Guanwei Recycling Corp (OTC:GPRC)

NEW YORK, Oct. 7, 2014 (GLOBE NEWSWIRE) -- The Nasdaq Stock Market LLC ("Nasdaq") announced today that it has issued a delisting notification letter to Guanwei Recycling Corp. (the "Company") (GPRC) due to the Company's failure to file its Form 10-Q for the period ended June 30, 2014, as required by Nasdaq Listing Rule 5250(c)(1). The Company has not requested review of this delisting determination and, as a result, Nasdaq will file a Form 25 with the Securities and Exchange Commission to complete the delisting. The delisting will become effective ten days after the Form 25 is filed.

The Company's securities were halted because the Company failed to disclose receipt of the delisting determination. For further information about the trading halt please visit:

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On September 9, 2014, Guanwei Recycling Corp. (the “Company”) received notice (the “Notice”) from The NASDAQ Stock Market LLC (“Nasdaq”) that because the Company has not maintained a bid price of $1 per share for the last 30 consecutive business days, it was not in compliance with Sections 5810 of the NASDAQ Listing Rules (the “Listing Rules”).

In order to maintain its listing, the Company must regain compliance in a period of 180 calendar days. In the event the Company does not regain compliance, the Company may be eligible for additional time. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period. If the Company meets these requirements, it will be granted an additional 180 calendar days. However, if it appears to Nasdaq that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice that the Company’s securities will be subject to delisting.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On August 25, 2014, Guanwei Recycling Corp. (the “Company”) received notice (the “Notice”) from The NASDAQ Stock Market LLC (“Nasdaq”) that the Company is not in compliance with the Listing Rules of Nasdaq (the “Listing Rules”) since the Company had not filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (“Filing”). The Company is afforded 30 calendar days to prepare and submit a plan of compliance.

In determining whether to accept the Company’s plan, Nasdaq will consider such things as the likelihood that the Filing, along with any subsequent periodic filing that will be due, can be made within the 180 day period, the Company’s past compliance history, the reasons for the late Filing, other corporate events that may occur within our review period, the Company’s overall financial condition and its public disclosures. If Nasdaq accepts the Company’s plan, it can grant an extension of up to 180 calendar days from the Filing’s due date or until February 17, 2015 to regain compliance. If Nasdaq were not to accept the Company’s plan, the Company would have the opportunity to appeal that decision to a Hearings Panel.

The Company intends to consider all available options to regain compliance with the requirements of the Listing rules. There can be no assurance that the Company will develop a plan to regain compliance, that Nasdaq will accept such plan, that any such plan will be successful, that the Company will appeal any determination by Nasdaq to reject the plan, that Nasdaq will grant any such appeal, or that the Company will be able to regain or subsequently maintain compliance with the requirements for continued listing under the Listing Rules. Failure to maintain listing on Nasdaq of the Company’s common stock may have a material adverse effect on the price or liquidity of the common stock.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On August 21, 2014, Guanwei Recycling Corp. (the “Company”) received notice (the “Notice”) from The NASDAQ Stock Market LLC (“Nasdaq”) that the Company is not in compliance with Rule 5605 of the Nasdaq Listing Rules (the “Listing Rules”). Rule 5605 of the Listing Rules requires a company to maintain a majority independent board and an audit committee with at least three independent directors and at least one financial expert. Because of the resignation of Mr. Howard Barth, as previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2014, the Company no longer complies with Rule 5605 of the Listing Rules.

FUQING CITY, China, July 23, 2014 (GLOBE NEWSWIRE) -- Guanwei Recycling Corp. (the "Company" or "Guanwei") (Nasdaq:GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), reported today it received a letter of notification from the Depository Trust Company ("DTC") on July 18, 2014, that DTC intends to suspend all book entry services provided to DTC participants with respect to GPRC shares (the "Global Lock"). The letter indicated the Company has until August 14, 2014 to provide a written response stating its objections to the DTC action, after which the latter will make either a determination or a request for further information within 20 days.

The DTC decision is the result of a recent SEC enforcement action against S. Paul Kelley and four other individuals, in which the SEC alleges that Kelly et al issued unregistered shares of the Company in violation of Section 5 of the Securities Act. (See Securities and Exchange Commission v. S. Paul Kelley. et al., Civil Action No. 2:14-cv-2827) (D. N.J., filed May 5, 2013). It is DTC's position that such shares were not eligible for deposit at DTC for book entry services. Because all the Company's shares held by DTC are freely interchangeable, DTC has determined to implement the Global Lock. The Company said there were no allegations made about any improprieties by GPRC, and believes DTC's actions are unfair and unnecessarily damaging to current shareholders and the Company.

The Company said it is reviewing its options and, if there are any new developments with respect to this matter, it will inform shareholders.

Item 8.01.  Other Events.

On July 23, 2014, Guanwei Recycling Corp. (the “Company”) announced that it received a letter of notification from the Depository Trust Company (“DTC”) on July 18, 2014, stating that DTC intends to suspend all book entry- services provided to DTC participants with respect to GPRC shares. The Company is reviewing its options and, if there are any new developments with respect to this matter, it will inform shareholders.

Fourth Quarter 2013 Results

• The company reported revenue of approximately $23.4 million, compared to $26.2 million for the same quarter 2013.
• The company reported EPS of $0.12 compared to $0.29 for the same quarter 2013.

"Given the positive trends we experienced in the first half of the year and again as we closed the year out, the full year result was a disappointment," stated Mr. Chen Min,
Chairman and CEO of the Company. He added, "The government focus on imported waste, which led to heightened examinations of our production and storage facility, is not likely to impact our results in the future. Further, as a leader in maintaining the highest possible environmental standards, we applaud the government's focus on the environment and believe our leadership and the investments we continue to make in environmental improvements will permit our Company to retain its key competitive edge."

Business Outlook

"The opportunity for continued growth in 2014 is there," stated Mr. Chen. "In 2012 we increased our manufacturing capacity to 80,000 tons and, in January this year, received approvals for a total of 135,000 tons of imported plastic waste. Our customer list is well diversified and should insulate us from the fluctuating demand in any one industry, as we continue to expand further into the construction equipment industry in line with the Chinese government's stimulus plans." He noted further, "Most importantly, we will continue to aim to maintain a significant price advantage over competitors who in most cases lack the scale or the sophistication to match the environmental standards of our facilities."

Third Quarter 2013 Financial Results

• Net revenues in the 2013 third quarter were $16,299,676, down 8.97% from the same period last year.
• Net income in the 2013 third quarter was $2,857,806, or $0.27 per share, compared with $3,622,832, or $0.35 per share in the same quarter last year.

Mr. Chen Min, Chairman and CEO of the Company, explained that the interruption in production was a consequence of heightened inspections of its facilities by various government agencies stemming from the government's new "Green Fence" policy which tightens requirements for imported waste materials.

"Going forward," he said, "we anticipate maintaining our industry leading environmental practices and see no material impact on our business from this new policy. We are therefore maintaining our favorable outlook for the remainder of the year, based on anticipated moderately improved demand and selling prices for our products, in an improving economy, coupled with continuing anticipated stabilization in our labor and raw material costs."

Second Quarter 2013 Financial Results

• Net revenues in the second quarter of 2013 were $17,732,347, including $17,266,070 in sales of manufactured recycled LDPE and $466,277 in sales of sorted non-LDPE materials. 2013 second quarter sales of manufactured recycled LDPE were up 5.21% compared with the $16,410,448 in sales of manufactured recycled LDPE in the same period last year.
• Net income in the second quarter of 2013 increased 2.37% to $3,237,997 from $3,163,030 in the year earlier quarter. EPS was $0.31 in both periods based on approximately 10.41 million diluted weighted average number of common shares outstanding in the 2013 quarter compared with approximately 10.35 million shares in the 2012 second quarter.

Outlook

"We anticipate the steady progress we have made over the past couple of quarters will continue through the remainder of the year, as current indications are that raw material costs will continue to stabilize and demand for recycled LDPE will continue to grow," stated Mr. Chen Min, Chairman and CEO.

"Further," he added, "we are well positioned to capitalize on stronger demand for our products as China's economy strengthens further and we retain our competitive advantage by staying focused on being the environmental leader in the industry."

First Quarter 2013 Financial Results

• Net income grew 14.53% year over year as the Company achieved small year over year increases.
• EPS in the 2013 first quarter increased to $0.23, compared with $0.21 a year earlier.

Outlook

"We continue to be very optimistic about our longer term outlook," stated Mr. Min Chen, Chairman and CEO of the Company, "for as the economy in China strengthens further, we anticipate demand for our lower cost, high quality recycled LDPE will continue to grow. We expect to sustain our competitive advantages by remaining focused on maintaining our environmental leadership."

He added, "Since the third quarter of 2012, we have seen continued stabilization in our manufacturing costs; in particular, the cost of imported plastic waste, our primary raw material. Based on current communications with our major suppliers, we believe that average raw material costs should remain fairly stable for the remainder of 2013."

FUQING CITY, CHINA--(Marketwire - Sep 27, 2012) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), said today that despite the economic downturn in China which continues to affect the operations of most customers, the Company nevertheless has been able to broaden its customer base, reporting an increase to 154 active customers going into the 2012 third quarter as compared to 124 at the end of 2011.

"As a consequence," stated Mr. Min Chen, Guanwei's CEO and Chairman, "we believe that despite the present down cycle in the economy, probably the worst in memory, we will push forward even stronger than before with a number of good new customers."

"While it is still too soon to pinpoint when the rebound in the economy will occur," Mr. Chen added, "we continue to be cautiously optimistic about modest pricing improvements and a leveling in costs for our imported raw materials."

FUQING CITY, CHINA--(Marketwire - Jul 13, 2012) - Guanwei Recycling Corp. (the "Company") (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), reported today it received a letter from the Nasdaq Stock Market stating that for the 30 day period from May 23, 2012 to July 6, 2012, the bid price of the Company's common stock closed below the minimum $1.00 per share requirement for continued inclusion on Nasdaq pursuant to Nasdaq Marketplace Rule 5450(a)(1) (the "Minimum Bid Price Rule").

The Nasdaq letter has no immediate effect on the listing of the Company's common stock. In accordance with Nasdaq Rule 581010(c)(3)(A), the Company will be provided 180 calendar days, or until January 7, 2013, to regain compliance with the Minimum Bid Price Rule. The Company may regain compliance with the Minimum Bid Price Rule if the bid price of the Company's Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to January 7, 2013.

The Company intends to actively monitor the closing bid price of its Common Stock and will consider available options to regain compliance with the Minimum Bid Price Rule.

Mr. Min Chen, Chairman and CEO of the Company, commented further, "While the recent economic environment has been difficult, we remain very optimistic about our long term growth prospects and believe that our shares ultimately will be valued accordingly."

FUQING CITY, CHINA--(Marketwire - Jun 13, 2012) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), said today it believes the recent announcement by the central bank of China of a quarter-percentage-point cut in its benchmark lending and deposit rates may prove helpful to China's economy and, in particular, several of Guanwei's customers.

"The decisions by the central bank, which include providing banks the ability to offer discounts to the key lending rate, as well as a recent government decision to speed up certain project approvals, should make it easier for a number of our customers to plan and grow their businesses against the backdrop of what has become the most difficult economic environment in China since 2008," stated Mr. Chen Min, CEO of the Company.

He added, "While we believe these actions provide good news for Guanwei's business, it is too soon to quantify. However, we are in regular contact with our customers in more than ten different industries and well positioned to benefit from an improving environment wherever it develops most strongly."

GUANWEI RECYCLING CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Full Year 2011 Results

• 2011 net revenues increased 34% to a record $63,600,678 from $47,534,645 a year earlier.
• Net income in 2011 grew 29% to a record $12,793,448, or $0.64 per diluted share, compared with $9,927,396, or $0.50 per diluted share in 2010.
• The Company's annual combined raw material import quota was increased to 99,000 tons in 2011 and 115,000 tons in 2012.
• Production capacity was expanded to 80,000 tons from 65,000 tons.
• Short term debt was paid off and working capital increased at year end to $23.8 million from $13.4 million a year earlier.
• With new equipment and improved facilities, product quality was enhanced while the Company maintained its pricing advantage over virgin plastic.

Continuing strong domestic demand for the high quality, competitively priced recycled plastic manufactured at its zero discharge facility, also is expected to produce another year of record growth in 2012.

Strong Growth Outlook For 2012

"2011 certainly was another banner year for our Company," Mr. Chen Min, Chairman and CEO of the Company, commented. He continued, "not only did we see core sales advance nearly 40%, but we continued to maintain gross margins above 30% and generated another strong gain on our bottom line."

"Further," he added, "through careful planning and sound execution, we were able to ratchet up our production capacity on a largely self-financed basis, and enter the new year with strong financials and no debt. Additionally, we obtained a substantial increase in our government quota for imported raw material."

"With these accomplishments," he stated, "we are confident of another year of record results in 2012. Even with an anticipated slowing in our domestic economy, we have a customer base that is well diversified, and the more than 40% price advantage our recycled plastic offers compared with virgin plastic continues to make it quite attractive."

"At the same time," Mr. Chen added, "we hope that in 2012 investor perceptions in the U.S. of Chinese companies such as ours with outstanding track records and continuing strong growth potential will begin to improve, and the patience of our shareholders will begin to be rewarded."

Second Quarter 2011 Results

• 2011 Q2 revenues increased 73% to $15.76 million, from $9.12 million in the year earlier quarter.
• Q2 net income increased 107% to $3.45 million or $0.17 per share, compared with $1.67 million, or $0.09 per share, in the same period last year.

Commenting on results, Mr. Chen Min, Chairman and CEO of the Company, stated, "Our growth in the quarter and through the first half of the year again demonstrates the very strong demand in China for our recycled LDPE which is used as a direct substitute for virgin plastic or blended with it to lower manufacturing costs. It should be noted that the upgrade of our facilities in the first half of 2010 reduced somewhat our production in that period, but the resulting enhancements to our product have contributed to our success this year and will continue to facilitate future growth." He added, "The expansion of our import quota certainly was the most significant event so far this year, positioning us to meet the strong and growing demand for our product over the foreseeable future."

FUQING CITY, CHINA--(Marketwire - Jul 11, 2011) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), announced today that it received official government approval for expansion of its quota for imported plastic waste which will allow continued strong growth of its recycled plastic production.

Having met the rigorous requirements for obtaining the higher quota, the Company reported its aggregate quota of 59,000 tons of imported plastic waste has been increased to 99,000 tons in 2011, which will grow to 185,000 tons next year, following another required abbreviated permitting process.

Further, all 40,000 additional tons in its quota this year are in Guanwei's name, as will be 150,000 tons of the quota next year. An additional 35,000 tons continue to be in the name of another company which has contracted them to Guanwei for a ten year period.

The Company added it views the granting of the higher quota as a strong endorsement of its state of the art environmentally friendly manufacturing facility. Protecting the environment is a key focus of the Company and of the regulators who have granted the increase at the local, regional and national level.

For the first quarter ended March 31, 2011:

--  Revenues increased 49% to $14,142,612 compared with $9,494,226 in the
    same period last year.
--  Gross profits increased 28% and contributed to a 23% increase in net
    income of $2,715,282 or $0.14 per share compared with $2,204,604 or
    $0.11 per share in the first quarter of 2010.
--  Cash and cash equivalents were $13.95 million compared with
    $10.28 million in the year ago quarter.

The Company added that sales of its core self manufactured product on a tonnage basis increased 38% to a record 12,233 tons, compared with 8,870 tons in the prior year period. Additionally, the selling price per ton realized by the Company during the quarter increased 8.37% to $1,139, compared with $1,051 in last year's first quarter. The increase in selling price, however, lagged behind increases during the quarter in raw material (plastic waste) costs, which were the key contributor to increases in manufacturing costs of approximately 20% year over year. Although lower than the 35% gross margin in the first quarter last year, the Company achieved a gross margin of 30% in this year's first quarter, in line with historical results.

Continuing Favorable Outlook

Mr. Chen Min, Chairman and CEO of the Company stated, "We were quite pleased with the sales growth in the quarter and see continuing strength in sales through the remainder of the year from our diversified customer base. We also envision continuing bottom line growth as we maintain our focus on expanding and strengthening our relationships with suppliers and making timely adjustments in our pricing. As always, our particular focus is on maintaining compliance with the highest environmental standards, which provides us with a clear advantage over competitors."

Increasing Import Quota and Production Capacity

Mr. Chen added that the Company continues to move forward toward achieving an anticipated tripling of its current aggregate annual quota for imported plastic waste from 59,000 tons currently to an aggregate of 185,000 tons. The Company believes its application will be approved by July prorated for the remainder of the year.

He also reported that to accommodate anticipated future growth the Company is continuing to develop plans to expand production capacity which currently is 65,000 tons annually. He added, "We will proceed in a measured fashion that makes the most sense in the current financial environment."

Full Year 2010 Results:

Global Hunter on GPRC (Update November 1, 2010)

Guanwei Recycling Corp (BUY)
Initiating coverage with a Buy rating and $7 price target.
 
Guanwei is one of the largest manufacturers of recycled LDPE in China; the company imports and recycles LDPE plastic scrap material into granular plastic for use in the manufacture of various consumer, industrial and chemical products. GPRC is one of few companies in China certified by PRC representatives and Germany’s TUV Rheinland, which allows them to import higher quality waste plastics from Europe directly, resulting in higher production yields and lower input costs. Guanwei is in the process of increasing its import quota, which if granted would allow the company to more than triple its current capacity to ~185,000 tons which should drive revenue and income growth for the foreseeable future. GPRC’s current valuation of only 5.8x P/E and 3.6x EV/EBITDA (based on our 2011 estimates), coupled with a strong management team and corporate governance, makes GPRC a very attractive proposition to any value or GARP investor focused on small cap US listed China companies.
 
Key Points:

Leader in a fragmented market – recycled LDPE. Guanwei operates a 60,000 square-meter warehouse and connected manufacturing facility, giving it an annual production capacity of 50,000 tons of end products. Following the recent expansion, the company can increase its total capacity to 65,000 tons annually simply by adding an extra shift. GPRC’s facilities also utilize a recently rebuild sewage treatment plant able to filter and process waste products resulting from the manufacturing process at expanded capacity levels, while most of its competitors lack the scale to accommodate the environmental standards and sewage treatment issues involved with processing larger volumes. The company’s two primary competitors can produce ~20,000 tons of recycled plastics each, making Guanwei larger than both of them, combined. 

Large addressable market opportunity. China is the second largest manufacturer of plastics products in the world and the world’s largest recycler of plastic. China consumed more than 50 million tons of plastic in 2008, only half of which was manufactured domestically, this creates strong demand for recycled plastic as plastic consumption far exceeds domestic production. As a result, plastic recycling growth in China over the past 5 years has exceeded 30% annually. More specifically to GPRC’s products, worldwide demand for LDPE is expected to grow from 18MM tons in 2009 to about 22MM tons in 2010. 

Ability to source foreign imports of waste plastics creates a competitive advantage. GPRC has the ability to import 59,000 tons of plastic waste internationally, primarily from Europe, where sorting and classification techniques significantly supersede Chinese standards. This creates a competitive advantage relative to other China-based competitors as the higher quality inputs create higher production yields of better grade recycled grains, without having to pay above spot rates to importers and aggregators that serve as middle men. 

Expansion of the import quota should drive revenue and earnings growth. The company is actively pursuing an expansion of its current import quota to 150,000 tons; they have already received local and provincial approval and expect to receive approval from central government by the end of calendar 2010. Combined with a 35,000 ton quota from Huan Li, this will provide Guanwei with a total potential import quota of 185,000 tons. As the company increases its import quota, production volumes will follow in correlation and we would expect this to result in significant revenue and earnings growth going forward. 

Clean-tech and environmental leader in China’s recycled plastics market. In order to gain import quota, the company has had to prove its production efficiency and environmental standards to both PRC representatives granting the quota as well as to the German Environment Audit Committee. GPRC is audited by Germany’s TUV Rheinland Cert GmbH every two years to ensure processing standards. Guanwei is subject to inspections relating to air, water and noise discharge by the German audit standard. Guanwei is one of only a few Chinese importers and manufacturers with this compliance certificate. German suppliers are not allowed to sell plastic waste to manufacturers that do not comply.
 

Guanwei Recycling announced today that in its third quarter ended September 30, 2010, the Company sold more than 12,000 tons of recycled LDPE, up strongly from the 8501 tons produced and sold in the second quarter this year. The Company noted that third quarter production was achieved with approximately 15,000 tons of imported plastic waste.

"With sales through the first nine months of 2010 of approximately 30,000 tons of recycled LDPE and continuing favorable market conditions," stated Mr. Chen Min, Chairman and CEO of the Company, "we are quite confident we will reach or exceed full year sales of 42,000 tons, the high end of our prior growth forecast." 

The Company anticipates reporting 2010 third quarter and nine month results on or prior to November 15^th.

Note: Shares outstanding have not included the fully diluted share count of 20 million shares.

Post Merger Share Calculation:

• 72,510,141: Pre reverse merger outstanding shares
• 64,510,140: Shares cancelled as part of the Share Exchange
• 12,000,000: Newly issued shares of Common Stock

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  20,000,000 

"We have a fast growing business that saw sales increase 61% in 2008 to $25.4 million with more demand for our high quality product than we could supply. The financial crisis in the first half of 2009 temporarily lowered demand and prices, but we still achieved a 74% gain in operating income on a sales increase of 149% to $30.4 million. As anticipated, in the second half of the year, prices for LDPE have strengthened and we are entering 2010 with high expectations for continuing strong growth."

Source: MarketWire (December 24, 2009)

Guanwei Recycling  became public via a reverse merger transaction on On November 5, 2009.

Company Details:

• Guanwei Recycling is China's largest manufacturer of recyclable Low Density Polyethylene (LDPE). It has generated rapid growth producing LDPE from plastic waste procured in Europe which it recycles into recyclable LDPE for sales to more than 200 manufacturers in more than ten industries in China.
• Since 2004, with national production capacity exceeding 20 million tons, China has become the second largest plastics products manufacturing country in the world after the United States, according to the Plastic Industry Statistics & Research Report (2008).

Merger Details:

• Post reverse merger shares: 72.92 million.
• There are no outstanding warrants to purchase our securities

Financial Information: