Guanwei Recycling (GPRC) 2011 Net Income Rose 29% on Record Revenues Up 34% Year Over Year

FUQING CITY, CHINA — (Marketwire) — 03/30/12 — Guanwei Recycling Corp. (the “Company”) (NASDAQ: GPRC), China’s leading clean tech manufacturer of recycled low density polyethylene (LDPE), today reported record sales and profits in 2011. 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.

Highlights

• 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.

Volume and Sales Price Increases

Year over year sales of self-manufactured recycled LDPE grew more than 39% to $61,900,588, reflecting increases in sales volume and pricing. Tonnage sales of manufactured recycled LDPE increased 27% from 41,478 tons a year earlier to 52,666 tons in 2011. Average selling prices increased approximately 9.6% from $1,072 per ton a year earlier to $1,175 per ton in 2011. While 2010 revenues included approximately $1.99 million in low margin sales of purchased recycled LDPE to meet customer requirements, there were no such sales in 2011.

Increased Production Capacity

During 2011, the Company continued the construction and expansion of its facilities as well as the replacement of machinery and equipment. Its capital asset expenditure for these improvements and equipment purchases was over $3.8 million. As a consequence of these significant improvements, manufacturing capacity during 2011 was increased from 65,000 tons to 80,000 tons and will continue to be enhanced in the current year.

Expanded Plastic Waste Import Quota

Of additional significance, the Company received government approval in July for expansion of its quota for imported plastic waste, the key raw material needed to manufacture recycled LDPE. In 2011, the annual quota was increased from 24,000 tons to 64,000 tons. When combined with the import quota of 35,000 tons annually which the Company has contracted with another company (Huan Li), its total quota in 2011 was 99,000 tons. For 2012, the Company received approval to increase its quota to 80,000 tons, bringing its combined total quota for the current year to 115,000 tons.

Gross Margin Down Slightly But Above 30%

While gross profit increased approximately 27% year over year in 2011 to $19.48 million, gross margins decreased to 30.64% from 32.20% a year earlier. This primarily was a consequence of an approximately 22% increase in raw material costs. In order to reduce these costs, the Company continues to develop relationships with new suppliers, primarily in Europe. Guanwei’s ability to purchase raw materials directly from European suppliers — reflecting its dedication to meeting the highest pollution and environmental standards — continues to provide the Company with a significant competitive advantage. Additionally, the Company continues to focus on managing operating costs. In 2011, higher raw material costs were partially offset by operating expense increases that were smaller than the growth in revenues.

No Outstanding Borrowings

Shareholders’ equity as of December 31, 2011 increased to approximately $45 million from $34.1 million a year earlier, reflecting among other factors a reduction in short term borrowing to zero from approximately $3.7 million a year earlier and an increase in retained earnings to $28.62 million from $15.84 million in the prior year. Total assets of $45.08 million at year end included cash and cash equivalents of $12.43 million, and accounts receivable of $4.48 million, reflecting an increased use of terms with certain customers. Inventories increased to $16.85 million, from $10.72 million a year earlier, and pre-payments and other assets of $2.10 million as of year end 2011 compared with $475,195 at the end of 2010.

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.”

Conference Call Invitation

The Company will discuss 2011 year end results during a live conference call and webcast on Monday, April 2nd, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-1427 when calling within the United States or 1-480-629-9664 when calling internationally. Please ask for the Guanwei Recycling Corp. 2011 Year End Conference Call, Conference ID: 4527622. There will be a playback available until 04/09/12. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4527622.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=00009567 or at ViaVid’s website at www.viavid.net.

Description of Guanwei Recycling Corp.

Guanwei Recycling Corp. is China’s largest manufacturer of recycled low density polyethylene (LDPE). Adhering to the highest “green” standards, it has generated rapid growth producing LDPE from plastic waste procured mostly in Europe for sales to more than 300 customers in ten different industries in China. Guanwei Recycling Corp. is one of the few plastic recyclers in China that has been audited by German authorities, most recently Umweltagentur Erftstadt, for compliance with German pollution and environmental standards. This allows the company to procure high quality plastic waste directly from Germany and other European countries (Spain and Holland), with no middlemen, and permits highly economic production of the highest grades of LDPE. Additional information regarding Guanwei Recycling Corp. is available at www.guanweirecycling.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

                          GUANWEI RECYCLING CORP.
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                        (Expressed in U.S. dollars)

                                                Year Ended December 31,
                                            -------------------------------
                                                 2011              2010
                                            --------------    -------------

Net Revenue                                 $   63,600,678    $  47,534,645

Cost of Revenue                                 44,111,700       32,179,321
                                            --------------    -------------
  Gross profit                                  19,488,978       15,355,324
                                            --------------    -------------

Operating expenses:
Selling and marketing expenses                     398,513          346,409
General and administrative expenses              1,903,062        1,568,653
Income from operations                          17,187,403       13,440,262

Other income (expenses):
Interest income                                     88,249           28,704
Interest expenses                                  (29,083)         (85,474)
Income before income taxes                      17,246,569       13,383,492

Income taxes                                     4,453,121        3,456,096

Net income                                  $   12,793,448    $   9,927,396

Comprehensive Income:

Net income                                  $   12,793,448    $   9,927,396

Other comprehensive income
- Foreign currency translation
 adjustments                                     1,067,008          488,683

Comprehensive income                        $   13,860,456    $  10,416,079

Earnings per share attributable to
 shareholders of Guanwei Recycling Corp.
  - basic and diluted                       $         0.64    $        0.50
                                            ==============    =============
  Weighted average number of shares of
   common stock used in computing basic
   and diluted earnings per share               20,000,006       20,000,006
                                            ==============    =============

                           GUANWEI RECYCLING CORP.
                         CONSOLIDATED BALANCE SHEETS
                         (Expressed in U.S. dollars)

                                                   As of December 31,
                                           ---------------------------------
                                                 2011              2010
                                           ---------------   ---------------
ASSETS:

Current assets:
Cash and cash equivalents                  $    12,432,803   $    14,940,236
Restricted cash                                          -         2,280,398
Accounts receivable                              4,475,386             9,106
Account due from director                            1,290             1,290
Prepayments and other current assets             2,103,059           473,905
Inventories                                     16,858,801        10,721,765
Total current assets                            35,871,339        28,426,700

Property, plant and equipment, net               8,151,012         4,894,141
Construction in progress                           174,295                 -
Land use right, net                                673,762           660,941
  Others                                           205,437           201,579
                                           ---------------   ---------------
  Total Assets                             $    45,075,845   $    34,183,361
                                           ===============   ===============

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:
Short term borrowings                      $             -   $     3,716,377
Accounts payable                                 8,741,822         8,812,940
Accrued expenses and other payables                714,072           721,569
Amount due to shareholder                        1,468,167           905,615
Income tax payable                               1,144,516           880,048
Total current liabilities                       12,068,577        15,036,549

Commitments and contingencies                            -                 -

Equity:
Shareholders' equity:
Common stock, $0.001 par value,
 500,000,000 shares authorized,
 20,000,006 shares issued and
 outstanding                                        20,000            20,000
Additional paid-in capital                       1,290,028         1,290,028
PRC statutory reserves                             805,483           805,483
Retained earnings                               28,629,076        15,835,628
Accumulated other comprehensive income           2,262,681         1,195,673
Total Shareholders' equity                      33,007,268        19,146,812

  Total liabilities and shareholders'
   equity                                  $    45,075,845   $    34,183,361
                                           ===============   ===============

                          GUANWEI RECYCLING CORP.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (Expressed in U.S. dollars)

                                                 Year Ended December 31,
                                              -----------------------------
                                                   2011            2010
                                              -------------    ------------

Cash flows from operating activities:
Net income                                    $  12,793,448    $  9,927,396

Adjustments to reconcile net income to net
 cash provided by operating activities
Depreciation of property, plant and
 equipment                                          600,065         438,563
Amortization of land use right                       15,070          14,389
Loss on disposal of property, plant and
 equipment                                           72,174           2,472
Bad debt                                                 98               -

Changes in operating assets and
 liabilities:
Accounts receivable                              (4,395,346)          4,795
Prepayments and other current assets             (1,586,462)        (36,185)
Inventories                                      (8,370,973)     (3,763,939)
Other assets                                          4,648               -
Accounts payable                                  2,340,991          13,364
Accrued expenses and other payables                 (35,833)        252,227
Income tax payable                                  223,415         391,517
Net cash provided by operating activities         1,661,295       7,244,599

Cash flows from investing activities:
Decrease (increase) in restricted cash            2,339,860      (2,266,980)
Purchase of property, plant and equipment        (3,847,657)       (584,467)
Proceeds from disposal of property, plant
 and equipment                                        3,563           5,948
Net cash used for investing activities           (1,504,234)     (2,845,499)

Cash flows from financing activities:
Advance from shareholder                            562,552         620,940
New bank borrowings                                       -       3,659,235
Repayment of bank borrowings                     (3,813,283)     (1,420,767)
Net cash flows (used for) provided by
 financing activities                            (3,250,731)      2,859,408

Effect of exchange rate change on cash and
 cash equivalents                                   586,237         379,519

Net (decrease) increase in cash and cash
 equivalents                                     (2,507,433)      7,638,027

Cash and cash equivalents at the beginning
 of year                                         14,940,236       7,302,209
Cash and cash equivalents at the end of
 year                                         $  12,432,803    $ 14,940,236

Supplemental disclosure of cash flow
 information:
  Interest received                           $      88,249    $     28,659
                                              =============    ============
  Interest paid                               $      29,083    $     85,215
                                              =============    ============
  Income taxes paid                           $   4,229,706    $  3,064,578
                                              =============    ============

US Contact:

Ken Donenfeld
DGI Investor Relations
kdonenfeld@dgiir.com
Tel: 212-425-5700
Fax: 646-381-9727