China Carbon Graphite Group Inc (OTC:CHGI)

WEB NEWS

Friday, September 15, 2017

Comments & Business Outlook

SHANGHAI, Sept. 14, 2017 /PRNewswire/ -- China Carbon Graphite Group, Inc. (OTC: CHGI) ("China Carbon" or the "Company"), a producer engaging in the research and development, production and sales of graphene and graphene oxide, today announced a pilot scale production of high quality graphene oxide was successfully undertaken in a collaboration with Hunan University.

The Company has collaborated with Hunan University on the graphene research since 2012, and was able to previously produce graphene oxide in a multiple-step process. Now the Company integrates multiple steps into only one process in a less than medium pilot scale.

"We are pleased to achieve this great success. We believe it is an important milestone for the Company and has laid a sound foundation for us to take further steps so as to deploy a full automotive large scale pilot production in this industry field in the near future." said Donghai Yu, Chief Executive Officer of China Carbon.

He continued, "market demands for graphene are expected to be between $195 million to $1.3 billion with high growth rate in the next 5 years beginning from 2018. It is our vision to produce 10,000 metric tons of graphene oxide once we secure sufficient capital support."


Thursday, May 12, 2016

Comments & Business Outlook

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2016 and 2015

(Unaudited)

 

    Three months ended
March 31,
 
    2016     2015  
             
Sales   $ 112,612     $ 21,415  
                 
Cost of Goods Sold     98,385       5,286  
                 
Gross Profit     14,227       16,129  
                 
Operating Expenses                
Selling expenses     5,044       4,808  
General and administrative     89,387       105,666  
Total operating expenses     94,431       110,474  
                 
Loss from continuing operations before other income (expense) and income taxes     (80,204 )     (94,345 )
                 
Other Income (Expense)                
Interest expense, net     (1,026 )     (146 )
Other income (expense), net     20,544       125  
Total other expense (income), net     19,518       (21 )
                 
Loss from continuing operations before income taxes     (60,686 )     (94,366 )
                 
Income Tax Expense     -       -  
                 
Net loss     (60,686 )     (94,366 )
                 
Other Comprehensive Income                
Foreign currency translation gain (loss)     (1,109 )     1,022  
Total Comprehensive Loss   $ (61,795 )   $ (93,344 )
                 
Share Data                
Net loss per share – basic and diluted   $ (0.00 )   $ (0.00 )
                 
Weighted average common shares outstanding, basic and diluted     33,737,243       33,670,518  

Tuesday, April 12, 2016

Comments & Business Outlook

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

For the Years Ended December 31, 2015 and 2014

 

 

    Years ended
December 31,
 
    2015       2014  
             
Sales   $ 323,369     $ 281,620  
                 
Cost of Goods Sold     244,993       163,309  
Gross Profit     78,376       118,311  
                 
Operating Expenses                
Selling expenses     26,794       43,155  
General and administrative     958,895       891,808  
Bad debt expense – related party     1,543,734       -  
Total operating expenses     2,529,423       934,963  
                 
Loss from continuing operations before other income (expense) and income taxes     (2,451,047 )     (816,652 )
                 
Other Income (Expense)                
Interest expense     (2,117 )     (2,426 )
Interest income     -       95  
Other income (expense), net     82,699       594  
Change in fair value of warrants     -       13,467  
Total other expense (income), net     80,582       11,730  
                 
Loss from continuing operations before income taxes     (2,370,465 )     (804,922 )
                 
Income Tax Expense     -       -  
                 
Net loss from continuing operations     (2,370,465 )     (804,922 )
Discontinued operations, net of income taxes     -       (5,311,304 )
Net loss     (2,370,465 )     (6,116,226 )
                 
Other Comprehensive Income                
Foreign currency translation gain (loss)     (60,107 )     334,365  
Total Comprehensive Loss   $ (2,430,572 )   $ (5,781,861 )
                 
Share Data                
Basic and diluted loss per share                
Continued operations   $ (0.07 )   $ (0.03 )
Discontinued operations   $ 0.00     $ (0.16 )
Net loss per share – basic and diluted   $ (0.07 )   $ (0.19 )
                 
Weighted average common shares outstanding, basic     33,670,518       31,410,507  
                 
Weighted average common shares outstanding, diluted     33,670,518       31,410,507  

Monday, November 16, 2015

Comments & Business Outlook

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

For the Nine Months Ended September, 2015 and 2014

(Unaudited)

 

 

    Three months ended September 30,     Nine Months ended
September 30,
 
    2015     2014     2015     2014  
                         
Sales   $ 117,572     $ 99,171     $ 146,408     $ 164,742  
                                 
Cost of Goods Sold     70,149       14,977       80,626       54,727  
                                 
Gross Profit     47,423       84,194       65,782       110,015  
                                 
Operating Expenses                                
Selling expenses     9,130       12,319       19,590       26,176  
General and administrative     584,106       20,617       781,527       814,905  
                                 
Total operating expenses     593,236       32,936       801,117       841,081  
                                 
Loss from continuing operations before other income (expense) and income taxes     (545,814 )     51,258       (735,336 )     (731,066 )
                                 
Other Income (Expense)                                
Interest expense     (731 )     (519 )     (1,707 )     (1,994 )
Interest income     -       -       -       95  
Other income (expense), net     21,355       (547 )     59,787       (236 )
Change in fair value of warrants     -       181       -       13,379  
                                 
Total other expense (income), net     20,624       (885 )     58,080       11,244  
                                 
Loss from continuing operations before income taxes     (525,190 )     50,373       (677,256 )     (719,822 )
                                 
Income Tax Expense     -       -       -       -  
                                 
Net loss from continuing operations     (525,190 )     50,373       (677,256 )     (719,822 )
Discontinued operations, net of income taxes     -       -       -       (5,311,304 )
Net loss     (525,190 )     50,373       (677,256 )     (6,031,126 )
                                 
Preferred Stock Dividends     -       -       -       -  
                                 
Net Loss Available To Common Shareholders     (525,190 )     50,373       (677,256 )     (6,031,126 )
                                 
Other Comprehensive Income                                
Foreign currency translation gain     (34,912 )     14,905       (34,011 )     350,296  
                                 
Total Comprehensive Loss   $ (560,102 )   $ 65,278     $ (711,267 )   $ (5,680,830 )
                                 
Share Data                                
Basic and diluted loss per share                                
Continued operations     (0.02 )     0.00       (0.02 )     (0.02 )
Discontinued operations     0.00       0.00       0.00       (0.16 )
Net loss attributable to Common Shareholders     (0.02 )     0.00       (0.02 )     (0.19 )
                                 
Weighted average common shares outstanding, basic     33,670,518       31,518,518       33,670,518       32,216,452  
                                 
Weighted average common shares outstanding, diluted     33,670,518       31,518,518       33,670,518       32,216,452  

Wednesday, August 19, 2015

Auditor trail

Item 4.01 Changes in Company's Certifying Accountant.

(1) Previous Independent Registered Public Accounting Firm
 
(i) On August 12, 2015, China Carbon Graphite Group, Inc. (the “Company”) dismissed its independent registered public accounting firm, KCCW Accountancy Corp. (“KCCW”).
 
(ii) The report of KCCW on the financial statements of the Company the fiscal years ended December 31, 2014 and December 31, 2013, and the related statements of operations, comprehensive loss, changes in stockholders’ deficiency, and cash flows for the fiscal years ended December 31, 2014 and December 31, 2013 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles other than an explanatory paragraph as to a going concern.
 
(iii) The decision to change the independent registered public accounting firm was recommended and approved by the Board of Directors of the Company.
 
(iv) During the Company’s two most recent fiscal years ended December 31, 2014 and March 31, 2013 and any subsequent interim periods through August 12, 2015, the date of dismissal, (a) there were no disagreements with KCCW on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KCCW, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
 
(v) On August 17, 2015 the Company provided KCCW with a copy of this Current Report and has requested that it furnish the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements. A copy of such letter is attached as Exhibit 16.1 to this Current Report on Form 8-K.
 

(2) New Independent Registered Public Accounting Firm
 
On August 12, 2015, the Board of Directors of the Company engaged TAAD LLP (“TAAD”) as its new independent registered public accounting firm to audit and review the Company’s financial statements. During the two most recent fiscal years ended December 31, 2014 and December 31, 2013 and any subsequent interim periods through the date hereof prior to the engagement of TAAD, neither the Company, nor someone on its behalf, has consulted TAAD regarding:
 
(i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or
 
(ii) any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.
 


Comments & Business Outlook
China Carbon Graphite Group, Inc and subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
For the Three and Six Months Ended June 30, 2015 and 2014
(Unaudited)
 
    Three months ended
June 30,
    Six Months ended
June 30,
 
    2015     2014     2015     2014  
                         
Sales   $ 24,672     $ 64,637     $ 28,836     $ 65,571  
                                 
Cost of Goods Sold     5,191       39,750       10,477       39,750  
                                 
Gross Profit     19,481       24,887       18,359       25,821  
                                 
Operating Expenses                                
Selling expenses     5,652       12,463       10,460       13,857  
General and administrative     91,755       605,228       197,421       794,288  
                                 
Total operating expenses     97,407       617,691       207,881       808,145  
                                 
Loss from continuing operations before other income (expense) and income taxes     (77,926 )     (592,804 )     (189,522 )     (782,324 )
                                 
Other Income (Expense)                                
Interest expense     (830 )     (1,456 )     (976 )     (1,475 )
Interest income     -       (11 )     -       95  
Other income (expense), net     21,056       (426 )     38,432       311  
Change in fair value of warrants     -       10,703       -       13,198  
                                 
Total other expense (income), net     20,226       8,810       37,456       12,129  
                                 
Loss from continuing operations before income taxes     (57,700 )     (583,994 )     (152,066 )     (770,195 )
                                 
Income Tax Expense     -       -       -       -  
                                 
Net loss from continuing operations     (57,700 )     (583,994 )     (152,066 )     (770,195 )
Discontinued operations, net of income taxes     -       (2,775,064 )     -       (5,311,304 )
Net loss     (57,700 )     (3,359,058 )     (152,066 )     (6,081,499 )
                                 
Preferred Stock Dividends     -       -       -       -  
                                 
Net Loss Available To Common Shareholders     (57,700 )     (3,359,058 )     (152,066 )     (6,081,499 )
                                 
Other Comprehensive Income                                
Foreign currency translation gain     (121 )     (44,858 )     901       335,391  
                                 
Total Comprehensive Loss   $ (57,821 )   $ (3,403,916 )   $ (151,165 )   $ (5,746,108 )
                                 
Share Data                                
Basic and diluted loss per share                                
Continued operations     (0.00 )     (0.02 )     (0.00 )     (0.02 )
Discontinued operations     0.00       (0.09 )     0.00       (0.17 )
Net loss attributable to Common Shareholders     (0.00 )     (0.11 )     (0.00 )     (0.19 )
                                 
Weighted average common shares outstanding, basic     33,670,518       31,518,518       33,670,518       31,062,916  
                                 
Weighted average common shares outstanding, diluted     33,670,518       31,518,518       33,670,518       31,062,916  

Managment Discussion and Analysis

Sales.

During the three months ended June 30, 2015, we had sales of $24,672, compared to sales of $64,637 for the three months ended June 30, 2014, a decrease of $39,965, or approximately 61.83%. Sales decrease was mainly attributable to the decrease in demand for products among consumers in the market.

Sales from Xingyong (our discontinued business) for the three months ended June 30, 2015 and 2014 were $0 and $1,670,582, respectively and were included in net loss from discontinued operations.

Net loss.

Our net loss for the three months ended June 30, 2015 was $57,700, compared to net loss of $3,359,058 for the three months ended June 30, 2014, a decrease of $3,301,358, or 98.28%. The decrease is mainly due to decreased loss from discontinued operations.


Friday, May 15, 2015

Comments & Business Outlook

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

 

    Three Months ended
March 31,
 
    2015     2014  
             
Sales   $ 21,415     $ 934  
                 
Cost of Goods Sold     5,286       -  
                 
Gross Profit     16,129       934  
                 
Operating Expenses                
Selling expenses     4,808       1,394  
General and administrative     105,666       189,060  
                 
Total operating expenses     110,474       190,454  
                 
Loss from continuing operations before other income (expense) and income taxes     (94,345 )     (189,520 )
                 
Other Income (Expense)                
Interest expense     (146 )     (19 )
Interest income     -       107  
Other income (expense), net     125       737  
Change in fair value of warrants     -       2,495  
                 
Total other expense (income), net     (21 )     3,320  
                 
Loss from continuing operations before income taxes     (94,366 )     (186,200 )
                 
Income Tax Expense     -       -  
                 
Net loss from continuing operations     (94,366 )     (186,200 )
Discontinued operations, net of income taxes     -       (2,536,240 )
Net loss     (94,366 )     (2,722,440 )
                 
Preferred Stock Dividends     -       -  
                 
Net Loss Available To Common Shareholders     (94,366 )     (2,722,440 )
                 
Other Comprehensive Income                
Foreign currency translation gain     1,022       380,249  
                 
Total Comprehensive Loss   $ (93,344 )   $ (2,342,191 )
                 
Share Data                
Basic and diluted loss per share                
Continued operations     (0.00 )     (0.01 )
Discontinued operations     (0.00 )     (0.08 )
Net loss attributable to Common Shareholders     (0.00 )     (0.09 )
                 
Weighted average common shares outstanding, basic     33,670,518       30,602,251  
                 
Weighted average common shares outstanding, diluted     33,670,518       30,602,251

Managment Discussion and Analysis

Sales.

During the three months ended March 31, 2015, we had sales of $21,415, compared to sales of $934 for the three months ended March 31, 2014, an increase of $20,481, or approximately 2,192.8%. Sales increase was mainly because the Company has generated more brand recognition among consumers in the market.

Sales from Xingyong (our discontinued business) for the three months ended March 31, 2015 and 2014 were $0 and $1,310,821, respectively and were included in net loss from discontinued operations.


Net loss from continuing operations.

As a result of the factors described above, our net loss from continuing operations for the three months ended March 31, 2015 was $94,366, compared to net loss of $186,200 for the three months ended March 31, 2014, a decrease of $91,834, or 49.3%.


Net loss from discontinued operations.

Net loss from Xingyong (our discontinued business) for the three months ended March 31, 2015 and 2014 were $0 and $2,536,240, respectively and were included in net loss from discontinued operations.

 
Net loss.

Our net loss for the three months ended March 31, 2015 was $94,366, compared to net loss of $2,722,440 for the three months ended March 31, 2014, a decrease of $2,628,074, or 96.5%. The decrease is mainly due to decreased loss from discontinued operations.


Wednesday, April 1, 2015

Comments & Business Outlook
China Carbon Graphite Group, Inc and subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
For the Years Ended December 31, 2014 and 2013
 
    Years ended December 31,  
    2014     2013  
                 
Sales   $ 281,620     $ -  
                 
Cost of Goods Sold     163,309       -  
                 
Gross Profit     118,311       -  
                 
Operating Expenses                
Selling expenses     43,154       -  
General and administrative     891,808       1,072,694  
                 
Total operating expenses     934,963       1,072,694  
                 
Loss from continuing operations before other income (expense) and income taxes     (816,652 )     (1,072,694 )
                 
Other Income (Expense)                
Interest expense     (2,426 )     836  
Interest income     95       149  
Other income (expense), net     594       (1,038 )
Change in fair value of warrants     13,467       210,895  
                 
Total other expense (income), net     11,730       210,842  
                 
Loss from continuing operations before income taxes     (804,922 )     (861,852 )
                 
Income Tax Expense     -       -  
                 
Net loss from continuing operations     (804,922 )     (861,852 )
Discontinued operations, net of income taxes     (5,311,304 )     (61,017,028 )
Net loss     (6,116,226 )     (61,878,880 )
                 
Preferred Stock Dividends     -       (8,199 )
                 
Net Loss Available To Common Shareholders     (6,116,226 )     (61,887,079 )
                 
Other Comprehensive Income                
Foreign currency translation gain     334,365       445,224  
                 
Total Comprehensive Loss   $ (5,781,861 )   $ (61,433,656 )
                 
Share Data                
Basic and diluted loss per share                
Continued operations     (0.03 )     (0.03 )
Discontinued operations     (0.16 )     (2.36 )
Net loss attributable to Common Shareholders     (0.19 )     (2.39 )
                 
Weighted average common shares outstanding, basic     31,410,507       25,903,011  
                 
Weighted average common shares outstanding, diluted     31,410,507       25,903,011  

Management Discussion and Analysis

Sales.


During the year ended December 31, 2014, we had sales of $281,620, compared to sales of $nil for the year ended December 31, 2013, an increase of $281,620, or approximately 100.0%. Sales increase was mainly because in December 2013, we acquired Royal Shanghai that generated sales in 2014.

Sales from Xingyong (our discontinued business) for the years ended December 31, 2014 and 2013 were $2,981,403 and $9,526,709, respectively and were included in net loss from discontinued operations.


Net loss from continuing operations.

As a result of the factors described above, our net loss from continuing operations for the year ended December 31, 2014 was $804,922, compared to net loss of $861,852 for the year ended December 31, 2013, a decrease in loss of $56,930, or 6.6%.


Net loss from discontinued operations.

Net loss from Xingyong (our discontinued business) for the years ended December 31, 2014 and 2013 were $5,311,304 and $61,017,028, respectively and were included in net loss from discontinued operations.


Net loss.

Our net loss for the year ended December 31, 2014 was $6,116,226, compared to net loss of $61,878,880 for the year ended December 31, 2013, a decrease of net loss of $55,770,853, or 90.1%. The decrease is mainly due to decreased loss from discontinued operations.


Wednesday, November 19, 2014

Comments & Business Outlook
China Carbon Graphite Group, Inc and subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
For the Three and Nine Months Ended September 30, 2014 and 2013 
(Unaudited)

 

 

      Three months ended September 30,       Nine months ended
September 30,
 
      2014       2013       2014       2013  
                                 
Sales   $ 99,171     $ -     $ 164,742     $ -  
                                 
Cost of Goods Sold     14,977       -       54,727       -  
                                 
Gross Profit     84,194       -       110,015       -  
                               
Operating Expenses                                
Selling expenses     12,319       -       26,176       -  
General and administrative     20,617       518,260       814,905       1,171,178  
Total operating expenses     32,935       518,260       841,080       1,171,178  
                                 
Loss from continuing operations before other income (expense) and income taxes     51,258       (518,260 )     (731,066 )     (1,171,178 )
                                 
Other Income (Expense)                                
Interest expense     (519 )     -       (1,994 )     -  
Interest income     -       3       95       3  
Other income (expense), net     (547 )     (353 )     (236 )     (423 )
Change in fair value of warrants     181       52,997       13,379       198,705  
                                 
Total other expense (income), net     (885 )     52,647       11,244       198,285  
                                 
Loss from continuing operations before income taxes     50,373       (465,613 )     (719,822 )     (972,893 )
                                 
Income Tax Expense     -       -       -       -  
                                 
Net loss from continuing operations     50,373       (465,613 )     (719,822 )     (972,893 )
Discontinued operations, net of income taxes     -       (6,422,486 )     (5,311,304 )     (16,861,477 )
Net loss     50,373       (6,888,099 )     (6,031,126 )     (17,834,370 )
                                 
Preferred Stock Dividends     -       826       -       (8,199 )
                                 
Net Loss Available To Common Shareholders     50,373       (6,887,273 )     (6,031,126 )     (17,842,569 )
                                 
Other Comprehensive Income                                
Foreign currency translation gain     14,905       92,843       350,296       731,522  
                                 
Total Comprehensive Loss   $ 65,278     $ (6,795,256 )   $ (5,680,830 )   $ (17,102,848 )
                                 
Share Data                                
Basic and diluted loss per share                                
Continued operations     0.00       (0.02 )     (0.02 )     (0.04 )
Discontinued operations     0.00       (0.24 )     (0.17 )     (0.65 )
Net loss attributable to Common Shareholders     0.00       (0.26 )     (0.19 )     (0.69 )
                                 
Weighted average common shares outstanding, basic     31,518,518       26,336,648       31,216,452       25,754,899  
                                 
Weighted average common shares outstanding, diluted     31,518,518       26,336,648       31,216,452       25,754,899  

Management Discussion and Analysis

Sales

During the three months ended September 30, 2014, we had sales of $99,171, compared to sales of $0 for the three months ended September 30, 2013, an increase of $99,171, or approximately 100.0%. Sales increase was mainly because in December 2013, we acquired Royal Shanghai that generated sales in 2014.

Sales from Xingyong (our discontinued business) for the three months ended September 30, 2014 and 2013 were $0 and $2,721,723, respectively and were included in net loss from discontinued operations.


Net income (loss) from continuing operations

As a result of the factors described above, our net income from continuing operations for the three months ended September 30, 2014 was $50,373, compared to net loss of $465,613 for the three months ended September 30, 2013, an increase of $515,986, or 110.8%.


Net loss from discontinued operations

Net loss from Xingyong (our discontinued business) for the three months ended September 30, 2014 and 2013 were $0 and $6,422,486, respectively and were included in net loss from discontinued operations.
 

Net income (loss)

Our net income for the three months ended September 30, 2014 was $50,373, compared to net loss of $6,888,099 for the three months ended September 30, 2013, an increase of $6,938,472, or 100.7%. The decrease is mainly due to decreased loss from discontinued operations.


Tuesday, August 19, 2014

Comments & Business Outlook

China Carbon Graphite Group, Inc. and subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

For the Three and Six months ended June 30, 2014 and 2013

(Unaudited)

  

 

    Three months ended
June 30,
  Six months ended
June 30,
    2014   2013   2014   2013
Sales   $ 64,637     $     $ 65,571     $  
                                 
Cost of Goods Sold     39,750             39,750        
Gross Profit     24,887             25,821        
                                 
Operating Expenses                                
Selling expenses     12,463             13,857        
General and administrative     605,228       433,814       794,288       652,918  
Total operating expenses     617,691       433,814       808,145       652,918  
                                 
Loss from continuing operations before other income (expense) and income taxes     (592,804 )     (433,814 )     (782,324 )     (652,918 )
                                 
Other Income (Expense)                                
Interest expense     (1,456 )           (1,475 )      
Interest income     (11 )           95        
Other income (expense), net     (426 )     (70 )     311       (70 )
Change in fair value of warrants     10,703       101,340       13,198       145,708  
Total other income (expense), net     8,810       101,270       12,129       145,638  
                                 
Loss from continuing operations before income taxes     (583,994 )     (332,544 )     (770,195 )     (507,280 )
                                 
Income Tax Expense                        
                                 
Net loss from continuing operations     (583,994 )     (332,544 )     (770,195 )     (507,280 )
Discontinued operations, net of income taxes     (2,775,064 )     (9,111,459 )     (5,311,304 )     (10,438,991 )
Net loss     (3,359,058 )     (9,444,003 )     (6,081,499 )     (10,946,271 )
                                 
Preferred Stock Dividends           (4,488 )           (9,025 )
                                 
Net Loss Available To Common Shareholders     (3,359,058 )     (9,448,491 )     (6,081,499 )     (10,955,296 )
                                 
Other Comprehensive Income                                
Foreign currency translation gain     (44,858 )     492,402       335,391       638,679  
Total Comprehensive Loss   $ (3,403,916 )   $ (8,956,089 )   $ (5,746,108 )   $ (10,316,617 )
                                 
Share Data                                
Basic and diluted loss per share                                
Continued operations   $ (0.02 )   $ (0.01 )   $ (0.02 )   $ (0.02 )
Discontinued operations     (0.09 )     (0.35 )     (0.17 )     (0.41 )
Net loss attributable to Common Shareholders   $ (0.11 )   $ (0.36 )   $ (0.19 )   $ (0.43 )
                                 
Weighted average common shares outstanding, basic     31,518,518       25,810,980       31,062,916       25,459,203  
                                 
Weighted average common shares outstanding, diluted     31,518,518       25,810,980       31,062,916       25,459,203

Management Discussion and Analysis

Sales.

During the three months ended June 30, 2014, we had sales of $64,637, compared to sales of $0 for the three months ended June 30, 2013, an increase of $64,637, or approximately 100.0%. Sales increase was mainly because in December 2013, we acquired Royal Shanghai that generated sales in 2014.

Sales from Xingyong (our discontinued business) for the three months ended June 30, 2014 and 2013 were $1,669,648 and $2,714,252, respectively and were included in net loss from discontinued operations.


Net loss.

Our net loss for the three months ended June 30, 2014 was $3,359,058, compared to net loss of $9,444,003 for the three months ended June 30, 2013, a decrease of loss of $6,084,945, or 64.4%. The decrease is mainly due to decreased loss from discontinued operations.


Thursday, July 10, 2014

Deal Flow

Item 1.01 Entry into a Material Definitive Agreement. 
 

On July 3, 2014, the registrant entered into an installment payment agreement (the “Installment Agreement”) with Dengyong Jin and Benhua Du (collectively the “Purchasers”). The Installment Agreement is entered in connection with the asset purchase agreement dated June 10, 2014, to which the registrant and the Purchasers are parties (the “Purchase Agreement”).

Pursuant to the Installment Agreement, the Purchasers agreed to pay the purchase price under the Purchase Agreement of RMB 10 million in installments as follows: (1) an initial installment of RMB 0.6 million in cash plus the cancellation of the registrant’s repayment obligation of RMB 6.27 million to one of the Purchasers, and (2) one or more installments of the remaining RMB 3.13 million in cash on or before July 25, 2014. Any amount not paid by such date will accrue interest at 10% annually until payment. Additionally, the closing of the transactions contemplated under the Purchase Agreement shall close concurrently with the final installment. As previously disclosed in the registrant’s current report on Form 8-K filed on July 3, 2014, the transactions under the Purchase Agreement was approved at a special meeting of the registrant’s shareholders held on June 30, 2014.

In connection with the foregoing initial installment, the registrant and Dengyong Jin entered into an indebtedness cancellation agreement (the “Cancellation Agreement”) concurrently with the Installment Agreement, pursuant to which Mr. Jin discharged the registrant of its obligation to repay him RMB 6.27 million, and surrendered all right to collect such amount from the registrant.

The foregoing descriptions of the Installment Agreement and the Cancellation Agreement are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibits 99.1 and 99.2 to this report and incorporated herein by reference. A copy of the Purchase Agreement is included as an exhibit to the registrant’s current report on Form 8-K filed on June 16, 2014.


Monday, June 16, 2014

Going Private News

Item 1.01 Entry into a Material Definitive Agreement.


On June 10, 2014, the registrant entered into an asset purchase agreement (the “Agreement”) by and among the registrant and its wholly-owned subsidiary, Xinghe Yongle Carbon Co., Ltd. (“Yongle Carbon,” and together with the registrant, the “Sellers”), and Dengyong Jin and Benhua Du (collectively “Purchasers”). Pursuant to the Agreement, the Purchasers will, following the satisfaction or waiver of applicable conditions to closing, purchase all of the rights and obligations of Yongle Carbon under a series of agreements (the “Contractual Arrangements”). Through the Contractual Arrangements, Yongle Carbon controls Xinghe Xingyong Carbon Co., Ltd. (“Xingyong Carbon”), which operates the registrant’s graphite raw material and electrode manufacturing business in the People’s Republic of China. The Purchasers collectively hold 100% of the outstanding equity interests of Xingyong Carbon. Mr. Jin was also the registrant’s chief executive officer from December 2007 to November 2008.

The purchase price under the Agreement is RMB 10 million, including RMB 3.73 million in cash and the cancellation of the registrant’s repayment obligations of RMB 6.27 million previously advanced by one of the Purchasers to the registrant. The Agreement contains customary representations, warranties and covenants of the Sellers and the Purchasers. Subject to certain limitations, the Sellers and the Purchasers have agreed to indemnify each other for breaches of representations, warranties and covenants. The consummation of the sale is subject to the approval of the registrant’s shareholders.


Monday, December 2, 2013

Comments & Business Outlook
Consolidated Statements of Operations and Comprehensive Income
For the Three and Nine Months Ended September 30, 2013 and 2012
(Unaudited)
 
   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Sales
  $ 2,721,723     $ 6,491,133     $ 8,496,893     $ 28,429,886  
                                 
Cost of Goods Sold
    2,269,493       4,722,151       13,202,146       20,850,882  
                                 
Gross Profit (Loss)
  452,230       1,768,982       (4,705,253 )     7,579,004  
                                 
Operating Expenses
                               
 
Selling expenses
    8,252       64,487       46,088       140,437  
 
General and administrative
   
2,715,815
      1,056,283      
6,638,182
      3,078,144  
 
Impairment of property and equipment
   
3,542,153
      -      
3,542,153
      -  
 
Depreciation and amortization
    187,803       56,198       307,505       160,028  
     Total operating expenses
    6,454,023       1,176,968       10,533,928       3,378,609  
                                   
Operating (Loss) Income Before Other Income (Expense)
    (6,001,793 )     592,014       (15,239,181 )     4,200,395  
                                   
Other Income (Expense)
                               
 
Interest expense
    (1,501,867 )     (1,208,970 )     (3,418,517 )     (3,658,888 )
 
Interest income
    562,916      
1
      624,722       44  
 
Other expense
    -       272       -       (215,196 )
 
Other income (expense), net
    (352 )     6,080       (99 )     221,270  
 
Change in fair value of warrants
    52,997       (188,046 )     198,705       (221,846 )
      Total other expense (income), net
    886,306      
(1,390,663
)     2,595,189       (3,874,616 )
                                   
(Loss) Income Before Income Tax Expense
    (6,888,099 )     (798,649 )     (17,834,370 )     325,779  
                                   
Income Tax Expense
    -       -       -       -  
                                   
Net Income (Loss)
    (6,888,099 )    
(798,649
)     (17,834,370 )     325,779  
                                   
Preferred Stock Dividends
    826       (4,537 )     (8,199 )     (14,180 )
                                   
Net Income (Loss) Available To Common Shareholders
    (6,887,273 )    
(803,186
)     (17,842,569 )     311,599  
                                   
Other Comprehensive Income
                               
 
Foreign currency translation gain
    92,843       528,509       731,522       518,452  
Total Comprehensive Income (Loss)
  $ (6,795,256 )   $
(270,140
)   $ (17,102,848 )   $ 844,231  
                                   
Share Data
                               
 
Basic earnings (loss) per share
  $ (0.26 )   $ (0.03 )   $ (0.69 )   $ 0.01  
                                   
 
Diluted earnings (loss) per share
  $ (0.26 )   $ (0.03 )   $ (0.69 )   $ 0.01  
                                   
 
Weighted average common shares outstanding, basic
    26,336,648       24,260,834       25,754,899       23,843,306  
                                   
 
Weighted average common shares outstanding, diluted
    26,336,648       24,560,834       25,754,899       24,143,306  
 
The accompanying notes are an integral part of these consolidated financial statements.

Thursday, August 15, 2013

Comments & Business Outlook

Second Quarter 2013 Results

  • Sales decreased by $9.16 million, or 77.1%, to $2.71 million from $11.88 million for the second quarter of 2012.
  • The company reported a loss per share of $0.37, compared to earnings of $0.04 for the same quarter 201.

Mr. Donghai Yu, Chief Executive Officer of China Carbon, commented, "As China's steel industry continued to battle with over-capacity, slowing demand growth, and deteriorating steel prices, the graphite industry remained challenged during the second quarter of 2013. The difficult industry environment was reflected in our disappointing financial results for the second quarter. However, graphite prices had stabilized during the second quarter and likely bottomed in our view. Looking ahead, we expect the graphite industry to recover in 2014 as demand increases and competition eases when more small players are forced to exit the market during this downturn."


Wednesday, May 15, 2013

Comments & Business Outlook
China Carbon Graphite Group, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
 
   
Three months ended March 31,
 
   
2013
   
2012
 
             
Sales
 
$
3,060,918
   
$
10,061,210
 
                 
Cost of Goods Sold
   
3,320,320
     
7,143,606
 
Gross Profit (loss)
   
(259,402
)
   
2,917,604
 
                 
Operating Expenses
               
Selling expenses
   
17,941
     
46,798
 
General and administrative
   
384,582
     
851,399
 
Depreciation and amortization
   
67,888
     
57,004
 
Total operating expenses
   
470,411
     
955,201
 
                 
Operating Income (Loss) Before Other Income (Expense)
   
(729,813
)
   
1,962,403
 
                 
Other Income (Expense)
               
Interest expense
   
(862,448
)
   
(1,229,745
)
Interest income
   
45,304
     
22
 
Other income, net
   
321
     
-
 
Change in fair value of warrants
   
44,368
     
(479,563
)
Total other expense
   
(772,455
)
   
(1,709,286
)
                 
Net Income (Loss)
 
 
(1,502,268
)
 
 
253,117
 
                 
Preferred Stock Dividends
   
(4,537
   
(5,018
)
                 
Net Income (Loss) Available To Common Shareholders
 
 
(1,506,805
)
   
248,099
 
                 
Other Comprehensive Income
               
Foreign currency translation gain
   
146,277
     
423,897
 
Total Comprehensive Income
 
$
(1,355,991
)
 
$
677,014
 
                 
Share Data
               
                 
Basic earnings (loss) per share
 
$
(0.06
)
 
$
0.01
 
                 
Diluted earnings (loss) per share
 
$
(0.06
)
 
$
0.01
 
                 
Weighted average common shares outstanding,
               
Basic
   
25,103,518
     
23,315,645
 
                 
Weighted average common shares outstanding,
               
Diluted
   
25,103,518
     
23,647,455
 

Wednesday, August 15, 2012

Comments & Business Outlook

Second Quarter (Q2) 2012 Highlights:

  • Gross profit grew 7.6%, from $2.69 million in Q2 2011 to $2.89 million in Q2 2012
  • Gross profit rate grew 10.0%, from 22.1% in Q2 2011 to 24.4% in Q2, 2012
  • Further advanced its product mix optimization process, with higher margin products made from fine grain and high purity graphite still key development priorities
  • Our working capital increased from $1.06 million as of December 31, 2011 to $7.83 million as of June 30, 2012

Earnings per diluted share of $0.04 on 24.25 million shares for Q2 2012. For Q2 2011, China Carbon reported fully diluted earnings per share of $0.04 on 23.19 million shares.

"We further ramped-up our higher margin business this past quarter," said Donghai Yu, Chief Executive Officer of China Carbon. "Notably, we were able to sustain growth in the percentage of sales of our higher margin products made from fine grain and high purity graphite products. This strategy together with our effort in price and profit control allowed us to increase our gross profit rate during the three months ended June 30, 2012 compared to the same period last year."

Business Outlook

"As we continue to refine our strategy of focusing on our higher margin products made from fine grain and high purity graphite, we will see improved financial results in upcoming quarters," remarked Mr. Yu. "This strategy enables us to maintain profitability while also exploring the significant potential market for these products. High purity and fine grain graphite products have numerous applications in fast developing fields like the nuclear, solar and defense industries, and we are working hard to be in a better position to meet any potential rises in demand for these products, including getting our new facility that will specialize in the manufacture of fine grain and high purity graphite products, plus double our annual production capacity to 60,000 tons, completely up and running."


Tuesday, May 22, 2012

Comments & Business Outlook
      Q1 2012       Q1 2011    
CHANGE
 
Revenue
  $ 10.1 million     $ 11.5 million       -1.4 million  
EBIDTA*
  $ 2.29 million     $ 2.52 million       -0.23 million  
Net Income
  $ 0.25 million     $ 0.33 million       -0.08 million  
Adjusted Net Income
  $ 0.91 million     $ 0.63 million       0.28 million  
EPS (Diluted)**
  $ 0.01     $ 0.01       -  
Adjusted EPS
  $ 0.04     $ 0.03       0.01  
                         

"We continued to focus on developing our higher margin business this past quarter and see an improvement of gross profit rate and a deduction of our general and administrative expenses," said Donghai Yu, Chief Executive Officer of China Carbon. "When comparing Q1 2011 with Q1 2012, we raised the percentage of our sales of fine grain and high purity graphite products, which are both higher margin products compared to our other business segment, graphite electrodes, while running at 75% of our 30,000 ton annual production capacity. Moreover, when further comparing these two quarters, raw material prices continued to increase, resulting in the average unit-selling price of our products increasing 49 percent with the average unit-selling price of our high purity graphite products increasing 47 percent in particular. We anticipated this trend and were able to offset rising graphite prices by making advance deposits to suppliers with available cash to lock in favorable prices."

Mr. Yu added, "While our increase in inventories this past quarter is a reflection of the rise in the cost of raw materials, it is also a result of an increase in the amount of our work in progress. Our high-end products made from fine grain and high purity graphite require longer production cycles, causing our work in progress to increase during the quarter. We feel comfortable with our order book that the robust demand for our fine grain and high purity graphite products will continue into 2012, and we anticipate that we will see improved demand for our ultra-high graphite electrodes during this time as well."

Business Outlook

"While we continue to grow our fine grain and high purity graphite businesses, we are confident that our top line results will be better in future quarters as the demand for graphite electrodes improves," commented Mr. Yu. "We project increasing demand in the fine grain, high purity and ultra-high power graphite electrode markets to continue in 2012, especially from China's evolving iron, steel, automobile, aerospace and defense industries. In particular, steel plants in China have been modernizing their current facilities with Electric Arc Furnaces, fueling the demand for large size ultra-high power graphite electrodes."

"Notably, the margin for large size ultra-high power graphite electrodes is high due to the shortage of supply compared to demand," remarked Mr. Yu. "Accordingly, we are working hard to get our new facility that specializes in the manufacture of fine grain and high purity graphite products completely up and running, as this facility will double our annual production capacity to 60,000 tons and will enable us to manufacture a new product: ultra-high power graphite electrodes with a diameter ranging from 600 to 800 millimeters. By improving our production capacity and capabilities in regards to these products, and by enhancing our ultra-high graphite electrodes business, we believe that we will see better financial results in upcoming quarters."


Friday, March 30, 2012

Comments & Business Outlook

Fourth Quarter 2011 Results

  • In Q4 2011, China Carbon had sales of $12.6 million compared to sales of $13.0 million in Q4 2010, a decrease of $0.4 million.
  • In Q4 2011, China Carbon's net income was $1.1 million as compared to a net loss of $0.4 million in Q4 2010, a $1.5 million improvement.
  • Adjusted EPS for fourth quarter 2011 was $0.06 vs $0.00 in prior year quarter.

"Our full year results in 2011 reflect the outstanding sales growth in our high purity and fine grain graphite products," said Donghai Yu, Chief Executive Officer of China Carbon. "For the year, our sales of these products rose 211 percent and 68 percent, respectively, and both products provided us with higher margins than our other business segment, graphite electrodes. We further improved our gross margin by making advance deposits to suppliers, offsetting the rises in graphite prices, and the manufacturing of solar and mold products increased the demand for our products as high performance raw materials."

"In 2012, we are very confident that we will boost our supply of high purity and fine grain graphite products," continued Mr. Yu. "We recently added a new facility that doubled our production capacity from 30,000 to 60,000 tons and is specializing in the manufacture of both these products. We delivered strong results this past year, achieving tremendous growth in our overall sales, gross profit and net income on the strength of our high purity and fine grain graphite sales, and we believe that we are poised to build on our success with the installation of this facility."

Business Outlook

"We believe that the future of graphite, especially when looking at it from the perspective of high-tech, high-demand applications, is very encouraging," said Mr. Yu. "Pebble-bed nuclear reactors, lithium ion batteries and solar panels are just some of the next generation technologies that make use of graphite's unique properties. In China, we are seeing the demand for graphite increase from the nation's developing iron, steel, automobile, aerospace and defense industries. To better take advantage of this evolving market, we are working hard to further enhance our product line."

"Specifically, our new plant has technologically advanced equipment capable of producing rounded fine grain electrodes with a diameter as large as 600 millimeters and ultra-high electrodes with a diameter as large as 800 millimeters," continued Mr. Yu. "Steel plants in China have recently been upgrading their furnace facilities, resulting in substantial increases in demand for large size ultra-high power graphite electrodes. Moreover, the margin for these products is high due to the shortage of supply compared to demand. Accordingly, we are striving to produce 800 millimeter diameter ultra-high graphite electrodes, as we believe selling this product could help us further strengthen our leading position in China's fine grain graphite market."

Mr. Yu further commented, "In 2012, we plan to continue adjusting our product mix towards our high purity and fine grain graphite products as a way to further improve our gross profit, and we are also looking to develop isostatic graphite products, including nuclear, solar and semiconductor products, to improve our margins as well. In regards to nuclear graphite, only graphite rods with a diameter of more than 840 millimeters and a purity of more than 99.99 percent may be used in nuclear power reactors and to date, we have produced samples that meet these standards. While we look to develop nuclear graphite and other isostatic graphite products, we are also seeking to acquire and vertically integrate a local graphite mine to supplement our operations. In the meantime, we will work towards maximizing our recently expanded production capacity to better position ourselves to meet potential rises in demand for our products. While 2011 was an excellent year for us in terms of financial growth and our development as a company, we are confident that we will make further progress in 2012, and solidify our position as one of China's premier graphite companies."


Tuesday, November 15, 2011

Comments & Business Outlook

Third Quarter 2011 Results

  • For the three months ended September 30, 2011, revenue increased 36%, from $10.0 million in Q3 2010 to $13.6 million in Q3 2011
  • Adjusted EPS in third quarter 2011 was $0.05 vs $0.09

"We were very glad to see sustained growth in our core businesses, fine grain and high purity graphite products, this past quarter," commented Donghai Yu, China Carbon's CEO. "During this time, we continued concentrating on the development of our fine grain and high purity graphite products business segments since these products are currently providing higher margins than our other business segment, graphite electrodes, and we were pleased to see the benefits of maintaining such a strategy. When comparing the third quarter of 2010 to the third quarter of 2011, our net sales of high purity graphite products rose from $2.2 million to $5.7 million, and our net sales of fine grain graphite products increased from $4.9 million to $5.8 million.

Mr. Yu continued, "Even though the increased interest expenses decreased our net profits in the three months ended September 30, 2011, we saw an increase in our net profit margins on a nine month basis and also when comparing our EBITDA from the third quarter of this year to the same period last year, we managed to keep this figure nearly in line with rising input costs and increased capital expenditures related to the construction of our new facility. With the launch of our new 30,000 ton facility, which includes a baking and dipping plant that will both specialize in the manufacturing of our higher margin products made from fine grain and high purity graphite, we expect that we will see significant improvement in our financial results in 2012. As the demand for graphite continues to rise, raw material prices are increasing as well, but we are confident that we are in a better position to thrive in this climate due to our production capacity expansion and ability to produce higher margin fine grain and high purity graphite products."

Business Outlook

"Through our ongoing expansion efforts, we are seeking to further leverage our leading position in China's graphite market and improve our profitability significantly," remarked Mr. Yu. "Recently demand of our higher margin graphite products have been exceeding our production capacity, so we intend to have our new facility specialize in the manufacturing of such products. Accordingly, we project that our revenues and profits will rise with increased sales of our higher margin products since many of these products, like large-size graphite electrodes, are applicable to and experiencing rising demand from some of China's fastest developing industries, including aerospace, defense, automotive and clean tech. Our ability to manufacture higher margin products is one of our key competitive advantages and with the doubling of our production capacity and by continuing our product development, we are confident that we will improve our financial results in future quarters."

"Currently we are seeking out potential natural graphite mines and solar graphite manufacturer acquisitions and or joint venture projects, and I want to emphasize to our investors that this will take time as these negotiations are very complicated and costly, and we must approach every potential acquisition and or joint venture carefully," added Mr. Yu. "We anticipate further improvement in our cash flow once our new facility is up and running that along with our solid relationships with Chinese banks, like China Construction Bank, leads us to expect that we will be able to finance our acquisitions and or joint venture with our cash flow and bank financing. In addition, we may also seek out off-take agreements with other suppliers in an effort to secure favorable graphite pricing amidst the rising prices of graphite."


Tuesday, October 4, 2011

Comments & Business Outlook

NEW YORK, Oct. 4, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced that videos showcasing the Company's latest manufacturing facilities are now available at:

http://s1219.photobucket.com/albums/dd423/ChinaCarbon/

The videos give viewers an in-depth look at China Carbon's new baking and dipping plants that will specialize in producing the Company's higher margin products made from fine grain and high purity graphite. Last quarter, the majority of China Carbon's revenues came from sales of its higher margin products and the Company's management team is confident that its new facilities will help China Carbon better meet the rising demand it is seeing for such products.

"Keeping investors, customers and potential clients apprised of what is happening within our Company is very important to us and we believe that these videos will allow those interested in China Carbon to get a better feel for the forthcoming operations at our new facilities. We expect that with the addition of these two plants, we will double our current production capacity that will, in effect, put us in a better position to supply more of our higher margin products, like large-size graphite electrodes, to many of China's fastest growing industries. This is a very exciting time for our Company and we want people interested in China Carbon to be able to see what steps we are taking to maintain our progress."


Monday, August 15, 2011

Liquidity Requirements
Some of our future expansion plans, including the expansion of our product offerings to include nuclear, solar and semiconductor products and pursuing an acquisition, would likely require us to obtain additional funds from equity or debt markets, or to borrow additional funds from local banks.

Friday, August 12, 2011

Comments & Business Outlook
 
Consolidated Statements of Income and Comprehensive Income
 
(Unaudited)
 
                         
   
Three months ended June 30,
   
Six months ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Sales
  $ 12,145,024     $ 3,248,351     $ 23,608,359     $ 8,095,207  
                                 
Cost of Goods Sold
    9,456,762       3,019,732       18,340,023       6,842,398  
Gross Profit
    2,688,262       228,619       5,268,336       1,252,809  
      22 %     7 %     22 %     15 %
Operating Expenses
    1,106,978       1,009,491       2,710,903       1,438,420  
Selling expenses
    57,312       21,704       107,175       46,697  
General and administrative
    1,049,666       987,787       2,603,728       1,391,723  
Amortization
    47,152       10,887       93,754       38,227  
      1,154,130       1,020,378       2,804,657       1,476,647  
Operating Income (Loss) Before Other Income (Expense)
                               
and Income Tax Expense
    1,534,132       (791,759 )     2,463,679       (223,838 )
                                 
Other Income (Expense)
                               
Interest expense
    (693,274 )     (268,123 )     (1,406,804 )     (474,271 )
Interest income
    -       -       -       -  
Other expense
    (765 )     (2,926 )     (766 )     (2,926 )
Other income
    15,670       -       76,550       -  
Change in fair value of warrants
    26,540       1,783,448       82,692       563,018  
      (651,829 )     1,512,399       (1,248,328 )     85,821  
                                 
Income (Loss) Before Income Tax Expense
    882,303       720,640       1,215,351       (138,017 )
                                 
Income Tax Expense
    -       -       -       -  
                                 
Net Income (Loss)
  $ 882,303     $ 720,640     $ 1,215,351     $ (138,017 )
                                 
Other Comprehensive Income
                               
Foreign currency translation gain
    553,200       146,086       821,448       46,564  
Total Comprehensive Income (loss)
  $ 1,435,503     $ 866,726     $ 2,036,799     $ (91,453 )
                                 
Share Data
                               
                                 
Basic earnings (loss) per share
  $ 0.04     $ 0.04     $ 0.05     $ (0.01 )
                                 
Diluted earnings (loss) per share
  $ 0.04     $ 0.04     $ 0.05     $ (0.01 )
                                 
                                 
Weighted average common shares outstanding, basic
    22,350,263       20,068,117       21,993,435       19,281,103  
                                 
                                 
Weighted average common shares outstanding diluted
    23,194,542       20,068,117       22,671,285       19,281,103  
                                 
 
During the three months ended June 30, 2011, we had sales of $12,145,024 as compared to sales of $3,248,351 for the three months ended June 30, 2010, an increase of $8,896,673, or approximately 273.9%. Our revenue was generated mainly from sales of graphite electrodes, fine grain graphite, high purity graphite, and semi-processed graphite products. Sales increase was mainly attributable to a significant increase in the demand of our products during the three months ended June 30, 2011 resulting from the market recovery, new customer developments, and change of product mix to include more high purity graphite products which average unit price increased 98% in the three months ended June 30, 2011 compared to the same period last year. The fast development of manufacturing of solar and mold products increased the demand of our products as raw material. Increased production capacity and increased unit prices also contributed to the increase of total sales. The increased unit price of high purity graphite is due to a large demand for such products in the market. We also had a decrease in the demand of high purity graphite in 2010. Since then, the company has been successful to improve its product mix to achieve higher profit by increasing sales of fine grain graphite and high purity graphite products which generate a better margin.
 
 
Until the third quarter of 2008, we experienced rapid growth in our operations. From the fourth quarter of 2008 until the end of 2009, however, as a result of the global economic crisis, the steel industry in general slowed, which caused our revenues and gross margin to decline significantly. Specifically, we had a significant decline in sales of graphite electrodes. The industry started to recover in 2010, and in particular since the third quarter of 2010. Our revenues and gross margins improved significantly in the second half of 2010, which trend has continued into 2011. As a result, our cash and receivables have also increased while the collectability remains very reliable. We believe that our allowance for doubtful accounts as of June 30, 2011 is adequate. We expect the recovery and increasing demand in the fine grain, high purity and ultra high power graphite electrode, markets to continue in subsequent quarters in 2011, primarily due to anticipated growth in the iron and steel automobile, aerospace ad defense industries in the PRC. Currently, steel plants in China have been upgrading their furnace facilities and created a high demand for large size ultra high power graphite electrode, which are different products from general graphite electrode. The margin of large size ultra high power graphite electrode is high due to the shortage of supply to the demand. We estimate the trend will continue for the near future. Our new forming plant will specialize in manufacturing high margin products including large size ultra high power graphite electrode, high purity graphite and fine gain graphite.
 
In order to try and address this demand, we have installed a 4200-ton compressor and 36 annular kilns as of June 30, 2011 and are currently testing this equipment. In addition, the new baking plant will have 36 furnaces, totaling 160 meters in length. The baking plant is expected go online later this month and testing at the extrusion press plant is expected to be finished by September 2011, with operations expected to begin shortly thereafter, subject to potential further delays in the installation of equipment, the hiring of additional employees, orders from customers, or other delays involved in construction, installation or production in a new facility. The new plant is expected to be used to manufacture a new product, ultra high power graphite electrodes with a diameter ranging from 600 to 800mm, along with existing fine grain and high-purity graphite products. The industrial applications of the products to be manufactured in the new facility include aerospace, defense, automotive and clean tech end products currently carries the greatest demand of all forms of graphite. We believe that this expansion will make us China's first domestic producer of 800 mm diameter ultra high power electrodes and will further strengthen the Company's leading position in China's fine grain graphite market. After the expansion, the Company is expected to have a 60,000 ton production annual capacity. The Company is currently operating at 100% production capacity of 30,000 tons annually.
 
 

Business Outlook

"Right now, we plan to have our new facility specialize in the manufacturing of higher margin products, like large size, ultra high power graphite electrodes, and high purity and fine gain graphite products," remarked Mr. Yu. "China's emerging aerospace, defense, automotive and clean tech end industries present the greatest demand for all types of graphite, specifically the forms of graphite we are planning to produce at our new facility. Moreover, we anticipate considerable growth in China's electric arc furnace steel production, which we believe will contribute to increased demand for large size, ultra high graphite electrodes. Accordingly, we are working hard to become the first company in China to produce 800 mm diameter ultra high power graphite electrodes. Through our product development and capacity expansion efforts, we are striving to enhance our production of higher margin products so we can gain further leverage in China's graphite sector."

 

Thursday, August 4, 2011

Comments & Business Outlook

NEW YORK, Aug. 4, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced that operations at its new facility, which includes baking and dipping plants, will commence later this month and become fully operational by September 2011.

China Carbon has already completed installations at the facility as well as testing at the baking plant. The baking plant will go online later this month and testing at the extrusion press plant will be finished by September 2011 with operations beginning shortly thereafter, according to the Company's management team. Once the facility is completely up and running, China Carbon anticipates that it will have an annual production capacity of 30,000 tons, which would double the Company's current annual production capacity. With its expansion efforts, China Carbon looks to better position itself to meet the growing demand the Company is seeing for its higher margin products.

When compared to the first quarter of 2010, the Company's sales more than doubled in the first quarter of 2011, with 80 percent of its revenues coming from sales of its higher margin products. Accordingly, China Carbon plans to primarily manufacture its higher margin products, such as Ultra high power graphite electrodes and fine grain and high purity graphite products, at its facility.

Donghai Yu, China Carbon's Chief Executive officer, commented, "We want to diversify our products' applications and enter in as many markets as possible. Right now, we feel that we have an excellent opportunity to really enrich our business by providing more of our higher margin products to some of China's fastest growing industries, including the aerospace, defense, automotive, steel and clean-tech industries."

In particular, China Carbon anticipates maintaining and enhancing its supply of large size, ultra high power graphite electrodes to Chinese steel plants. Currently, the margin for large size, ultra high power graphite electrode is high due to the shortage of supply to demand. In an effort to take advantage of this trend, the Company is striving to become China first domestic producer of 800 mm diameter ultra high power graphite electrodes.

"Our ability to produce higher margin products is one of our key competitive advantages," added Mr. Yu. "Large size carbon and graphite manufacturing requires the most sophisticated technologies but can deliver us more than a 30 percent gross profit margin. We believe that we are already China's leading manufacturer of large size carbon and graphite products, and through our capacity expansion and product development, our goal is to enhance our production of these products and gain further leverage in the market."


Tuesday, May 17, 2011

Comments & Business Outlook

First Quarter Results:

  • Revenue increased 137%, from $4.85 million in Q1 2010 to $11.46 million in Q1 2011
  • EBITDA improved 155% from $0.99 million in Q1 2010 to $2.52 million in Q1 2011
  • Net income grew 139%, from ($0.86 million) in Q1 2010 to $0.33 million in Q1 2011
  • Adjusted net income rose 91%, from $0.33 million in Q1 2010 to $0.63 million in Q1 2011
  • Adjsuted EPS was $0.03 vs. $0.02

Donghai Yu, China Carbon's CEO, said, "As we expected, our first quarter results were excellent. In particular, we are very pleased with the significant improvement in our EBITDA, which increased 154 percent. We successfully adjusted our product mix in the first quarter of 2011 to capitalize on market demand, producing and selling more of our higher margin products, like high purity graphite, than our lower margin products, such as graphite electrodes. Notably, our sales benefited from the increasing applications for our higher margin products in China's rapidly developing solar and mold industries."


Thursday, May 5, 2011

Comments & Business Outlook

NEW YORK, May 5, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. today announced that the Company anticipates reporting a considerable increase in revenue for the first quarter of 2011 as compared with the same quarter of 2010.

China Carbon's preliminary, unaudited revenue during the first quarter of 2011 was approximately $11.6 million USD, reflecting an increase of approximately $6.7 million USD or 138%, when compared to revenue of $4.8 million during the first quarter of 2010. This substantial improvement in revenue is due to its doubled capacity and the significant increase in the sales of its high margin products.

Industrial Minerals recently reported that the price range for industry standard large flake high carbon graphite has risen from $2,050-$2,500 per ton to $2,275-$3,000 per ton. In the third and fourth quarters of 2010, China Carbon accurately projected that the per ton graphite price would increase within this range.

Anticipating these price increases, after securing a $27 million USD loans from the Construction Bank of China, China Carbon purchased additional levels of inventory and paid advances to suppliers to lock in the price of its raw materials. This well-timed strategic move has China Carbon expecting improved gross margins for the first quarter of 2011 as well as considerable full year increases.

The notable rise in the commodity prices associated with carbon graphite is being driven in large part by the mounting demand for carbon graphite, which is in turn being driven by increased manufacturing associated with global economic growth. At this time, China Carbon plans to accommodate by expanding its current operations and the Company estimates that the construction of its new baking plant—which is expected to boost its annual production capacity from 30,000 tons to 60,000 tons—will be completed by June 2011 and fully operational by August 2011, subject to potential delays involved in construction, installation or production involved in the development of a new manufacturing facility. The Company is currently running at 100 percent capacity.


Monday, April 18, 2011

Comments & Business Outlook

Full Year 2010 Results:

  • Revenue increased 102%, from $15.4 million in 2009 to $31.0 million in 2010
  • Gross profit increased 218%, from $2.2 million in 2009 to $6.9 million in 2010
  • Gross profit rate increased 57.86%, from 14.17% in 2009 to 22.36% in 2010
  • Operating income increased 383%, from operating loss of ($0.9 million) in 2009 to operating income of $2.4 million in 2010
  • Net income increased 194%, from net loss of ($1.5 million) in 2009 to net income of $1.4 million in 2010
  • EPS of $0.06 vs. ($0.16), up 138%

GeoTeam® Note: 2010 vs. 2009 Adjusted EPS

  • Full Year:  $0.14 vs. $(0.08)
  • Fourth Quarter:  $0.06 vs. $(0.21)

"We are thoroughly pleased that the Company's operations generated such robust growth and excellent results in 2010," said Donghai Yu, Chief Executive Officer of China Carbon. "We are especially proud to have increased our net income by over 190 percent and operating income by over 380 percent compared to 2009. We are glad to see increased revenue from expanded customer base due to market recovery and doubled production capacity, improved margin due to a higher margin product mix, as well as strong financing support from banks."

Mr. Yu explained that China Carbon is positioned for excellent results in 2011 and for future growth in the coming years as the Company plans to expand production capacity by as much as 100% in 2011. Mr. Yu stated, "Our new facility which is expected to start operating around August 2011 will increase the production capacity of our higher margin products. The Company also has plan to actively seek opportunities to integrate vertically with raw material providers to help to save the raw material cost and thus to improve the gross profits."

The Company expects that the increased demand for its higher margin products of fine grain graphite and high purity graphite will extend through 2011, primarily due to anticipated growth in China's automobile, aerospace, defense, iron and steel industries. China Carbon also expects that relatively lower margin products of graphite electrodes will continue to experience increased demand in 2011. The Company anticipates that cash flow from operations will continue to increase with enhanced sales, improved accounts receivable collection and less bad debt expenses for accounts receivable allowances.


Liquidity Requirements

We expect that anticipated cash flows from operations, short-term and long-term bank loans and loans from a related party will be sufficient to fund our operations through at least the next twelve months, provided that:

  • We generate sufficient business so that we are able to generate substantial profits, which cannot be assured;
  •  Our banks continue to provide us with the necessary working capital financing; and
  • We are able to generate savings by improving the efficiency of our operations.

In December 2009 and January 2010, we raised an aggregate of approximately $3 million in a private placement transaction. We may require additional equity, debt or bank funding to finance acquisitions or to allow us to produce graphite for the nuclear industry, which are our primary growth strategies


Wednesday, April 6, 2011

Research

We are speculating that CHGI will report strong 2010 year end financial results

Notice verbiage in the original 2010 year end extension filing

Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?

No

Notice verbiage in the amended 2010 year end extension filing

Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?

Yes

Please be aware that a strong report is not guaranteed, but since the company ended 2009 on a sour note, we are speculating that the "significant change" will be positive. Given the state of the Chinese RTO market, we do not how investors will react to such news.


Monday, January 24, 2011

Comments & Business Outlook

NEW YORK, Jan. 24, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. today announced that it has completed the exterior construction of its new 30,000-ton plant, and will start installation and shakedown testing of a 4200-ton compressor and 36 annular kilns soon. The new facilities are expected to begin production by June 2011.


Tuesday, November 16, 2010

Comments & Business Outlook

Third Quarter 2010 Highlights

  • Revenue was $9,979,707, up 78.8% from the same quarter of 2009.
     
  • Gross profit was $2,474,084, up 62.2% from the third quarter of 2009.
  • Gross margin of 24.8%, slightly decreased 2.5% from 27.3% for the third quarter of 2009.
     
  • Net income was $1,900,563, an increase of $965,298 or 100% from the third quarter 2009.
  • Earnings per diluted share were $0.09 vs. $0.06.

"We are pleased to announce solid financial results and robust growth in the quarter," Donghai Yu, CEO of the Company commented. "Our Third Quarter results came in strong as anticipated, we experienced 78.8% growth in our revenues year over year. Due to our long production cycle, in the quarter, we began to deliver most of the orders we received at the beginning of this year. We expect to see increased demand in higher margin ultra purity graphite electrode, fine grain and high purity graphite product lines. We see this demand extending through 2010 and into 2011, primarily due to anticipated growth in the automobile, aerospace, defense, iron and steel industries in China. Thus far, in 2010, we have doubled our capacity from 15,000 tons to 30,000 tons. We have also begun construction on a new 30,000 ton facility to meet the increasing demands of our customers. Additionally, we have sufficient capital to fund all of our raw material needs for our new capacity expansion through our RMB 180 million loan from China Construction Bank."

"We have recently increased our customer base and expect to establish long term relationships with each new customer. In turn we believe this will further strengthen our robust revenue growth in the future," Mr. Yu continued.

GeoTeam® Note:  CHGI included an other income line item in its filings.  Investors should eliminate this figure for a more accurate picture of CHGI's performance.  Doing so yields EPS of $0.06 for the 2010 third quarter.

 
   Three Months ended September 30
Nine months ended September 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Sales
  $ 9,979,707     $ 5,580,776     $ 18,074,914     $ 12,131,938  
                                 
Cost of Goods Sold
    7,505,623       4,055,953       14,348,021       9,012,935  
Gross Profit
    2,474,084       1,524,823       3,726,893       3,119,003  
 
 
 
   
 
   
 
   
 
 
Operating Expenses
                               
       Selling expenses
    48,978       14,102       95,675       332,016  
       General and administrative
    706,235       218,522       2,097,959       675,932  
       Depreciation and amortization
    74,365       19,096       112,592       57,275  
      829,578       251,720       2,306,226       1,065,223  
Operating Income Before Other Income (Expense)
 
 
   
 
   
 
   
 
 
and Income Tax Expense
    1,644,506       1,273,103       1,420,667       2,053,780  
 
 
 
   
 
   
 
   
 
 
Other Income (Expense)
                               
       Interest expense
    (308,489 )     (356,891 )     (782,760 )     (761,586 )
       Interest income
    -       -       -       -  
       Other expense
    (16 )     -       (2,941 )     (1,462 )
       Other income
    556,038       19,053       556,038       545,122  
       Change in fair value of warrants
    25,129       -       588,147       -  
      272,662       (337,838 )     358,484       (217,926 )
 
 
 
   
 
   
 
   
 
 
Income Before Income Tax Expense
    1,917,168       935,265       1,779,151       1,835,854  


Monday, November 8, 2010

Deal Flow

China Carbon Graphite Group, Inc.  today announced that during the second and third quarters of 2010, it has received RMB 180 million in total from China Construction Bank through four loans, which is equal to roughly USD 27 million based on a RMB to US dollar conversion rate of 6.66 to 1.

  • Each of these loans has a one year term with an interest rate of 5.41% per year and will be renewable at the lender's option after the expiration of the loans. 
  • The loan agreement provides for operating and financial covenants typical for loan transactions of this type.
  • Proceeds of the loans will be used by the Company to purchase raw materials, specifically focusing on higher purity graphite and fine grain graphite materials.

This loan facility enables China Carbon to significantly reduce the risk of price inflation of raw materials and leverage increased facility capacity, and expand its profit margin, by allowing the Company to buy larger amounts of raw materials in advance in order to receive better pricing.

"We believe the price of raw materials will continue to rise in the coming years, the loans we received from China Construction Bank will allow us to lock in the price of our raw materials by facilitating larger advanced purchase arrangements at better pricing, in order to hedge against the risk of inflation. Furthermore, with the increasing sales and price of our products, we believe we will deliver improved results in next few quarters, showing incremental increases in our top and bottom line," said Donghai Yu, the Chief Executive Officer of China Carbon.

"The ability for us to receive these loans on such favorable terms from one of the largest Chinese banks further shows the confidence of our business operation and future industry potential," Donghai Yu continued.


Wednesday, September 1, 2010

CFO Trail
On September 1, 2010, Ms. Ting Chen, Chief Financial Officer, informed the Board of Directors of China Carbon Graphite Group, Inc. (the “Company”) that she would resign as the Chief Financial Officer and as a member of the Board of the Company, effective on that date, and the Board of Directors has accepted her resignation. There was no disagreement between Ms. Chen and the Company which led to her resignation.

Thursday, August 20, 2009

Research

China Carbon Graphite reported 2009 second quarter results today:

  • Revenues decreased 53% to $ 3.7 million
  • GAAP Earnings per share fell to 50% to $0.04
  • Geo calculated Tax adjusted non-GAAP Earnings per share fell 40% to $0.03

While we didn't expect results to drastically recover from plant closure issues we discussed in our initial report, we were hoping for a slightly better financial showing. Furthermore, China Carbon did not revisit its financial guidance of top and bottom line growth of 15% to 20%.

Still, there was some encouraging information presented in China Carbon's press release that bodes well for long-term investors.

  • A resolution of a capitalization issue arising from the reverse merger transaction in December 2007 that called for the company to pay $4 million in fees.
  • China Carbon is now starting to see an increase in order flow. "The Company received purchase orders late in the second quarter that it expects will be filled in the third and fourth quarters of 2009."(Source: Press Release)
  • The company commented that it is pursuing acquisition opportunities.

Value investors can find solace in that the stock is still trading at a discount to its current book value per share of $2.61.  China Carbon will likely have to relay a message that it can resume earnings per share growth in the near future in order to fully garner Wall Street's attention. The stock has already come a long way in a short period of time, mainly due to capital restructuring initiatives. Now it is time for China Carbon to show the street that it can grow its business. Completing an acquisition could accomplish this task.


Tuesday, August 4, 2009

Research
New article available for China Carbon Graphite

Thursday, July 16, 2009

Research

On Wednesday, July 1, 2009, 10:14AM The GeoTeam® coded China Carbon Graphite (chinacarboninc.com) as a GeoSpecial. At its current price the stock may offer an attractive risk reward opportunity. 

 In 2007 the China Carbon saw its earnings per share grow 30.7% with a 47.2% increase in sales.  2008 saw a continuation of growth as sales and adjusted net income grew 7.7% and 11.1% respectively. 2008 growth would have been greater if it had not been for the Olympics which necessitated the closure of Xingyong's plant facilities as mandated by the Chinese government for the August 2008 Olympics. The closure caused the Company to shut down its production. The Company requires a 6 months production cycle and therefore was unable to resume production until March of 2009."  With operations back to normal the company is positioning itself to propel its growth rate to new heights. 

China Carbon is one of the China's top three producers of specialty graphite products. The Company's main products are graphite electrodes, fine grain graphite and high purity graphite. In general, the mineral is a valuable commodity in the Chemical, Mechanical, Nuclear and Electrical industries because of its ability to conduct heat and electricity and for its refractory nature (chemical and physical stability over a wide range of temperatures). These industries often need durable materials that can withstand conditions and processes over a long period of time, characteristics that lack in other industrial materials.

Graphite is considered to be one of the purest forms of carbon and highest grade of coal. Purity refers to the percent of carbon versus other non-carbon impurities found in the mineral. Graphite is one of two allotropes of carbon (the other being diamonds), the term allotrope meaning that it is a naturally occurring form of pure carbon. The chart below illustrates different grades of coal as they compare to carbon's allotropes.


    Mineral Constituents by % Weight
Name *Volatiles % C Carbon % H Hydrogen % O Oxygen % S Sulfur %
Braunkohle (Lignite Coal) 45-65 60-75 6.0-5.8 34-17 0.5-3
Flammkohle (Flame coal) 40-45 75-82 6.0-5.8 >9.8 ~1
Gasflammkohle (Gas flame coal) 35-40 82-85 5.8-5.6 9.8-7.3 ~1
Gaskohle (Gas coal) 28-35 85-87.5 5.6-5.0 7.3-4.5 ~1
Fettkohle (Fat coal) 19-28 87.5-89.5 5.0-4.5 4.5-3.2 ~1
Esskohle (Forge coal) 14-19 89.5-90.5 4.5-4.0 3.2-2.8 ~1
Magerkohle (Non baking coal) 10-14 90.5-91.5 4.0-3.75 2.8-3.5 ~1
Anthrazit (Anthracite Coal) 7-12 >91.5 <3.75 <2.5 ~1
Graphite 7 >99 <1 <1 <1
Diamond 0 100 0 0 0
Source: Wikipedia

There are three types of naturally occurring graphite; high crystalline graphite, amorphous graphite and flake graphite, all of which are named for observations that can be made about how they appear in their natural environments. However, graphite can also be artificially processed to obtain a synthetic form of the mineral.

Amorphous graphite has applications in metallurgy, pencil production, refractories, coating, lubricants and paint production.

Crystalline graphite can be used in batteries, lubricants, grinding wheels and powder metallurgy.

Flake graphite is used predominantly in refractory applications, mainly in secondary steel making; in addition to this it may also be used in lubricants, powder metallurgy, pencils and coatings. Most sources of natural graphite are also used in the fabrication of graphite foil.
 
Synthetic, or artificially prepared, graphites are used in aerospace applications, batteries, carbon brushes, graphite electrodes for furnaces and metallurgical processing, and moderator rods in nuclear power plants. China Carbon specializes in "using carbon rich raw materials to manufacturing graphite with a high degree of purity. The raw materials, purchased from domestic Chinese suppliers, include materials such as coal asphalt, asphalt coke, metallurgy coke, needle coke, metallurgy coke powder, quartzose sand, coal, petroleum coke and calcined coke. The extraction process typically requires a large amount of heat and several iterations of critical extraction steps before the desired purity is obtained.

Understanding China Carbon Graphite:

China Carbon Graphite manufactures three types of synthetic graphite products. Each type of product can generally be broken down into different quality grades that determine its use.

Its products are generally used:

  • As a component in other products,
  • As an element of the machinery in a facility
  • To produce nuclear energy
  • In the manufacturing process of other products.

The company typically focuses on high end applications within its varying product lines.

1. Graphite electrodes line: Conducting material used for electric arc furnaces in the manufacture of steel and smelting alloy steel, brown alumina, yellow phosphorus, or other metals.

The electric arc furnace operates as a batch melting process producing batches of molten steel. The energy supplied during the smelting process can be either chemical or electrical. Electrical energy is supplied via the graphite electrodes and is usually the largest contributor in smelting operations.

2. Fine Grain graphite: Widely used in smelting for colored metals and rare-earth metal smelting as well as the manufacture of molds. (When liquid metal needs to poured into a container, that container must have a high tolerance for heat. Because graphite has a low sensitivity to heat, it is ideal for making molds in this scenario).

3. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. Common uses of this product line are the manufacture of molds, parts for machinery, automotive parts, lining in pipes to prevent chemical erosion, cubicles for silicon wafers and nuclear power plant applications. High purity graphite is generally lighter and less sensitive to heat than the aforementioned product lines.

Growth strategy. Going forward the company will follow a three pronged strategy:

1. Continue to serve the higher end markets in its Graphite electrodes line and Fine Grain graphite product lines.

2. Financing: The Company has applied for a $26 million loan financing from the PRC at below market rates. Use of proceeds: immediate acquisition, expansion of current plant and to purchase additional equipment for the manufacture of fine grain and high purity products.

  • The company has identified a potential acquisition target, that when purchased, would result in a 100% increase of both revenues and profits. If the transaction occurs it would double the size of the company in terms of revenue and net income.

3. Intensify its penetration into the high purity markets: A major impetus for growth will come from China Carbon's increased focus on its high purity graphite line.

There are numerous reasons to concentrate on the high purity graphite line:

1. Less competition

  • The majority of Chinese graphite manufacturing companies are not involved in the production of high purity graphite.
  • The expertise and high cost of machinery needed to manufacture high purity graphite is very demanding, creating a barrier to entry.
  • The company has a qualified and seasoned staff. This is important because "the reputation of the manufacturer and the quality of the product may be as important as price."

2. High purity graphite opens the door to a much broader array of markets. This should reduce the company's sensitivity to economic cycles when compared to its other product lines.

3. Margins in the high purity graphite line are significantly better as compared to its other product lines.

4. High purity graphite is becoming the preferred material of choice utilized in the production of nuclear plants. This trend presents an exciting opportunity on which China Carbon is poised to capitalize.

  • The projected significant investments in Chinese nuclear power industry provide opportunities for companies that are directly or indirectly involved in the nuclear power industry.
  • Energy demands and savings, as well as emission reduction requirements pose growing pressures for the fast development of the Chinese economy. Industry experts contend that nuclear power is the most competitive solution to change Chinese energy structures and meet the energy demands.
  •  By the end of 2008 a total of 11 nuclear power generating sets were in operation. The Chinese government is seeking to build 40 nuclear reactors by 2015.
  • In 2008 the annual nuclear power production was about 68 billion KWh, accounting for 2% of the total power production in China. The Chinese government plans that the installed capacity of nuclear power in China will eventually reach 5%, the electrical power production will reach 8% and the installed capacity of the nuclear power will exceed 70 million KW by 2020. If these estimates materialize, then the investments in Chinese nuclear power construction will total 720 billion Yuan (105 billion USD) in approximately 10 years.

The GeoTeam is speculating that the current stock price of China Carbon has been suffering as a result of the following reasons.

1. A capitalization issue arising from the reverse merger transaction in December 2007 called for the company to have to pay $4 million in fees. The initial payment of $800,000 was due by December 13, 2007 and the remaining $3,200,000 is due by September 13, 2009. Neither payment had been made.

  •  Problem solved- China Carbon has submitted capitalization reorganization plan to the PRC for approval. "We expect approval for the recapitalization in the next 60 days. These actions will effectively reduce the intercompany investment obligations owed to Yongle from $4,000,000 to $100,000 and eliminate possible fines or penalties by the PRC business bureau.

2. The 2008 Olympics resulted in short term facility shut downs.

  • Problem solved- "The sales decrease reflects the closure of Xingyong's plant facilities as mandated by the Chinese government for the Olympics in August 2008. The closure caused the Company to shut down its production. The Company requires a 6 months production cycle and therefore was unable to resume production until March of 2009." With the conclusion of the Olympics operations are back to normal.

3. Dilution due to financing needs for acquisitions and plant expansion.

  • Problem solved - "As one of the largest privately owned employers in Inner Mongolia, we have been recommended by the local government of Inner Mongolia to apply for a RMB 180,000,000 loan (approximately $26,000,000 US) through the Central government's economic stimulus plan. Once approved, it will expedite the process of doubling our production capacity to 30,000 metric tons annually and allow us to develop nuclear graphite for the more than 40 nuclear reactors the government is seeking to build by 2015."
  • Final approval for the loan and funding is expected in the fourth quarter of this year.

4. The six million outstanding warrants makes it difficult to compile an EPS estimate and accurately value the stock. The issue of potential dilution is still open and could put a short term cap on the stock unless:

  • The company considers steps to restructure the contract terms of the outstanding warrants, a step the GeoTeam® would highly recommend. To that end, the GeoTeam® has been able to confirm that China Carbon is preparing a repurchase agreement to retire 5 million warrants.
  • Completes an acquisition that can deliver EPS growth despite dilution.
  • Adds manufacturing capacity that can deliver EPS growth despite dilution.

5. No investor awareness initiatives.

  • Problem solved-

-China Carbon Graphite has retained the services of Ventana Capital Partners. (www.venturecapitalpartners.com)
-China Carbon Graphite has retained the services of Capital Group Communications. (www.capitalgc.com)
-Research report has been furnished by Crystal Equity Research which should help the company gain additional exposure. (www.crystalequityresearch.com)

The GeoTeam® will follow the CHGI story very closely. The stock may start to react positively when the loan and capital restructuring terms are actually approved. The company has provided guidance implying that it will experience sales and earnings growth in 2009.

"As we look at the remainder of 2009, we expect that China Carbon will achieve a 15% to 25% increase in top line and bottom line in 2009. We are encouraged as the overall economic condition has been steadily improving in China. We are especially encouraged by the strong demand for our high quality fine grain graphite and high purity graphite."

It appears that this guidance does not take into account potential for acquisitions or manufacturing capacity increases, either of which could significantly add to the 2009 out look, a situation possibly needed in the short term for investors to get over dilutive issues.

Book Value Per Share using current outstanding shares: $2.61
Book Value Per Share including outstanding warrants:  $1.82

Enterprise Value Per Share using current outstanding shares: $1.15
Enterprise Value Per Share including outstanding warrants: $1.03

The GeoTeam® will publish complete valuation scenarios as events unfold.


Sources:

chinacarboninc.com
thefreelibarary.com
reportbuyer.com
crystalequityresearch.com


Wednesday, July 1, 2009

Research

China Carbon Receives Initial $5 Million PO From Tianrui Group.

"The PRC stimulus package will boost spending on infrastructure as well as assist in the recovery of steel manufacturing in China," stated Donghai Yu, CEO of the Company. "We expect that the effects of this stimulus package could result in a substantial increase in order flow for the remainder of 2009."

Source: GlobeNewswire (June 29, 2009)

"As one of the largest privately owned employers in Inner Mongolia, we have been recommended by the local government of Inner Mongolia to apply for a RMB 180,000,000 loan (approximately $26,000,000 US) through the Central government's economic stimulus plan. Once approved, it will expedite the process of doubling our production capacity to 30,000 metric tons annually and allow us to develop nuclear graphite for the more than 40 nuclear reactors the government is seeking to build by 2015."

Source: GlobeNewswire (May 27, 2009)


Special Situations

The GeoTeam is taking a closer look at China Carbon Graphite and coding the stock as a special situation play- repricing of risk premium/corporate restructuring. 

See comprehensive review of CHGI.

The company is the largest wholesale supplier of fine grain and high purity graphite in China and one of the nation's top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare-earth metal smelting as well as the manufacture of molds.  Management commented,

"During the year ended December 31, 2008, we had sales of $27.3 million , as compared to sales of $ 25.4 million for the year ended December 31, 2007, an increase of $1.9 million or approximately 7.48%. This increase resulted from our marketing efforts both to develop new customers and make follow-on sales to existing customers, although our sales decreased in the fourth quarter reflecting the effects of the global economic downturn as well as the closure of Xingyong’s plant facilities for almost two months for the Olympics in August 2008 as part of the Chinese government’s program to reduce air pollution during that period. This shutdown reduced our production in third quarter and therefore affected sales in fourth quarter 2008 because it takes about three months to six months to produce graphite products. These factors caused our sales in fourth quarter 2008 to decrease compared to both the third quarter 2008 and the fourth quarter of 2007.

We believe that our working capital, together with the cash flow from our ongoing business will be sufficient to enable us to meet our normal cash requirements for the next twelve months provided that we generate sufficient business so that we are able to generate a profit, which cannot be assured. We will require additional working capital if we are going to make any acquisitions or to purchase equipment to expand our production capacity. We will also need additional funding to make the capital payment to Yongle if we don’t receive any further extensions. Further, we expect that both revenue and the results of our operations will decline as a result of the effects of the global economic downturn. As a result, if we are not able to generate savings by making our operations more efficient, we may require additional funding for our normal operations. We cannot assure you that funding will be available if and when we require funding. Further, in the event that any of our lenders demand payment at the time the loans are due in May 2009 through July 2009, we would require additional financing in order to repay those loans, and we cannot assure you that we will be able to obtain the necessary funding either from another bank or from other sources."


Financials
 
1st QUARTER 2009 vs. 2008 FINANCIAL SNAPSHOT ENDED MARCH

  1st Quarter 2009 1st Quarter 2008 Period Change
GAAP Revenue $2.9 million $5.7 million 49.1%
GAAP EPS $0.04 $0.02 100.0%
Tax Rate 00.0% 00.0% 00.0%
Fully Tax-Adjusted EPS b $0.0256 $0.0128 100.0%
Fully Diluted Shares c 13,847,244 18,757,257 -26.2%

Source: See Release, May 27, 2009.

FULL YEAR 2008 vs. 2007 FINANCIAL SNAPSHOT ENDED DECEMBER

  Full Year 2008 Full Year 2007 Period Change
GAAP Revenue $27.3 million $25.4 million 7.5%
GAAP EPS $0.21 $0.34 -38.2%
Company Supplied Non-GAAP EPS a $0.32 $0.34 -20.6%
Tax Rate 00.0% 00.0% 00.0%
Fully Tax-Adjusted GAAP EPS b $0.15 $0.22 -31.8%
Fully Tax-Adjusted Non-GAAP EPS a,b $0.21 $0.22 -4.5%
Fully Diluted Shares c 14,623,187 10,506,099 39.2%

Source: See Release, April 20, 2009

Non-GAAP EPS figures generally 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.

b For valuation purposes, The GeoTeam® prefers to adjust EPS to reflect a United States tax rate of 36%

It's important to note that the company has a total of six million warrants outstanding (with exercise prices of $1.20 and $2.00) that will result in significant dilution if the stock price rises.


 


Sunday, February 22, 2009

Investor Presentations