CHGI China Carbon Graphite Group Inc (CE)

China Carbon Graphite Group, Inc. ("China Carbon" or the "Company") (OTCBB:CHGI), one of China's leading non-state-owned producers and wholesale suppliers of fine grain and high purity graphite, announced today its first-quarter 2010 results.

Financial Highlights

• Net revenue increased 68% year-over-year from the first quarter 2009; Net revenue increased 50% from the fourth quarter 2009;  
• Gross profit increased 22% year-over-year from the first quarter 2009; Gross profit increased 209% from the fourth quarter 2009;  
• Operating income increased 51% year-over-year from the first quarter 2009; Operating income increased 120% from the fourth quarter 2009;  
• Cash and cash equivalents were $4.0 million at March 31, 2010 compared to $243,000 at March 31, 2009 and $2.7 million at December 31, 2009.  
• Net cash flow from operation increased 276% to $3.1 million for the first quarter in 2010 from $0.8 million in 2009.

First Quarter 2010 Results
Summary of Financial Results
(Thousand US dollars, except earnings per share and shares outstanding)
	For the Three Months
	Ended March 31,
	2010	2009
Total revenue	$4,847	$2,894
GAAP Net income (loss) available to shareholders	(1,028)	471
Deemed preferred stock dividend	133	--
Change in fair value of warrants	1,220	--
Adjustments to Net income available to shareholders	1,353	--
Non-GAAP Net income available to shareholders	325	471
GAAP Diluted earning per share	(0.06)	0.04
Adjustment to diluted EPS	0.07	--
Non-GAAP diluted EPS	0.02	0.04
Weighted average common shares outstanding, diluted	18,485,344	13,847,244

Net revenue increased 68% year-over-year to $4.8 million in the first quarter 2010 from $2.9 million in the first quarter 2009; Net revenue increased 50% from $3.2 million in the fourth quarter 2009. The increase in revenue attributes to the slight recovery of the general graphite market, in particular the demand for graphite electrodes.

Gross profit increased 22% year-over-year to $1.0 million in the first quarter 2010 from $841,000 in the first quarter 2009; Gross profit increased 209% from $(942,000) in the fourth quarter 2009. Gross margin declined from 29% in the first quarter of 2009 to 21% for the first quarter 2010. The lower gross margin was primarily due to the change in the product mix. In the first quarter 2009, we had fewer sales of the low margin graphite electrodes, which led to the higher than average gross margin.

Operating expenses was $456,000 in the first quarter 2010 compared to $464,000 in the same quarter 2009. General administration expenses increased significantly in the first quarter 2010 due to higher public company expenses in respect to a private offering and related S-1 registration.  

Income from operations was $568,000 in the first quarter 2010 compared to $377,000 in the same period last year, an increase of 51%.

GAAP net loss available to shareholders was $1.0 million, with diluted loss per share of $0.06, compared with net income of $471,000 and diluted earnings per share of $0.04 in the first quarter of 2009. Excluding non-cash charges reflecting the change in fair value of warrants issued and deemed preferred stock dividend of $1.4 million, non-GAAP net income was 325,000,a year-over-year decrease of 31% due to increased operating expenses. Non-GAAP diluted earnings per share were $0.02 compared to $0.04 for the same quarter in 2009. Diluted weighted average number of shares outstanding for the first quarter of 2010 was 18.5 million compared to 12.8 million in the first quarter of 2009.

About China Carbon Graphite Group, Inc.

China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures carbon and graphite based products in China. The Company is the largest wholesale supplier of fine grain and high purity graphite in China and is one of the nation's top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare-earth metal smelting as well as the manufacture of molds. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. In September 2007, the Company was approved and designated by China's Ministry of Science & Technology as a "National Hi-tech Enterprise." Of the 400 plus carbon graphite producers in China, China Carbon is the only non-state-owned company which has received this honor. For more information, visit http://www.chinacarboninc.com. Any information on the Company's website or any other website does not constitute a part of this press release.

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the Company's business and that of its subsidiaries. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors. The Company does not assume a duty to update these forward-looking statements.

CONTACT:  NUWA Group
          Investor Relations:
          925-330-8315
 
          China Carbon Graphite Group, Inc.
          Investor Relations:
          ir@chinacarboninc.com