Aug 18 2010
Lihua International, Inc. (Nasdaq: LIWA) ("Lihua" or the "Company"), a leading Chinese developer, designer, and manufacturer of low cost, high quality alternatives to pure copper products, including refined copper products and superfine and magnet wire, as well as copper clad aluminum ("CCA") wire, today announced that it has signed its first customer contract for its new copper anode product with one of the world's leading copper and metal conglomerates based in the People's Republic of China (PRC).
The China-based conglomerate has total annual revenue of approximately $5.0 to $6.0 billion dollars and operates three major business segments composed of metals, chemicals and equipment manufacturing.
Under the terms of the supply agreement, Lihua will supply a minimum of 1,000 metric tons of copper anode to this customer on a monthly basis. Lihua launched production of copper anode from its newly built second smelter in July 2010, and will fulfill this customer's supply orders commencing in August 2010. Pricing of the product will be determined upon delivery at the prevailing market price. The customer is expected to provide Lihua with its full year 2011 volume demand indication later this year. Lihua is expecting profitability for its copper anode product similar to that of its copper rod product.
Copper anode is the fundamental building block for almost all pure copper products, and holds a wide range of potential end market uses. Lihua launched production of copper anode in July 2010, in conjunction with the completion of its second copper smelter. Lihua's new state-of-the-art smelter holds an annual capacity of 25,000 tons and meets China's strict industry and environmental requirements. The completion of its second smelter doubles Lihua's manufacturing capacity to 50,000 tons per year.
"This supply contract represents a significant endorsement of our newest pure copper product from one of the largest copper conglomerates in both China and the world," said Jianhua Zhu, Chairman and CEO of Lihua. "We are currently working to optimize the allocation of our copper anode output to a few select customers to ensure that we are diversifying our customer base for this new product line while quickly securing an elite group of customers with healthy demand. We are very excited to have forged our first partnership with this industry leader. We expect copper anode products to provide meaningful contributions to both our top and bottom line beginning in the third quarter, with our second smelter operating at full capacity beginning in September of this year."
As previously announced, Lihua expects full year 2010 gross profit to increase by 46-53% over 2009, to $52.9 to $55.7 million, and non-GAAP net income to grow by 48-57% to $38.1 million to $40.3 million.