China Clean Energy (PINK:CCGY)

FUQING CITY, China, May 16, 2011 /PRNewswire-Asia-FirstCall/ -- China Clean Energy Inc. announced that its Board of Directors has authorized the repurchase of up to $1 million of its outstanding common shares between now and May 16, 2012, subject to market and other conditions.  Under this plan, the Company can repurchase shares from time to time for cash in open market purchases in accordance with applicable federal securities laws.

First Quarter 2011 Highlights

• Revenue totaled $19.0 million, up 77% from $10.7 million for the first quarter in 2010
• Gross profit totaled $4.3 million, up 192% from $1.5 million in the first quarter of 2010
• Gross margin was 22.9%, compared to 13.8% in the same period in 2010
• Operating income was $3.6 million, up 260% from $1.0 million in the first quarter 2010
• Net income was $2.9 million or $0.09 per fully-diluted share, compared to net income of $0.4 million or $0.01 per fully-diluted share in the first quarter 2010
• Adjusted net income (Non-GAAP) was $2.7 million, or $0.09 per fully-diluted share for the first quarter of 2011, compared to $0.8 million or $0.03 per fully- diluted share in the comparable period of 2009. A table reconciling adjusted net-income, a non-GAAP measure, to its nearest GAAP measure is available elsewhere in this release.

"We are delighted to report another quarter of strong performance, as we continue to establish ourselves as a unique, renewable resources-based leader in the biodiesel and specialty chemicals sectors," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "As we look to the future, we expect to continue to grow our operating results as we benefit from increased capacity attributable to our Jiangyin plant, improved product quality and an even greater migration to our premium, higher margin products."

Business Outlook

"The demand for specialty chemicals continues to be strong in China, driven by consumer demand for both everyday and more sophisticated products. China is a rapidly growing specialty chemicals market, second only in size to that of the U.S. In addition, biodiesel continues to be an early-mover, relatively clean energy alternative to imported oil. China Clean Energy is well-positioned in both segments to capitalize upon their strong trends," stated Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "We are seeking to acquire an upstream feedstock supplier in the second half of 2011 to secure supply and expand our gross margins. Our raw materials sourcing sets us apart as we use renewable resources to produce our specialty chemicals and biodiesel unlike other industry participants who use depleting commodities such as oil, natural gas or coal. We expect to be able to finance an eventual transaction with cash on hand as well as cash flow from operations."

"Our increased production capacity as well as our new facility's geographical positioning will continue to promote strong operating results. We plan to continue to deliver positive results in the quarters ahead. We reiterate our guidance for 2011, and expect

• revenue of $75 million 
• operating income of $14 million 
• adjusted earnings reach $0.36 per fully-diluted share compared to $0.25 in 2010.

Fourth Quarter Results:

• Revenue totaled $18.1 million, up 271% from $4.9 million for the fourth quarter in 2009
• Gross profit totaled $4.3 million, up 378% from $0.9 million in the fourth quarter of 2009. Gross margin increased to 23.7%.
• Operating income was $3.8 million, compared to $0.3 million in the fourth quarter 2009
• Net income was $ 2.2 million or $0.07 per fully-diluted share, compared to net income of $0.6 million or $0.02 per fully-diluted share in the fourth quarter 2009
• Adjusted net income (Non-GAAP) was $2.9 million, or 0.09 per fully-diluted share for the fourth quarter of 2010, compared to $0.3 million or $0.01 per fully- diluted share in the comparable period of 2009. A table reconciling adjusted net-income, a non-GAAP measure, to its nearest GAAP measure is available elsewhere in this release.

Fiscal Year 2010 Highlights

• Total revenue increased to $59.0 million, up 270% from $15.9 million for the full year 2009
• Gross profit totaled $12.2 million, up 260% from $2.9 million for the full year 2009
• Gross margin was 20.7%, up from 18.5% for the full year 2009
• Operating income was $10.2 million, up from $0.9 million for the full year 2009
• Net income was $6.4 million, compared to a loss of $0.3 million for the full year 2009
• Earnings per fully-diluted share were $0.20, compared to a loss of $0.01 in 2009
• Adjusted net income (Non-GAAP) was $7.8 million, or $0.25 per fully-diluted share
• Cash and cash equivalents totaled $13.6 million at year end

"We are delighted with our results for the fourth quarter and for the fiscal year 2010, reflecting the successful ramp up of our Jiangyin plant, as we gradually expanded production to meet demand from existing as well as new customers," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "As we look to the future we expect to continue to grow our top- and bottom-line as we benefit from our increased capacity, improved product quality, and growing customer acceptance for our premium products, such as purity dimer acid and high performance adhesives."

"The macroeconomic environment in China remains positive, and we are excited with the opportunities to continue to deliver positive results in the quarters ahead. We expect our revenue and operating income in 2011 to be approximately $75 million and $14 million, respectively, as we benefit from our increased capacity as well as improving sales mix. We would also expect to see adjusted earnings reach $0.36 per fully-diluted share in 2011," stated Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO.

China Clean Energy expects revenue to reach $75 million and operating income to reach $13 million in fiscal year 2011.

"During 2010 we gradually and successfully ramped up our Jiangyin plant to full capacity, and improved the quality of our products as a result of increased scale and more advanced technology in our manufacturing process," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "Going into 2011 we expect to make fuller use of our expanded capacity. We also expect to increase shipments of high margin products which command premium pricing, including high purity dimer acid and high performance adhesives. As a result, we are hopeful to deliver improved top- and bottom-line results for the year."

Preliminary Fourth Quarter Report:

• Revenue is expected to be in the range of $17.8 million to 18.2 million, compared to previous guidance of $17.3 million, and up from $4.9 million in the fourth quarter of 2009.
• Operating income is expected to be in the range of $3.6 million to $3.8 million, compared to previous guidance of $3.5 million, and up from $0.3million in the fourth quarter of 2009.
• Adjusted earnings per share, excluding non-cash charges associated with changes in the fair value of warrant liabilities, impairment of fixed assets, as well as stock-based compensation, is expected to be in the range of $0.08 to $0.10.

"We are pleased to report another quarter of results that exceeded our expectations. Clearly, by any measure, the ramp-up of our Jiangyin plant has been a tremendous success and positions us well to benefit from the positive macro-economic environment in China as well as from the on-going recovery in the global economy," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "We look forward to provide additional detail and to share our plans and strategies for the quarters ahead at our earnings conference call to be held at the end of March 2011."

FUQING CITY, China, March 2, 2011 /PRNewswire-Asia-FirstCall/ -- China Clean Energy Inc. announced today that the Company began trading on the OTCQB, a marketplace developed by the OTC Markets Group, as of February 23, 2011 under the ticker symbol CCGY.

FUQING CITY, China, Jan. 11, 2010 /PRNewswire-Asia-FirstCall/ -- China Clean Energy Inc. today announced the appointment of Dr. Constantine Konstans and Mr. Yu Lin as independent directors for the Company.

"We are delighted to announce the further appointments of Dr. Konstans and Mr. Lin as our independent directors after appointing Mr. Carl Mudd last week," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "We believe Dr. Konstans' rich experiences and solid academic background will bring us more advanced management mindset. Mr. Lin's deep understanding of the chemicals industry will also benefit our business, both at the operating and strategic levels. We plan to continue to work towards a listing on a senior stock exchange in the weeks ahead."

Third Quarter 2010 Highlights

• Revenue totaled $16.0 million, up 300% from the same period in 2009 and up 12.9% from the second quarter 2010

• Gross profit totaled$3.7 million, up 382% from the same period in 2009 and up 35.4% from the second quarter 2010

• Gross margin was 23.2%, compared to 19.3% in the same period in 2009 and 19.4% in the second quarter 2010

• Operating income was $3.2 million, up 1,046% from the same period in 2009 and up 51.1% from the second quarter 2010

• Net income was $1.8 million, or $0.06 per fully-diluted share, compared to a net loss of $0.7 millionin the third quarter 2009

• Adjusted net income, excluding change in fair value of warrant liabilities and stock-based compensation, was $2.2 million, or $0.07 per fully-diluted share, compared to adjusted net income of $0.3 million, or $0.01 per fully-diluted share in the third quarter 2009

• Cash and cash equivalents totaled $9.1 million at the end of September 2010, compared to $4.2 million at year-end 2009 and $7.3 million at the end of June 2010

"In the third quarter we again delivered results that exceeded our expectations as we continued to successfully ramp production at our Jiangyin plant," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "Our record results for the quarter were driven by higher volume and improved margins in our specialty chemicals business as we increased sales of high margin products such as high-purity dimer acid and multi-purpose hot melt adhesive, and raised prices of some other of our specialty chemical products to reflect our improved quality, as we benefited from strong demand from our existing customer base. Looking ahead, demand for our products remains strong and we expect to sustain our growth momentum into the fourth quarter."

Business Outlook

China Clean Energy's Jiangyin plant produced 8,935 tons of specialty chemicals and 3,213 tons of biodiesel in the third quarter of 2010, representing 89% and 26% of the estimated full capacity, respectively.  Jiangyin plant's output in the quarter accounted for approximately 90% in total volume and 88% in total revenue.

Mr. Ou added, "Based on our existing order book, we expect to deliver

• Revenue of approximately $17.3 million in the fourth quarter 2010, representing an increase of approximately 253% over the fourth quarter 2009.

• Operating income is expected to reach $3.5 million, up from $0.3 millionin the fourth quarter 2009.

 For the full year 2010,

• Revenue is expected to reach $58.1 million, representing a year-over-year increase of 265%;

• Operating income is expected to reach $9.9 million, compared to $0.9 million in 2009.

We also remain committed to list our shares on a senior U.S. exchange, and hope to announce our progress towards this goal in the weeks ahead."

• During the quarter ended June 30, 2010, we had net sales of $14,140,437 (26% from biodiesel sales and 74% from specialty chemicals sales), as compared to net sales of $4,259,747 (20% from biodiesel sales and 80% from specialty chemicals sales) during the quarter ended June 30, 2009, an increase of approximately 232%. The increase in revenue was driven by the increased capacity provided by:
  
  • our new facility in Jiangyin
  • the global economic recovery.

The average selling price was approximately $1,406 per ton for specialty chemicals and approximately $682 per ton for biodiesel, as compared to the quarter ended June 30, 2009, in which the average selling price was approximately $1,289 per ton for specialty chemicals and approximately $569 per ton for biodiesel. This increase in average selling price for both biodiesel and specialty chemicals was driven by the increased demand for those products.

• Net income was $1,949,590, or $0.063 per basic and diluted share, for the quarter ended June 30, 2010, which included a non-cash income of $363,110 due to change in fair value measurement of the warrants issued in connection with our 2008 private placement. We recorded a net loss of $76,832, or $0.002 loss per basic and diluted share, for the quarter ended June 30, 2009. The increase in net income was attributable mainly to the increase in sales volume of both specialty and biodiesel chemicals and the increase in the average selling price of both products and higher gross margin for biodiesel products.
  
• Adjusted EPS was $0.05 vs. (0.01).

As of December 2009, the trial production phase at our new plant had been successfully completed and as of January 2010, the new plant had commenced commercial production operating on a commercial basis. As previously disclosed, the new plant has a production capacity of 100,000 tons of biodiesel per year or 30,000 tons of specialty chemicals per year or a combination of biodiesel and specialty chemicals for a total output of 70,000 tons per year. The new plant increases our specialty-chemicals capacity by 30,000 tons to a total of 40,000 tons annually.

Liquidity:

We expect that current capital and other existing resources will be sufficient only to provide a limited amount of working capital. On its own, revenue from our operations is not currently sufficient to fully fund our operations and planned growth. Currently, we have sufficient working capital to operate at full capacity until the end of the year 2010. We expect that we will require approximately an additional $10,000,000 of working capital to continue to expand our business beyond the initial phase. The Company plans to continue its growth by acquiring an upstream feedstock supplier to mitigate its feedstock supply risk and feedstock price fluctuation. If we are unable to obtain required additional financing, we may be forced to restrain our growth plans or cut back existing operations.

We intend to repay our debt and other obligations through cash generated from our business operation. To the extent that we have excess funds on hand, we intend to reinvest such excess funds in additional equipment.

Preliminary results for the first quarter ended March 31, 2010.

"Our strong results for the first quarter reflect our focused efforts over the past two years to design, build and commission our Jiangyin plant," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "As we discussed in the past, we received positive feedback, which have translated into substantial increase in orders from our existing customers as well as initial orders from new customers. In addition, our increased production scale has opened up new marketing opportunities to sell our biodiesel into power generation applications. We expect our current growth momentum to continue as we strive to expand our order book to support the ramp-up of production to full-capacity in the quarters ahead."

Business Outlook

China Clean Energy's Jiangyin plant was commissioned in December of 2009 and was operating in commercial production mode during the whole of the first quarter 2010. During the quarter total shipments of specialty chemicals and biodiesel amounted to 10,217 tons, with Jiangyin plant accounting for 55% of total. Management continues to expect ramp-up of the new plant to 50% of capacity by the end of the second quarter of 2010 and to full capacity by the end of the year 2010. As previously disclosed, the Jiangyin plant has capacity to produce 30,000 tons of specialty chemicals capacity and 40,000 tons of biodiesel.

Mr. Ou added, "We are very happy with the operating performance of our new plant, which is exceeding our expectations. We currently expect to deliver revenue of approximately $11.5 million in the second quarter of 2010, representing an increase of approximately 167% over the comparable period in 2009. As we look to the future, we intend to continue to focus on gradually ramping up our capacity to meet demand from new and existing customers. We also intend to evaluate opportunities to acquire feedstock suppliers to reduce our exposure to raw material supply disruptions and protect our margins in the quarters and years ahead."

On April 1, 2010 CCGY reported 2009 financial results.

^a Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.The GeoTeam® non-GAAP figures apply a 25% and 36% tax rate for Chinese and United States companies respectively.

The company also provided details about bio-diesel and specialty production:

*Actual company projection for 2010 first quarter production
** Projected plant capacity for specified time period. Actual quarterly production figures not supplied for 2nd through 4th quarters.

***As of end of 4th quarter 2009

Based on the above assumptions we feel CCGY has a chance to report sequentially higher tax adjusted EPS of $0.02 for its 2010 first quarter. At full capacity, using similar assumptions, CCGY seems capable of generating $43 million in revenues and tax adjusted EPS of $0.14, assuming no dilution (albeit far fetched assumption when dealing with China Hybrid stocks). These assumptions do not include possible margin expansion. Given these findings, investors may take CCGY shares to its book value per share of $1.01. In the long-term, we are not sure how Wall Street will value this low margin business.

Disclosure: GeoTeam Long CCGY

Mr. Ou added, "We expect to see more demand from our existing customers. The Jiangyin plant enables us to provide three times more specialty chemicals and four times more biodiesel and with better quality. With the smoothly running operation in our new plant, we are confident to exceed our recently released revenue guidance for the first quarter of 2010 of RMB50 million (approximately $7.3 million), representing an increase of approximately 150% over the comparable period in 2009. The expected sales volume in the first quarter is approximately 4,000 tons for biodiesel and 5,000 tons for specialty chemicals, separately."

Source: PR Newswire (April 1, 2010)

We have been monitoring the China Clean Energy story  for sometime now.  We believe it is time to place CCGY on the GeoSpecial on the radar list.

We originally were attracted the company due to make good arrangements:

"In connection with our January 9, 2008 private placement, Tai-ming Ou, our Chief Executive Officer and Chairman, agreed to place 1,042,012 shares of common stock held by him into an escrow account, with such shares to be released to the investors in such private placement should we fail to either (i) commence the production of biodiesel at our production facility in Jiang Yin, People’s Republic of China on or before January 1, 2009 or (ii) record at least $14,000,000 of adjusted net income for the fiscal year ending December 31, 2009."

However, construction delays occurred:

"As a result of construction delays, we failed to commence the production of biodiesel at our production facility in Jian Yin on or before January 1, 2009 and on January 30, 2009 these 1,042,012 shares of common stock held by Mr. Ou were disbursed, pro rata, among the private placement investors."

Fast forward one year and the company is  finally in a position to generate revenues from its tJian Yin production facility.

"We commenced the construction of the new Jiangyin plant in December 2007 and completed construction in October 2009. The trial production phase at its Jiangyin plant has been successfully completed and as of January 2010 the new plant is operating on a commercial basis."

"The Jiangyin plant will increase the Company's specialty-chemicals capacity by 30,000 tons per year to a total of 40,000 tons per year. In addition, the new plant will increase biodiesel capacity by 40,000 tons per year to 50,000 tons per year. Management anticipates that for the first quarter of 2010, China Clean Energy will produce a total of 4,000-4,500 tons of specialty chemicals and 3,000-4,000 tons of biodiesel in both plants. Management presently expects revenue for the first quarter of 2010 to be RMB 50 million (approximately $7.3 million), representing an increase of approximately 150% over the comparable period in 2009."

"We expect our existing customers to absorb up to 50% of our increased specialty-chemicals capacity within the next 6 months, and intend to strengthen our business development efforts to ensure a ramp-up to full capacity by the end of 2010."

Further due diligence is required to gain an understanding of profit potential in this low margin business. We will request an interview with management. For the mean time it's quite possible that investors may bid CCGY shares up, to its book value per share of $0.98 , as an element of uncertainty has been taken off the table.

Warrants: 6.2 million with a strike price of $2.00

China Clean Energy announced today that the trial production phase at its Jiangyin plant has been successfully completed and as of January 2010 the new plant is operating on a commercial basis. Additionally, the Company's administrative headquarters is now located at the new plant.

As previously disclosed, the Jiangyin plant will increase the Company's specialty-chemicals capacity by 30,000 tons per year to a total of 40,000 tons per year. In addition, the new plant will increase biodiesel capacity by 40,000 tons per year to 50,000 tons per year. Management anticipates that for the first quarter of 2010, China Clean Energy will produce a total of 4,000-4,500 tons of specialty chemicals and 3,000-4,000 tons of biodiesel in both plants. Management presently expects revenue for the first quarter of 2010 to be RMB 50 million (approximately $7.3 million), representing an increase of approximately 150% over the comparable period in 2009.

Source: PR Newswire (January 7, 2010)