China Industrial Waste (PINK:CIWT)

DALIAN, China, Oct. 20, 2011 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. (OTCBB: CIWT) ("China Industrial Waste Management" or the "Company"), a leading environmental services and solutions provider in China, today announced that it has determined to file a certification on Form 15 with the Securities and Exchange Commission ("SEC") in order to suspend its reporting obligations under Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

The Board of Directors has approved this action as a cost reduction measure. Suspending and, ultimately, terminating the Company's SEC reporting obligations will allow it to reduce the substantial legal, accounting and other expenses associated with reporting compliance and make those savings available for continued operation of the business.

"The decision to become a non-reporting public company has not been entered into lightly. The Board of Directors has sought advice from several outside resources before making the decision. Historically, the Company's stock has been negligibly traded. We plan to streamline our operations and focus more on expanding our waste processing business and increasing market share in China," said Jinqing Dong, Chief Executive Officer of the Company.

The Company is eligible to suspend its reporting obligations and deregister its common stock because it has fewer than 300 record holders of its common stock as of the date hereof and anticipate keeping the similar status in addition to its satisfaction of other eligibility criteria under Rule 12h-3 of the Exchange Act on the date of filing the Form 15. Immediately upon the filing of the Form 15, certain reporting obligations of the Company, such as its obligation to file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, will be suspended. Shares are anticipated being available for trading on the OTC Pink sheets, although there can no assurances that any trading market for the Company's securities will exist, after the Company has filed the Form 15.

Second Quarter 2011 Results

• Revenues increased 69.4% to $8.3 million 
• Gross profit increased 41.2% to $4.3 million
• Operating income increased 35.7% to $2.6 million 
• Net income attributable to the Company increased 40.1% to $1.7 million
• Diluted earnings per share from continuing operations increased 71.4% to $0.12 vs $0.07 in 2010

 

"In the second quarter 2011 we achieved another period of excellent financial results, reflecting strong overall demand for our products and services, including hazardous and non-hazardous waste disposal, sludge treatment, and recycled commodities," said Mr. Jason Dong, Chairman and Chief Executive Officer. "Through the first half of the year, our existing operations performed well across the board and we also are making significant progress on our Dagushan expansion project, which we expect to complete in late third quarter 2011. Given our recent momentum, we remain optimistic for continued strong performance in the second half of the year."

Business Outlook

The Company is currently building in Dalian one of the most advanced one-stop service centers for industrial solid waste treatment in China (the "Dagushan Expansion Project"). The construction of the Dagushan Expansion Project is now 95% complete and management expects the center to become operational late in the third quarter of 2011. Once fully operational, this new facility will double the Company's hazardous industrial solid waste treatment capacity to 114,000 tons per year.

First Quarter Results:

• Revenues increased 48.1% to $6.1 million
• Gross profit increased 15.2% to $3.1 million
• Operating income increased 10.3% to $1.7 million
• Net income attributable to the Company increased 101.4% to $1.2 million
• Diluted earnings per share doubled to $0.08

"We are pleased to announce strong financial performance for the first quarter and begin 2011 on a strong note. We achieved substantial revenue, net income, and EPS growth," said Mr. Jason Dong, Chairman and Chief Executive Officer.  "In the first quarter of 2011, we had increased demand for waste disposal services from our customers; our sales of recycled commodities increased as a result of favorable market prices; and our sludge treatment business generated additional service fees. In addition, our discarded domestic appliance disposal operations contributed to our revenues."

The Company reaffirms that for the first half of 2011, the Company expects revenues of between $10 million and $12 million and net income attributable to the Company of between $2.0 million and $2.5 million.

We expect our pending projects such as the Dagushan Expansion Project with the Dalian government will require us to invest an aggregate of approximately $4.3 million in 2011. We expect to fund these projects through a combination of cash generated from operating activities, bank loans, government subsidies, and sales of our securities.

By press release dated February 23, 2011, we announced our planned presentation at the Rodman & Renshaw Annual China Investment Conference, scheduled for March 6-8 in Shanghai, China.

DALIAN, China, March 2, 2011 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. today announced its unaudited preliminary results for the fiscal year ended December 31, 2010.

• For the fiscal year ended December 31, 2010, the Company's total unaudited revenue increased 98.1% to approximately $21 million from $10.6 million for the year ended December 31, 2009.
• Full year 2010 unaudited net income was approximately $4.5 million, up 125% from $2.0 million for the year ended December 31, 2009.

The Company expects to release its audited financial results when it files its Annual Report on Form 10-K on or before March 29, 2011.

GeoTeam® Note: This guidance implies 2010 vs. 2009 (we need to wait for the release of the 10K to determine if guidance was non-GAAP).

Year end EPS of: $0.26 vs. $0.16 

Fourth quarter EPS of $0.10 vs. $0.05

Third Quarter Highlights

• Revenues increased 47.6% to $4.6 million compared to the third quarter of 2009

• Gross profit increased 24.0% to $2.4 million

• Operating income increased 69.9% to $1.3 million

• Operating margin increased to 29.1% from 25.3%

• Net income increased 46.8% to $1.0 million, or $0.06 per diluted share, compared to $0.7 million, or $0.05 per diluted share for the same period last year.

"Our strong third quarter results were the result of the continued growth of our Dontai Organic sludge treatment business and higher selling prices and sales volumes of recycled commodities," said Mr. Jason Dong, Chairman and Chief Executive Officer.  "While our gross profit margin was off slightly as our sludge treatment business has not yet reached full capacity, every other significant financial measure showed improved.The need within China for environmentally-sound waste disposal methods is at a historic high and we believe we are well-positioned to provide solutions to this growing market. "

Business Outlook

The Company's Dalian Dongtai subsidiary is currently building one of the most advanced one-stop service centers for industrial solid waste treatment in China (the "Expansion Project"). The construction of this Expansion Project is now 80% complete and we expect it to become operational in the second quarter of 2011. Once fully ramped up, this new facility will provide Dalian Dongtai with 114,000 tons per annum of industrial solid waste treatment capacity, which is double the capacity of the current plant.

The Company's Dongtai Organic operates the first BOT (Build-Operate-Transfer) plant in China using anaerobic fermentation technology. This is a build-operate-transfer or 'BOT' project with a 20-year franchise period. During this period, this sludge-to-energy plant is expected to dispose of the sludge derived from all of the sewage treatment plants located in urban Dalian City. This plant has a designed capacity of 600 tons per day and is expected to generate approximately 11,000 cubic meters of methane gas once it reaches its full capacity, which is expected to happen within two years. As a first-mover in this space in China and having Dongtai Organic function as a demonstration project in Dalian, the Company is well positioned to promote our sludge treatment facility engineering business across the country.  The Company's expertise is in-line with the Chinese government's goal of encouraging sustainable and environmentally friendly development.

Mr. Dong concluded, "We are optimistic about our prospects.  The environmental protection industry in China is growing faster than China's overall rapid GDP growth rate and we are an industry leader in this rapidly developing industry.  Our Dalian Dongtai business has a strong track record of developing and operating industrial waste treatment systems with over 770 customers, including major multinational companies. From our dominant position in Dalian, a major industrial center that is a hub for shipbuilding and other heavy industries, we intend to continue to build out our environmentally-conscious waste processing capabilities and look forward to doubling our capacity in this area with our new Expansion Project which we expect to come online next year.  

"We have focused our efforts on developing next generation solutions for China's waste challenges, including a state-of-the-art anaerobic sludge treatment facility operated by Dongtai Organic.  We anticipate that the Dongtai Organic facility will continue to positively contribute to our financial performance as the project approaches full capacity.  In addition, we are actively seeking new opportunities to utilize our expertise in this area to lead similar projects in other regions of China."

We intend to use our available funds as working capital and to expand and develop our current lines of business. We believe that our available funds will provide us with sufficient capital for at least the next twelve months; however, to the extent that we make acquisitions, we may require additional capital for the acquisition or to support the operations of the combined companies.

Second Quarter 2010 Results:

• For the three months ended June 30, 2010, revenues were $4.9 million compared to $2.5 million in the same period last year, an increase of 100.8%.
  
• Net income increased 178.3% to $1.2 million from $0.4 million in the same period last year. Diluted earnings per share increased 141.5% to $0.07 from $0.03 in the same period last year.

"China Industrial Waste Management had a strong second quarter as we again delivered robust growth with strong increases in revenue and earnings," said Mr. Jason Dong, Chief Executive Officer. "Sales continued to rise as our customers increased their manufacturing production in the wake of the global recovery. Our Dongtai Organic business remained a meaningful contributor to our revenues, and our sales and margins for recycled commodities grew in an environment where prices were significantly higher than last year. We are pleased with our performance and believe it is a testament to the high level of services we provide for our customers and our leadership position in the fast growing industrial waste management market in China."

Business Outlook for 2010

Mr. Dong added, "As we enter the second half of 2010 we are proud of the progress our business has made and optimistic about the future of our company. Our core Dalian Dongtai solid waste treatment business has rebounded strongly from the lows of last year as our customers' production volumes continue to recover and we see this trend continuing at least through the end of 2010. To further bolster our capabilities in this market we are currently building one of the most advanced one-stop service centers for industrial solid waste treatment in China. The construction of this Expansion Project is now 70% complete and we expect it to become operational in the fourth quarter of this year. Once fully ramped up, this new facility will provide us with 114,000 tons per annum of industrial solid waste treatment capacity, which is double the capacity of our current plant.

"Overall, as we look at our business going forward, we believe we have laid the groundwork for future growth. We have invested considerable resources in expanding our capacity and capabilities, and we are seeing the early rewards as we execute against our plan. Dongtai Organic's sludge processing facility and our soon-to-open Expansion Project are among the most advanced in China, and our other engineering projects demonstrate our considerable expertise and abilities. We believe our strong quarterly and first half results are evidence that we are on a compelling and profitable path in what we believe is a very attractive growth industry in China."

  China Industrial Waste Management  today announced that the Company's 90%-owned subsidiary Dalian Dongtai Industrial Waste Treatment Co., Ltd. ("Dalian Dongtai") signed a major waste management contract with a national petrochemical firm located in Liaoning Province (the "Customer").

    Under the terms of the contract, beginning on September 1, 2010, Dalian Dongtai will treat and dispose of the industrial waste sludge and slag generated by the Customer's production over the next 30-months, which the Customer estimates will total approximately 40,000 tons.  Based on this expected volume, Dalian Dongtai anticipates it will generate an additional $3.65 million in revenues from this Customer over the life of the 30-month contract.    

    "We are pleased to announce this major contract win," said Mr. Jason Dong, Chief Executive Officer. "Our selection by this prestigious customer is a testament to our leadership position and strong reputation in Liaoning Province.  We expect this contract to significantly boost our financial performance and we anticipate that this will be the first of many opportunities in the petrochemical industry."

China Industrial Waste Management continues to see evidence of a strong recovery from the recession. The Company's industrial customers are raising their production levels from the lows of last year, prices of recycled commodities are increasing, and the Company expects these trends to continue through the balance of the year.

For the second quarter of 2010, the Company expects:

• revenues of between $4 million and $4.5 million
• net income of between $1.0 million and $1.2 million.

For full year 2010, the Company continues to expect:

• revenues of between $15.0 million and $18.0 million
• net income of between $4.5 million and $4.8 million.

Mr. Dong added, "We are optimistic about our business prospects going forward. Our customers have returned to healthy production volumes and we see this trend continuing. We are also starting to benefit from the investments we made in expanding into sludge treatment via our Dongtai Organic BOT plant which is now starting to ramp up and will account for a growing percentage of our revenues going forward. Come the fourth quarter, our Dongtai Expansion project is expected to come online and begin contributing to our financial results. Overall, we believe we are well positioned to capitalize on the growing market for industrial waste treatment in China and look forward to delivering continued strong results for our shareholders."

The Company has seen signals of a strong recovery from the recession since the third quarter of 2009, as the demand from existing customers and new customers increased significantly, and the Company expects this trend to continue in 2010 and thereafter.

In terms of specific projects that will contribute to the Company's growth, Dalian Dongtai commenced the construction of its expansion project in July 2008. The total investment for the project was estimated to be $16 million, 30% of which (approximately $4.8 million) is expected to be subsidized by the central government. To date, $1.5 million has been released to the Company, and the balance is expected to be disbursed consistent with construction progress. The project is approximately 50% complete, and upon completion, which is expected in the fourth quarter of 2010, Dalian Dongtai's industrial solid waste treatment capacity is anticipated to increase to 114,000 tons per annum, or twice its existing capacity.

In accordance with Dongtai Organic's franchise agreement with the local government, Dongtai Organic is entitled to process all of the sludge generated from sewage treatment plants in the urban area of Dalian City. The project generates revenues from two sources: (i) fees which are based on the volume of sludge processed and (ii) fees from the sale of biogas (Methane) to the Dalian Gas Company. In the first quarter of 2010, Dongtai Organic received its first payment of $120,000 from the sale of biogas (Methane) and its first payment of $185,000 for processing municipal sludge in Dalian City. The Company expects Dongtai Organic to be an increasingly important contributor to the Company's financial performance in 2010.

For full year 2010, the Company expects revenues of between $15.0 million and $18.0 million and net income of between $4.5 million and $4.8 million.

Mr. Dong added, "The growth drivers of our business in 2010 will be a continued increase in industrial waste processing volumes from our existing customer base as China's export sector continues on the path of recovery from last year's slowdown and from our Dalian Dongtai expansion project, which is scheduled to be completed in the fourth quarter of this year; a broadening of our client base to new customers as we grow our capabilities and further refine our high tech waste management offerings; and the ramp up of our Dongtai Organic sludge treatment facility. Overall, we are optimistic and expect to see a continued recovery and growth in our business in 2010 and thereafter."

Source: PR Newswire (April 14, 2010)

"Our full year 2009 sales were down from 2008 because most of our customers are in China's export sector, an area of the market that was negatively impacted by the global economic slowdown," said Mr. Jinqing Dong, Chief Executive Officer. "However, the global economy and the export sector in China continue to recover from the trough of the first quarter of 2009. Our business is growing as our customers ramp up their production and exports from the very low levels of early last year, driving an increase in demand for our waste management services. Throughout this difficult period we have remained profitable and operating cash flow positive, and we expect our business to continue on this recovery path in 2010."

The GeoTeam® will track the China Industrial Waste story due to the following commentary in a recent press release:

'With the economic recovery in China, we expect that the industrial waste management market will increase significantly from levels seen at the beginning of this year,' commented Mr. Dong. 'We look forward to improved second half results as volumes for our industrial waste treatment business increase and prices for recycled products recover.'

Source: PR Newswire (August 17, 2009)

The company recently reported increased sales and earnings for 2007. The company is currently paying no taxes. The GEO team has adjusted Net Income for a standard tax rate and one time gains/charges.

While net income growth of 20% was shy of the preferred GEO minimum 30% thresh hold, company commentary is very strong. Furthermore, the company has issued guidance, which will translate into 2008 fully taxed adjusted EPS of $.38 up 179% from 2007, well above our minimum growth preference.

The stock appears to be undiscovered, as it currently trades on the OTC Bulletin Board. The valuation scenarios outlined in this update could be conservative as investors may assign the stock an above average P/E, due to the estimated 2008 tax adjusted EPS growth rate of 179%.

GEO Notes:

The company only issued net income guidance for 2008. The GEO Team used 13.2 million outstanding shares in order to derive a 2008 tax adjusted EPS number.

The GEO team needs to verify what the outstanding share count for 2008 will be before making a large investment commitment in this stock.

The following excerpt, from the recent 10K, could infer that the share count could increase, due to 2008 capital needs, potentially leading to EPS dilution and a change in the valuation scenarios:

"We anticipate that our various projects will require us to invest an aggregate of approximately RMB 42 million (approximately $5.8 million). We will fund this investment through a combination of internally generated funds, bank loans and sales of our securities."

The GEO team holds a position in CIWT,

Short-Term scenario based on P/E of 25 on trailing EPS: $3.40

Short-Term scenario based on P/E of 15 on four quarters forward EPS: $5.70

Long-Term scenario based on P/E of 25 on four quarters forward EPS: $9.50

Scenario based on P/E equaling past EPS growth rate: $2.72
Scenario based on P/E equaling future EPS growth rate: $24.34



Short-Term defined as now.
Long-Term- defined as at the end of 12 months.

These scenarios are not intended to be investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions. For more on the GEO Team's investment philosophy and discipline please click on the following link.


EPS numbers have been adjusted to reflect a fully taxed scenario and any one time charges or gains. Future EPS numbers have been obtained from public sources.

The GEO team feels that an adjustment to net income to reflect a standard tax rate is necessary for investors to make proper investment decisions.

2007 Financial highlights:

-- Revenues up by 49.5% to $9,539,507.

-- Reported Net Income up by 58.4% to $3,689,207.

-- Reported Full year fully-diluted EPS rises to $0.28 per share, up by 56% from $0.18 per share in 2006.

-- 34% operating margins.

The GEO Team has made the following adjustments to net income in order to get a clearer picture of the company's financial picture:

- Applied a standard tax rate.
- Subtracted $860,460 of one time Reimbursed legal costs.

These adjustments yield a fully taxed adjusted 2007 net income figure of $1.8 million ( up 20%) and EPS of $.136 ( up 20%).