CHOP Beats Analyst Estimates for Q4 2009

The Maxim Group estimates were for $56.4m in revenues and $7.9 Million in net income.  CHOP beat estimates producing $57.2 million in revenues and $11.4 million in net income.

    Fourth Quarter 2009 Highlights
    -- Revenue increased 45.3% to $57.2 million from $39.4 million in the
       fourth quarter of 2008
    -- Gross profit increased 70.3% to $17.0 million from $10.0 million
    -- Gross margin increased 430 basis points to 29.7% from 25.4%
    -- Operating income increased 80.9% to $15.7 million from $8.7 million
    -- Operating margin increased 550 basis points to 27.5% from 22.0%
    -- Net income attributable to common stockholders increased 111.5% to
       $11.4 million, or $0.27 per diluted share, from $5.4 million, or $0.18
       per diluted share
    -- Cash and restricted cash of $79.6 million and $37.5 million,
       respectively, as of year-end 2009, compared to $42.6 million and $24.7
       million, respectively, as of year-end 2008
    -- Accounts receivable of $4.8 million as of year-end 2009, compared to
       $10.3 million at year-end 2008
    -- Working capital of $49.3 million as of year-end 2009 versus a working
       capital deficit of $9.4 million at the end of 2008
    -- Shareholders' equity of $87.0 million as of year-end 2009, compared to
       $12.5 million at the end of 2008

Business Outlook

China Gerui’s existing production facility is running at very close to full capacity and for fiscal year 2010 the Company expects to focus on expanding its production lines in order to meet the demand for its products in the Chinese domestic market. In addition to the high-precision cold-rolled steel strip products, the Company will focus on developing other high-margin steel products in the cold-rolled steel category, such as wide strips and sheets.

The Company is on schedule with its plan to construct a new production facility, including two 75,000 ton chromium-coated production lines to be completed by the second half of 2010 and one 100,000 ton zinc-coated production line to be completed by the end of 2011. This expansion is expected to increase the Company’s annual production capacity to 500,000 tons by 2011.

Disclosure:  LONG CHOP