Orient Paper Inc. (OPAI -> ONP)
"A Flexible and Mature Operating Model"
Orient Paper Inc. is the
most rapidly developing paper company to emerge in China in recent years.
The company is engaged in the manufacture and distribution of paper in
China. Established in 1996, the company initially directed its efforts to
the manufacture of corrugated paper which was serviced by one
manufacturing facility. Today, the company serves over 140 packaging
producers and printing companies with a diversified product offering that
includes corrugated paper, high-grade offset paper, mid-grade offset paper
and writing paper from eight manufacturing facilities in northeast China.
Orient Paper is focused on the latest technological advances in the
industry. Through its unparalleled research and development staff and
facility, the company is using cutting edge technology to rapidly move
forward with the development of value-added products such as
anti-counterfeit paper, environmentally friendly newsprint and digital
photographic paper. Orient Paper will leverage its production scale,
diversity of product offerings, technological know-how and extensive
customer base to continue to profitably grow.
2008 DEVELOPMENTS
Orient Paper expects 2008 sales to increase by approximately 20% from 2007
sales that totaled $39.7 million. This sales projection does not take into
account any impact related to future acquisitions. The company will
continue to focus its efforts on four main products from which they
generate most of their revenue: corrugated paper, high-grade offset paper,
mid-grade paper and writing paper. They intend to maximize sales of these
products through an expanding customer base and supplement this growth
with new product introductions.
COMPANY INFORMATION
Key Details
Market Data
Ticker: OPAI
52-Week Range: $ 0.10 - $ 1.30
Sector: Consumer Goods
Shares Outstanding: 40 million
Industry: Paper and Paper Products
Market Cap: $ 30 million
Financial Data
Revenue $ 39.7 million
Net Income $ 4.1 million
Earnings Per Share $ 0.10
MANAGEMENT TEAM
Zhenyong Liu, CEO
- From 1980 to 1989 Mr. Liu was the General Manager of East Central
Household Appliance Purchases and Supply Station in Xushui County. In 1990
he became Chairman of the Board and General Manager of Orient Paper Inc.,
two positions he still holds to this day.
Jing Hao, CFO
- Ms. Hao graduated from Hebei University with a degree in accounting. She
has been employed in the financial industry as an accountant, financial
manager and CFO at Shandong Chenming Paper Co., Ltd., before joining the
Orient Paper Inc.
"Healthy Growth in the Years Ahead"
PAPER INDUSTRY IN CHINA
The Chinese paper industry is largely comprised of numerous manufacturers
of small-scale production capacity, considerable pollutant output, and
sub-par quality. To increase attention to environmental protection,
China's General State Council issued "Decisions on Environmental
Protection Issues" in August 1996, setting forth strict rules and
regulations intended to reduce pollution. The notice required that all
small-scale paper plants with annual output of less than 50,000 tons be
closed. The few years following the decision have seen thousands of paper
mills shut down, in addition to numerous other small-scale paper mills
that have failed to maintain a competitive edge in compliance with
environmental standards imposed. As a result, China's paper industry has
undergone massive consolidation within the past decade. Furthermore, along
with the expansion of urban areas, many paper manufacturing businesses
have been abandoned to reap greater profits, with facilities having been
converted for use as other commercial or residential properties.
Meanwhile, the Chinese paper industry after consolidation, coupled with
the market demand for high-quality paper products, has attracted many
foreign paper makers to join China's market. In the wake of the
consolidation period, China's paper industry currently remains a
relatively scattered industry.
MESSAGE FROM THE CEO
Zhenyong Liu, CEO
- “Our paper milling business brings significant advantages to a very
large and fast growing market in China. We have a flexible and mature
operating model with multiple layers of growth that can allow Orient Paper
to become a much larger, more profitable business in the future. As we
look ahead, we have a large opportunity to grow our business through
maximizing sales at existing paper types, expanding our customer base,
introducing new products and signing new supplier agreements with leading
international and domestic consumer brands. Additionally, we will evaluate
the opportunity to pursue strategic opportunities, including an
acquisition, to expand our presence in the Chinese marketplace. We are
excited with the opportunities in our business and believe our initiatives
will position Orient Paper for healthy growth in the years ahead.''
INDUSTRY DRIVERS
• The China paper industry has undergone significant consolidation over
the last decade.Due to failure to comply with environmental standards,
numerous small-scale paper mills have shut down.
• Although paper capacity has leveled off in some areas of the world,
China’s papermaking industry is still acknowledged as a “sunrise industry”
with a massive market potential.
• For the first eight months of 2007, the Chinese papermaking industry
realized a 36% increase in sales from the comparable prior year period.
OPAI SOUND BITES
Environmental Focus The only paper manufacturer in Hebei Province to
obtain a Pollution Discharge Permit that allows its operation in
compliance with environmental protection regulations. Supplier Agreements
Long-term contracts signed with several suppliers ensures a reliable and
predictable supply of raw materials. Research and Development An
experienced R&D team will continue to develop solutions that will reduce
energy consumption, improve quality and increase operational efficiency.
Cooperation with a variety of well-respected research institutions will
sustain the innovation process.
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