China Tracker - Details for China Shengda Packaging (CPGI)

 China Shengda Packaging
 Business Outlook

The growth in revenues between the first and second quarters resulted in a mix of products with lower gross margins, in part because of the nature of the product and in part because of continuing labor and raw material cost pressures. Even so, our current order activity points towards a stronger second half of the year with a return to a higher margin product mix. The Company reiterates its guidance for the full fiscal year of 2011, of revenues of between $115 million and $125 million, net income of between $11.5 million and $12.5 million, and diluted earnings per share of between $0.29 and $0.32.

"We are encouraged by the pick-up in sales in the second quarter. We are continuing to build customer relationships and look forward to offering new options from our new flexo line in the second half, all of which will provide momentum as we head in to 2012."

(Source: PR Newswire, 2011-08-15)

China Shengda Packaging Group today announced that its board of directors has approved a share repurchase program for up to $5 million of its common stock over the next twelve months, subject to market and other conditions. "This reflects the board's belief that our stock is significantly undervalued given our strong industry position and growth opportunities. We will continue to pursue actions that maximize value for our shareholders."

The Company also reiterated previous guidance expecting fiscal year 2011 revenues of between $115 million and $125 million, net income of between $11.5 million and $12.5 million, and diluted earnings per share of between $0.29 and $0.32.

(Source: PR Newswire, 2011-07-18)

The Company expects fiscal 2011 revenues of between $115 million and $125 million, net income of between $11.5 million and $12.5 million, and diluted earnings per share of between $0.29 and $0.32.

The Company anticipates that the second quarter will be weaker than the first quarter, an improvement in the back half of the year, and an overall flat full year sales performance compared to 2010. The restrictive financial policies of the PCOB are expected to persist over the balance of the year and continue to impact the manufacturing enterprises in the YRD. The Company also expects electricity shortages in the YRD during the summer season that are more severe than those experienced historically. The Company expects net income to be lower than in 2010 given the inflation in raw material prices and labor costs in China. Based on the experience of management, during a period of inflation, it is very difficult for the Company to pass on all of the input cost increases. The Company also recently raised employee salaries to attract additional workers. Finally, the packaging orders the Company lost in the first quarter due to the labor shortage will be difficult to win back as customers are hesitant to change suppliers after they have made a switch.

"We expect to return to growth in 2012 as a result of an improved macro environment as well due to several important business developments and initiatives. Shengda Color has moved to their new facility and is expected to contribute more to our total sales with a higher gross margin. We are currently targeting three large clients and have passed the supplier qualification checks for one of them earlier this month and expect to receive orders soon. We are optimistic about the other two. We are increasing our advertising investments and attending more exhibitions to help drive additional sales. Finally, we are increasing our investments in research and development to continue to shift our revenue profile to higher margin products."

(Source: PR Newswire, 2011-05-13)

We believe we are well positioned to benefit from a number of favorable trends in our market. China's packaging market is the second largest in the world only after the U.S. Despite China's huge packaging market, per capita paper packaging consumption in China is only a fraction of that in the United States, Japan, and Europe. This suggests a large market potential for paper packaging in China. With environmental concerns becoming an increasingly important topic around the world, packaging materials are expected to be energy saving, toxic-free, reusable, degradable and multi-functional. Government mandates as well as consumer preferences make paper a more environmentally-friendly substitute for metal, plastic or glass as a packaging material. All of the foregoing translates into significant growth potential for the corrugated paper packaging industry in the China. Furthermore, as the standard of living rises, consumers are becoming more discerning about product image and presentation. This increased consumer sophistication translates into growing demand for high-quality and aesthetically pleasing packaging. We are well positioned to take advantage of these market trends as we expand our capacity for color-printed cartons.

(Source: PR Newswire, 2011-03-28)

China Shengda Packaging today announced that on March 7, 2011, the Company signed a Letter of Intent to purchase the land use rights for a 166,533 square meter plot of land in Yancheng City, Jiangsu Province, China for $11.4 million in order to build a paper manufacturing plant. China Shengda Packaging plans to build the new plant in two phases. Phase I, which is expected to be completed by the end of 2011, will entail the construction of 100,000 to 150,000 tons per annum of paper capacity and is expected to require capital expenditures of $34.2 million, including the cost of acquiring the land use rights. Phase II, which is expected to be completed by the end of 2012, will entail the construction of 100,000 to 150,000 tons per annum of paper capacity and is expected to require $18.2 million. The Company plans to fund the purchase of the land use rights and construction of the new plant through the proceeds received from its recently closed equity financing and internal cash generation.

"We had initially explored opportunities to acquire a paper manufacturing company with an annual capacity of 250,000 to 300,000 tons to achieve vertical integration of our production process. However, given the increase in valuations among potential targets and the level of proceeds from the Company's recent equity raise, we concluded it would be more cost effective for the Company and our shareholders to build a new plant in order to fulfill our strategic objectives."

(Source: PR Newswire, 2011-03-07)
CPGI
Printing & Packaging
SCORE
-9
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SAFETY/RISK SCORE
HIGH RISK
DETAILS: Safety/Risk Model for CPGI
Current Price:  $6.73
F10k Day (2010-10-12): 68.67%$3.99
2010 Close: 69.52%$3.97
2011 Close: 664.77%$0.88
High (2012-10-15): 429.92%$1.27
Low (2012-06-28): 1,021.66%$0.60
Exchange: NCM
Market Capitalization: 265.54 mill
Total Shares: 39.46 mill
Float: n/a
Avg Volume: 134.50 k
Short Interest: 17.30 k
Short Ratio: 0.02%0.1 d
Last Quarter: 2011-03-31
Revenue (MRQ): 26.93 mill
Net Income (MRQ): 3.44 mill
Op. Cash Flow (MRQ): -10.67 mill
all financial data provided without warranty