Business & Finance
Business and Finance
Business and Finance 
Thu, December 24, 2009
MD Holdings Corp. Changes Name to Guanwei Recycling Corp.
FUQING CITY, CHINA--(Marketwire - December 24, 2009) - MD Holdings Corp. (
As reflected in the Company's new name, following the recent successful completion of a reverse merger, Guanwei Recycling is China's largest manufacturer of recyclable Low Density Polyethylene (LDPE). It has generated rapid growth producing LDPE from plastic waste procured in Europe which it recycles into recyclable LDPE for sales to more than 200 manufacturers in more than ten industries in China.
"Our focus on being environmentally friendly is good for the environment and good for our business," stated Mr. Chen Min, Chairman and CEO of Guanwei. He explained that by meeting the highest European environmental standards, Guanwei is one of the few plastics manufacturers licensed in China that also has obtained the certificate issued by the German Environment Auditing Association. "Our advantage is that we procure high quality plastic waste directly from Germany and other European countries, with no middlemen, which enhances our bottom line and permits economic production of the highest grades of LDPE." He noted further, "We have a fast growing business that saw sales increase 61% in 2008 to $25.4 million with more demand for our high quality product than we could supply. The financial crisis in the first half of 2009 temporarily lowered demand and prices, but we still achieved a 74% gain in operating income on a sales increase of 149% to $30.4 million. As anticipated, in the second half of the year, prices for LDPE have strengthened and we are entering 2010 with high expectations for continuing strong growth."
Driving this growth, according to the Company, is the fact that China consumed more than 50 million tons of plastic in 2008, which exceeded plastics production capacity of 20 million tons. Additionally, 24% of plastic consumed within the country was produced by recycled plastic. It further noted that the demand for plastic products in a strengthening economy continues to accelerate, spurred in part by the government. Among the key industries served by the LDPE produced by Guanwei is the building and construction industry, where there has been an ongoing governmental push to promote the use of plastic in a variety of products, such as water and sewage pipelines.
"We are very pleased as a newly public Company to be able to generate growth for shareholders which also contributes to a cleaner environment in China and elsewhere in the world," Mr. Chen said.
Strong Nine Month and Third Quarter Results
The Company reported that in its third quarter ended September 30, 2009 net income grew 175.39% to $2,139,783 from $776,999 in the same period last year, on a revenue increase in the 2009 quarter of 14.02%, to $7,446,817 from $6,531,375.
Through the first nine months of 2009, revenues reached $37,892,598, up 102.85% compared with revenues of $18,679,751 in the first nine months of 2008. In the 2009 period the Company realized an 89.94% increase in net income to $5,872,045 compared with $3,091,465 in the first nine months of 2008.
Reflecting the recovery in the selling price of LDPE in the third quarter of 2009, through the first nine months of the year the average selling price of LDPE was $996 per ton, a 10.71% decrease from the same period last year. In the third quarter, however, the average selling price of recycled LDPE was $1,045, about matching the $1,049 per ton in last year's third quarter. This was one factor in the 139.87% increase in gross profit in the quarter, and the increased profit margin in the period which grew to 41.85% from 19.89% in the same period last year. Additionally, the Company purchased lower volumes of scrapped plastic at prices significantly lower than in the same period last year, in part reflecting lower oil prices. In the 2009 third quarter the Company also saw an approximately 20.39% increase in sales volume, selling 6,976 tons of recycled LPDE compared with 5,794 tons in the same period in 2008.
The key contributor to the revenue advance in the first nine months of 2009 was a 38.67% increase in the sales volume of manufactured LDPE to 22,515 tons from 16,256 tons in the same period in 2008. Additionally, in the first quarter of the year, in a precautionary move, the Company sold 14,033 tons of raw material at relatively low margins, which generated $7,488,370 in revenues. Reflecting improved processing techniques developed by the Company, during the first nine months of 2009 it also sold approximately 50.07% less lower margin non-LDPE scrapped plastics.
"Going forward," said Mr. Chen, "we will continue to work with suppliers to obtain more favorable terms and by placing batch orders. To further enhance margins we also will maintain our focus on labor productivity and G&A expenses. Overall, we clearly are operating in a much improved environment and are optimistic about continuing growth."
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.