China Gerui Advanced Materials Group Ltd. (CHOP) Hosts Investor Day and Commences Operation of Two New Steel Production Lines

QualityStocks would like to highlight China Gerui Advanced Materials Group Limited (NASDAQ: CHOP), a leading niche and high value-added steel processing company in China. The company produces high-end, high-precision, ultra-thin, high- strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise.

In the company’s news Friday,

China Gerui Advanced Materials announced that it has commenced operation on two wide-strip, cold rolled steel production lines, with 150,000 tons of annual capacity, along with one additional plating line with 200,000 tons of capacity per year.

China Gerui’s on-going Capacity Expansion plan is an important part of its continued growth and evolution in the high-end and specialized cold-rolled steel sector. The most recently added facility, which marks Phase I completion of the Capacity Expansion Plan, brings cold-rolled steel production up to a total amounting to 400,000 tons annually and increased the Company’s value-added plating capability to 250,000 tons of total capacity annually. The new capacity is expected to ramp up to a normalized utilization rate of 75% within six months consistent with China Gerui’s 2011 guidance and will aid in maintaining a blended gross margin of 30%.

The Company hosted a ribbon cutting ceremony on June 29, 2011 to showcase Phase I of the new facility and in attendance to the event were local government officials, industry participants, members of the media, supplies, customers, analysts, investors, the Board of Directors and senior management of China Gerui. The event was succeeding an Investor Day where investors and analysts toured the cutting-edge facility and interacted with China Gerui management in order to learn about the facility and to get an update on the Company’s strategy and business.

“Completion of our new facility is a major milestone in our growth plan and bolsters our capabilities to further tailor products to customer specifications as well as to meet pent-up demand,” Mr. Mingwang Lu, Chairman and Chief Executive Officer, stated. “The final phase will add 100,000 more tons of capacity by the end of 2011, bringing us to a total of 500,000 tons of annual specialized cold-rolled steel production capacity. The addition of wide-strip capacity with value-added, higher-margin plating capability for 50% of our output will open up new markets and further strengthen our leading position in the sector,” he continued.

Topics that were covered as part of the analyst and investor event included a local government update, customer and supplier testimonials, a steel industry outlook and perspective by an industry expert, commentary by the Company’s auditor, and an extended tour of the new facility.

Ye Congfa, an industry expert from China Iron & Steel Research Institute, indicated that high-value, high precision, ultra-thin cold-rolled steel is in shorter supply in China, forcing it to look to imports for 90% of the 10 million tons of specialized product per year. China Gerui, with its capacity to provide the market with both wide-strip and narrow-strip cold-rolled steel, maintains an advantage to other foreign competitors because of its strong domestic presence, lower production costs, and its reputation for a very high quality standard.

Harry Edelson, the director of the Company’s board and a veteran venture capitalist, reviewed the history of the Company and brought attention to additional measures of financial and legal diligence that the Company has undertaken and brought forth the differences in regulatory and other due diligence reviews required to effect a merger through a special purpose acquisition company (SPAC), like China Gerui, as opposed to a reverse merger (RTO).

Customer representative Yong Wang, Senior Engineer from Wuhan Academy of Post and Telecommunications, was also in attendance at the event. Yong Wang stated, “China Gerui’s products conform exactly to our stated specifications, reflecting a high degree of engineering and manufacturing expertise. Knowing that we have a consistent source of supply for this highly specialized steel, in both narrow- and wide-strip, has been a key to keeping our products competitive in the marketplace.” The Company’s immense increase in production capacity will allow it to continue to meet the needs of the customer and enhance the firm’s migration to higher margin products, while developing higher-end technology products.

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