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Lihua International copper wire sales soar on strong Chinese demand

|Includes: Lihua International Inc (LIWA)

For the fourth-quarter, Chinese-based CCA (copper-clad aluminium) and copper wire manufacturer, Lihua International (NASDAQ: LIWA) reported a 367% increase in sales to US$51.3m and a 178% increase in gross profit to US$10.9m.

"In 2009 we more than doubled our annual CCA and copper wire sales and demonstrated clear growth across key operating metrics", Lihua chief executive and chairman Jianhua Zhu commented. "We believe this growth reflects the continued demand for pure copper alternatives in a broad range of end markets, as well as heightened contribution from our copper recycling facility, which accounted for approximately 75% of our total sales in 2009.”

The strong end to the financial year added to 2009’s substantial growth. Lihua reported a 223% increase in FY09 sales to US$161.5m, leading to FY09 profit growth of 116% taking gross profit to US$36.2m (FY08: US$16.8m). FY09 net income improved by 43% to US$16.8m, equating to US$0.88 per diluted share (FY08: US$11.7, US$0.70), adjusted FY09 earnings (EBITDA) increased 118.3% to US$33m.

As of December 31 2009, Lihua had US$34.6m in cash and cash equivalents (FY08: US$26m), and total debt of US$2.2m (FY08: US$6.1m).

The company launched its copper recycling business in the first quarter of 2009, and Lihua said the operation has now become an integral part of its business, enabling it to capture new market share. Furthermore, the company continues to expand through its growth strategy.

"In line with our growth strategy, we continue to expand our business operations. In February we launched the first two of our 10 new production lines planned for 2010, which we believe will increase our production capacity by approximately 40%”.

The company anticipates that it will complete the build out of four additional copper wire production lines during the first half of 2010.

In 2010, Lihua is targeting gross profit between US$47.1m and US$48.9m, which would represent year-over-year growth between 30% and 35%. The company expects that the growth will be largely the result of continued strong demand in China, particularly from the household appliance, consumer white goods and infrastructure markets.

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