 quarter to quarter. Nonetheless, we are pleased to have achieved satisfactory results well within our financial guidance for the full year, and made good progress on all our projects.”
Mr. Liu continued, “In particular, we are pleased to announce that we are wrapping up the conversion works of PM1 into an insulation liner paper production line. The conversion project is looking at a completion months ahead of schedule with a much lower cost than budgeted. We will launch the new PM1 production during the second quarter of 2014 and will be ramping up production in the months to come.
For our existing operations, we will continue to ramp up production of PM6, after achieving a record high monthly annualized utilization of 86% in December and a 24% increase of production volumes for the full year.”
Mr. Liu concluded, “Meanwhile, we continue to make progress in our new tissue business expansion in Wei County, with the PM8 installation to be completed in the second half of 2014. We remain committed to ensuring the success of our new businesses such as insulation liner and tissue paper, which are expected to be additional key revenue growth drivers for the Company in 2015 and beyond.”
Financial Review:
Quarter ended December 2013 Financial Results compared with quarter ended December 2012
Changes in revenues, sales volumes, and Average Selling Prices (“ASPs”) for 4Q 2013 are presented as follows:
| | | Sales Volumes (Tonnes) | | | YOY Change | | | Revenue (US$ millions) | | | YOY Change | | | ASP (US$) | | | YOY Change | |
| Corrugating Medium Paper | | | 62,562 | | | | -25.3 | % | | | 23.3 | | | | -24.6 | % | | | 373 | | | | +1.1% | |
| CMP excluding PM1 | | | 62,562 | | | | -1.6 | % | | | 23.3 | | | | -0.5 | % | | | 373 | | | | +1.1% | |
| Offset Printing Paper | | | 15,469 | | | | -8.0 | % | | | 10.4 | | | | -11.1 | % | | | 676 | | | | -3.0 | % |
| Digital Photo Paper | | | 382 | | | | +61.2% | | | | 1.5 | | | | +66.7% | | | | 3,879 | | | | +4.1% | |
Revenue
Total Revenue in the fourth quarter of 2013 was $35.2 million, decreased 19.1% from $43.5 million.
Corrugating Medium Paper (“CMP”)
| - | Revenue from CMP decreased 24.6% to $23.3 million, representing 66.2% of total revenue. |
| - | Volumes sold during the fourth quarter were down 25.3% to 62,562 tonnes, which were solely produced from PM6, as PM1, which contributed 20,181 tonnes to the fourth quarter 2012 sales revenue, was not in operation. |
| - | ASP increased 1.1% year-over-year to $373/tonne, a sign that the downward pressure in the Chinese packaging paper industry has started to stabilize. |
Offset Printing Paper
| - | Revenue from offset printing paper in the quarter decreased 11.1% to $10.4 million, representing 29.5% of total revenue. |
| - | Volumes sold were down 8.0% to 15,469 tonnes due to slower customer demand. |
| - | ASP decreased 3.0% year-over-year to $676/tonne. |
Digital Photo Paper
| - | Revenue from digital photo paper increased 66.7% to $1.5 million, representing 4.3% of total revenue. |
| - | Volumes sold increased 61.2% to 382 tonnes due to longer hours of operation compared to the quarter ended December 31, 2012 |
| - | ASP increased 4.1% year-over-year to $3,879/tonne. |
Cost of Sales
Cost of Sales in the fourth quarter of 2013 was $28.1 million, down 23.8%, primarily due to the decreased production volume and the lower raw material unit cost. CMP cost per tonne decreased from $312 in the fourth quarter of 2012 to $303 in the fourth quarter of 2013.
Gross Profit
Gross profit in the fourth quarter of 2013 was $7.2 million, up 7.5% from $6.7 million for the fourth quarter of 2012. The improvement was mainly due to lower raw material prices and stabilization of average selling prices.
Overall gross margin in the fourth quarter of 2013 was 20.3%, up from 15.4% for the fourth quarter of 2012. Gross profit margins for CMP, offset printing paper and digital photo paper for the fourth quarter of 2013 were 18.8%, 23.0% and 25.6%, respectively.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $1.8 million for the fourth quarter of 2013, compared to $0.9 million for the fourth quarter of 2012. The increase was mainly due to the 2013 year end stock-based compensation in the amount of $790,020.
Income from Operations& Operating Margin
Income from operations was $5.3 million for the fourth quarter of 2013, up 77.0% from $3.0 million for the fourth quarter of 2012, partly due to a $2.8 million asset impairment loss on the conversion of PM1 in the fourth quarter of 2012.
EBITDA
Excluding the impact of interest expenses, income tax expenses, depreciation and amortization, EBITDA, a non-GAAP measurement, was $7.1 million, up 36.5% from $5.2 million. See Note 2 hereto for a reconciliation of Net Income to EBITDA.
Net Income
Net income was $3.5 million, up 75.0% from $2.0 million. Basic and diluted earnings per share for the fourth quarter of 2013 were $0.19, compared to $0.11 for the corresponding period of 2012.
Cash, Liquidity and Financial Position
As of December 31, 2013, cash and cash equivalents were $3.1 million, compared to $13.1 million at the end of 2012. The decrease is mainly due to the use of cash to fund the of new tissue business expansion at Wei County. For the full year of 2013, Orient Paper generated net cash flow from operating activities in the amount of $29.9 million, representing an increase of 34.7% from $22.2 million in 2012.
As of December 31, 2013, we had $26.0 million of current assets and $28.4 million of current liabilities, resulting in a working capital deficit of $2.4 million as of the end of 2013. However, $2.3 million of the current liabilities were actually related parties security deposit or accruals that do not require immediate cash outflows or payments. Short-term debts and notes payable were $11.5 million, and current portion of long-term debts were another $10.0 million. Long-term debt was $20.1 million, of which $13.5 million are long-term capital lease obligations. As of December 31, 2013, shareholders’ equity totaled $161.1 million, compared to $142.8 million at the end of 2012.
Operations and Business Updates
PM1 Modernization Plan
As announced earlier, Orient Paper has voluntarily shut down PM1 as part of its facility upgrade plan. The modernization plan is to convert PM1 into a more energy-efficient production line, producing higher profit margin products of insulation liner paper, which is used to sandwich certain insulation materials as a construction material for wall and floor insulation. The PM1 renovation project cost is estimated to be approximately $6.8 million, well below previous expected budget of $15 million, and is expected to be completed months ahead of schedule during the second quarter of 2014. Revenue contribution from PM1 when operation commences is expected to be in the range of between $7 million to $9 million for 2014.
Tissue Paper Expansion (PM8 and PM9) on schedule
Orient Paper has started building the factory and other infrastructures for the household/tissue paper production facilities located in the Wei County Economic Development Zone in Hebei Province since mid- February 2013. The installation of PM8, the first 15,000 tonnes-per-year production line is progressing on schedule and is targeted for completion by the second half of 2014.
The Company has also started planning for the installation of PM9, the second 15,000 tonnes-per-year tissue paper production line. If our cash flow permits, installation will be scheduled to start in the second half of 2014, with a target to roll out production by the second half of 2015.
Outlook
Despite the mild economic recovery and the government’s continued elimination of outdated capacity, the consensus among industry analysts, appears to be that paper ASPs in China may continue to stay the same level as 2013. We believe that while the ASP for corrugating medium paper may not substantially decline, the price may not noticeably improve in 2014.
Since the government has identified environmental protection as a top priority, we expect an increase in environmental inspections and more stringent requirements for manufacturers. Although this would inevitably lead to increased costs and resources to comply, we believe this would advance the paper industry and benefit committed players like Orient Paper, while creating a long term benefit for China and its people.
Looking forward, the Company’s Wei County Project is well positioned to take advantage of China’s growing urbanization and economic development. Strategically located at the junction of Hebei, Shandong, and Shanxi provinces, Wei County enjoys good transportation links with direct access to three national highways, and close proximity to the burgeoning economies of the neighboring tier three and tier four cities.
Meanwhile, Orient Paper has also been progressively modernizing facilities to raise capacity, as well as to improve energy-efficiency and environmental conservation, thereby positioning itself to increase market share and further establish its leadership in the industry.
Looking ahead to 2014, the Company will continue to focus on the execution of its business strategy, ramping up PM6, launching the renovated PM1 in the second quarter, and completing the installation and launch of PM8 in the second half of the year. At the same time, we will strive to maintain strong cash flows and restructure our debt to support our investments and expansion.
2014 Guidance
Revenues for the full year are expected to be in the range of between $146 million and $161 million, gross profit to be between $27 million and $30 million, net income to be between $15 million and $17 million, and basic and diluted earnings per share to be between $0.81 and $0.90.
Conference Call
Orient Paper’s management will host a conference call for institutional and retail investors at 8:30 am US Eastern Time (5:30 am US Pacific Time/8:30 pm Beijing Time) on Wednesday, March 26, 2014, to discuss its quarterly results and recent business, operational and corporate activities.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:
| China: | 400-120-3170 |
| Hong Kong: | 800-966-120 |
| United States: | 1-855-811-0264 |
| International: | +61-2-8038-5361 |
| Passcode: | 1145035 |
A replay of this conference call will be available by dialing:
| China: | 400-120-0932 |
| Hong Kong: | 800-963-117 |
| United States: | 1-855-452-5696 |
| International: | +61-2-8199-0299 |
| Passcode: | 1145035 |
The replay will be archived for fourteen days following the earnings announcement until April 9, 2014.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://www.orientpaperinc.com/. Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. A replay will be archived for one year shortly after the call by accessing the same link.
About Orient Paper, Inc.
Orient Paper, Inc. (“Orient Paper”) is a leading paper manufacturer in North China. Using recycled paper as its primary raw material, Orient Paper produces and distributes three types of paper products namely, packaging paper (corrugating medium paper), offset printing paper, and other paper products, including digital photo paper, and household/tissue paper that the company is currently expanding into.
With production operations based in Baoding in North China’s Hebei Province, Orient Paper is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country.
Orient Paper’s production facilities are controlled and operated by its wholly owned subsidiary Shengde Holdings, Inc., which in turn controls and operates Baoding Shengde Paper Co., Ltd., and Hebei Baoding Orient Paper Milling Co., Ltd for manufacturing digital photo, printing and packaging paper.
Founded in 1996, ONP has been listed on the NYSE MKT Board since December 2009. (Please visithttp://www.orientpaperinc.com.)
Note 1: Production Facilities of Orient Paper
| PM# | Paper Product | Designed Capacity (tonnes/year) | Location |
| PM1* | Insulation liner paper | 50,000 | Xushui County, Baoding city, Hebei province |
| PM2 | Offset printing paper | 50,000 |
| PM3 | Offset printing paper | 40,000 |
| PM4 | Digital photo paper | 2,500 | ONP’s Headquarters Compound |
| PM5 | Digital photo paper | 2,500** |
| PM6 | Corrugating medium paper | 360,000 | Xushui County, Baoding city, Hebei province |
| PM7* | Specialty paper | 10,000 |
| PM8* | Tissue paper | 15,000 | Economic Development Zone in Wei County, Hebei Province |
| PM9* | Tissue paper | 15,000 |
*: Paper machines under renovation or under construction, or in the planning stage.
**: PM4 and PM5 have a total coating capacity of 2,500 tonnes per year.
Note 2:
Reconciliation of Net Income to EBITDA
(Amounts expressed in US$)
| (in millions) | For the Three Months Ended December 31 | For the Year Ended December 31 |
| | 2013 | 2012 | 2013 | 2012 |
| Net income | $ | 3.5 | | 2.0 | $ | 13.0 | | 14.7 |
| Add: Income tax | | 1.5 | | 0.8 | | 5.1 | | 5.5 |
| Add: Net interest expense | | 0.3 | | 0.2 | | 1.0 | | 0.9 |
| Add: Depreciation and amortization | | 1.8 | | 2.2 | | 7.8 | | 8.4 |
| EBITDA | $ | 7.1 | | 5.2 | $ | 26.9 | | 29.5 |
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, anticipated revenues from the digital photo paper business segment; the actions and initiatives of current and potential competitors; the Company's ability to introduce new products; the Company's ability to implement the planned capacity expansion of tissue paper; market acceptance of new products; general economic and business conditions; the ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For investor and media inquiries, please contact:
Investor and Media Contacts:
Orient Paper, Inc.
T: 1-562-818-3817
E:ir@orientpaperinc.com
FleishmanHillard
T: +852-2530-0228
E:ir@orientpaperinc.com
ORIENT PAPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THETHREE MONTHS AND YEARSENDED
DECEMBER 31, 2013 AND 2012
| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | | |
| Revenues | | $ | 35,246,348 | | | $ | 43,534,781 | | | $ | 125,717,630 | | | $ | 151,116,806 | |
| | | | | | | | | | | | | | | | | |
| Cost of Sales | | | (28,085,195 | ) | | | (36,837,423 | ) | | | (102,392,031 | ) | | | (124,060,559 | ) |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 7,161,153 | | | | 6,697,358 | | | | 23,325,599 | | | | 27,056,247 | |
| | | | | | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | (1,836,328 | ) | | | (925,841 | ) | | | (4,567,079 | ) | | | (3,360,520 | ) |
| Loss on impairment of assets | | | - | | | | (2,762,349 | ) | | | - | | | | (2,762,349 | ) |
| Gain from disposal of property, plant and equipment, net | | | 235 | | | | 46 | | | | 84,972 | | | | 45,288 | |
| | | | | | | | | | | | | | | | | |
| Income from Operations | | | 5,325,060 | | | | 3,009,214 | | | | 18,843,492 | | | | 20,978,666 | |
| | | | | | | | | | | | | | | | | |
| Other Income (Expense): | | | | | | | | | | | | | | | | |
| Interest income | | | 11,312 | | | | 12,950 | | | | 90,260 | | | | 30,674 | |
| Subsidy income | | | 474 | | | | - | | | | 171,125 | | | | - | |
| Interest expense | | | (272,591 | ) | | | (226,936 | ) | | | (995,694 | ) | | | (871,834 | ) |
| | | | | | | | | | | | | | | | | |
| Income before Income Taxes | | | 5,064,255 | | | | 2,795,228 | | | | 18,109,183 | | | | 20,137,506 | |
| | | | | | | | | | | | | | | | | |
| Provision for Income Taxes | | | (1,543,642 | ) | | | (794,117 | ) | | | (5,094,535 | ) | | | (5,464,843 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income | | | 3,520,613 | | | | 2,001,111 | | | | 13,014,648 | | | | 14,672,663 | |
| | | | | | | | | | | | | | | | | |
| Other Comprehensive Income: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustment | | | 736,669 | | | | 386,810 | | | | 4,818,869 | | | | 884,872 | |
| | | | | | | | | | | | | | | | | |
| Total Comprehensive Income | | $ | 4,257,282 | | | $ | 2,387,921 | | | $ | 17,833,517 | | | $ | 15,557,535 | |
| | | | | | | | | | | | | | | | | |
| Earnings Per Share: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic and Fully Diluted Earnings per Share | | $ | 0.19 | | | $ | 0.11 | | | $ | 0.71 | | | $ | 0.79 | |
| Weighted Average Number of Shares | | | | | | | | | | | | | | | | |
| Outstanding – Basic and Fully Diluted | | | 18,458,446 | | | | 18,459,775 | | | | 18,458,446 | | | | 18,456,781 | |
ORIENT PAPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DEMCEMBER 31, 2013 AND 2012
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | |
| ASSETS | | | | | | | | |
| | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash and cash equivalents | | $ | 3,131,163 | | | $ | 13,140,288 | |
| Restricted cash | | | 2,454,108 | | | | 1,585,138 | |
Accounts receivable (net of allowance for doubtful accounts of $67,592 and $57,643 as of
December 31, 2013 and 2012, respectively) | | | 3,327,494 | | | | 2,836,335 | |
| Inventories | | | 11,428,405 | | | | 15,104,101 | |
| Prepayments and other current assets | | | 1,068,031 | | | | 5,401,705 | |
| Asset held for sale | | | 4,130,590 | | | | - | |
| Deferred tax assets – current | | | 413,537 | | | | - | |
| | | | | | | | | |
| Total current assets | | | 25,953,328 | | | | 38,067,567 | |
| | | | | | | | | |
| Prepayment on property, plant and equipment | | | 1,492,098 | | | | 1,445,645 | |
| Property, plant, and equipment, net | | | 178,535,259 | | | | 122,391,456 | |
| Recoverable VAT | | | 3,277,188 | | | | - | |
| Deferred tax asset – non-current | | | 268,329 | | | | 941,656 | |
| | | | | | | | | |
| Total Assets | | $ | 209,526,202 | | | $ | 162,846,324 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Short-term bank loans | | $ | 6,544,288 | | | $ | 3,962,844 | |
| Current portion of long-term loanfrom credit union | | | 1,660,613 | | | | 4,168,912 | |
| Current obligations under capital lease | | | 8,264,795 | | | | - | |
| Accounts payable | | | 926,571 | | | | 1,012,906 | |
| Notes payable | | | 4,908,216 | | | | 3,170,276 | |
| Security deposit from a related party | | | 1,636,072 | | | | 1,075,606 | |
| Due to a related party | | | 64,546 | | | | - | |
| Accrued payroll and employee benefits | | | 498,010 | | | | 292,638 | |
| Other payables and accrued liabilities | | | 2,651,472 | | | | 1,262,284 | |
| Income taxes payables | | | 1,218,140 | | | | 1,255,457 | |
| | | | | | | | | |
| Total current liabilities | | | 28,372,723 | | | | 16,200,923 | |
| | | | | | | | | |
| Loan from credit union | | | 4,253,788 | | | | 1,561,361 | |
| Loan from a related party | | | 2,389,633 | | | | 2,315,239 | |
| Deferred gain on sale-leaseback | | | 1,160,271 | | | | - | |
| Long-term obligations under capital lease | | | 12,296,639 | | | | - | |
| | | | | | | | | |
| Total liabilities | | | 48,473,054 | | | | 20,077,523 | |
| | | | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 18,753,900 and
18,459,775 shares issued and outstanding as of December 31, 2013 and 2012, respectively | | | 18,754 | | | | 18,460 | |
| Additional paid-in capital | | | 46,909,543 | | | | 46,135,975 | |
| Statutory earnings reserve | | | 6,038,406 | | | | 5,963,960 | |
| Accumulated other comprehensive income | | | 17,146,308 | | | | 12,327,439 | |
| Retained earnings | | | 90,940,137 | | | | 78,322,967 | |
| | | | | | | | | |
| Total stockholders’ equity | | | 161,053,148 | | | | 142,768,801 | |
| | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 209,526,202 | | | $ | 162,846,324 | |
| | | | | | | | | |
ORIENT PAPER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
| | | Year Ended | |
| | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| Cash Flows from Operating Activities: | | | | | | | | |
| Net income | | $ | 13,014,648 | | | $ | 14,672,663 | |
| Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | |
| Depreciation and amortization | | | 7,794,743 | | | | 8,382,859 | |
| (Gain) Loss from impairment and disposal of property, plant and equipment | | | (84,972 | ) | | | 2,717,061 | |
| Allowance for (Recovery from) bad debts | | | 7,990 | | | | (19,631 | ) |
| Stock-based expense for service received | | | 773,862 | | | | 378,065 | |
| Deferred tax | | | 409,665 | | | | (941,207 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (402,709 | ) | | | 1,029,978 | |
| Prepayments and other current assets | | | 1,211,679 | | | | (295,763 | ) |
| Inventories | | | 4,105,876 | | | | (5,024,459 | ) |
| Accounts payable | | | (117,308 | ) | | | (1,771,968 | ) |
| Notes payable | | | 1,614,387 | | | | 3,168,769 | |
| Accrued payroll and employee benefits | | | 194,795 | | | | (17,306 | ) |
| Other payables and accrued liabilities | | | 1,599,375 | | | | 453,546 | |
| Income taxes payable | | | (200,090 | ) | | | (500,641 | ) |
| | | | | | | | | |
| Net Cash Provided by Operating Activities | | | 29,921,941 | | | | 22,231,966 | |
| | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | |
| Payment for construction in progress | | | (64,181,991 | ) | | | (2,759,997 | ) |
| Refund of prepayment for purchase of property, plant and equipment | | | - | | | | 3,112,571 | |
| Proceeds from disposalof property, plant and equipment | | | 2,589,919 | | | | 175,593 | |
| Purchases of property, plant and equipment | | | (384,794 | ) | | | (13,518,955 | ) |
| Security deposit from a related party | | | 1,614,387 | | | | 1,075,095 | |
| | | | | | | | | |
| Net Cash Used in Investing Activities | | | (60,362,479 | ) | | | (11,915,693 | ) |
| | | | | | | | | |
| Cash Flows from Financing Activities: | | | | | | | | |
| Proceeds from related party loans | | | 1,390,802 | | | | 1,030,097 | |
| Repayment of related party loans | | | (1,390,802 | ) | | | (1,230,097 | ) |
| Proceeds from bank loans | | | 10,703,389 | | | | 5,941,441 | |
| Proceeds from sale-leaseback financing | | | 24,215,811 | | | | - | |
| Repayments of bank loans | | | (8,281,807 | ) | | | (4,832,372 | ) |
| Payment of capital lease obligation | | | (5,406,481 | ) | | | - | |
| Restricted cash | | | (807,194 | ) | | | (1,584,384 | ) |
| Dividend paid | | | (323,032 | ) | | | (692,242 | ) |
| | | | | | | | | |
| Net Cash Provided by (Used in) Financing Activities | | | 20,100,686 | | | | (1,367,557 | ) |
| | | | | | | | | |
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | | | 330,727 | | | | 26,126 | |
| | | | | | | | | |
| Net(Decrease) Increasein Cash and Cash Equivalents | | | (10,009,125 | ) | | | 8,974,842 | |
| | | | | | | | | |
| Cash and Cash Equivalents - Beginning of Period | | | 13,140,288 | | | | 4,165,446 | |
| | | | | | | | | |
| Cash and Cash Equivalents - End of Period | | $ | 3,131,163 | | | $ | 13,140,288 | |
| | | | | | | | | |
| Supplemental Disclosure of Cash Flow Information: | | | | | | | | |
| Cash paid for interest, net of capitalized interest cost | | $ | 708,089 | | | $ | 486,278 | |
| Cash paid for income taxes | | $ | 4,884,961 | | | $ | 6,909,690 | |
| | | | | | | | | |
