Lumena Announces Interim Results 2011

Revenue and Gross Profit Surged by 118.7% and 97.6% respectively to RMB2,236.1 million and RMB1,455.3 million

HONG KONG, Aug. 29, 2011 /PRNewswire-Asia/ --

Financial Overview

China Lumena New Materials Corp. ("Lumena" or the "Company", HKEx Stock Code: 67), the world's largest PPS resin producer* and one of the largest thenardite producers**, is pleased to announce its interim results for the 6 months ended 30 June 2011.

For the 6 months ended 30 June 2011, the Company's revenue increased to approximately RMB2,236.1 million (1H 2010: RMB1,022.4 million), representing an increase of approximately 118.7% as compared to the corresponding period in 2010. The increase in revenue was attributable to the successful acquisition of 94.1% equity interest in Sino Polymer New Materials Co., Ltd. ("Sino Polymer") and the consolidation of its results into the consolidated accounts of the Company since the Completion Date of Acquisition. During the period under review, gross profit of the Company amounted to RMB1,455.3 million (1H 2010: RMB736.5 million) for the 6 months ended 30 June 2011, representing an increase of approximately 97.6% year-on-year. The overall gross margin of the Company was 65.1% (1H 2010: 72.0%) for the 6 months ended 30 June 2011. Profit for the period amounted to RMB793.4 million, up by 122.3% as compared to the same period in 2010 (1H 2010: RMB356.9 million). Basic earnings per share amounted to RMB15.04 cents (1H 2010: RMB18.34 cents). The Board of Directors recommends and declares an interim dividend amounted to RMB193.6 million for the six months ended 30 June 2011 (1H 2010: HK$89.2 million), an increase of 117.0% year-on-year.

For the 6 months ended 30 June 2011, the completed acquisition of Sino Polymer enables the Group to enjoy economies of scale, leading market position, advanced technology and has devoted itself to a more focused business. The successful acquisition of the entire equity interest in Sino Polymer marks the transformation of the company into a vertically integrated new material producer from a thenardite producer, which will further enhance its market value.

As the largest PPS resin producer in the world in terms of production capacity after the acquisition of Sino Polymer, Lumena produces PPS resin, PPS compounds and PPS fibre. The Company's PPS products are sold under the brand name "Haton" and the trademark "Deyang". Revenue contributed by PPS resin, PPS compounds and PPS fibre were RMB134.0 million, RMB909.7 million and RMB188.6 million respectively, accounted for approximately 6.0%, 40.7% and 8.4% of the Group's overall revenue respectively in the period under review.

As a leading thenardite producer in China, the company enjoys strong brand awareness and product recognition among downstream industries in China. The brand "Chuanmei" has been successively recognized as a "Sichuan Famous Brand Product" since 1993 and the registered trademark "Chuanmei" was recognized as a "China Well-known Trademark" by the State Administration for Industry and Commerce of the PRC in March 2008. Revenue contributed by specialty, medical and powder thenardite were RMB526.0 million, RMB424.9 million and RMB52.4 million respectively, accounted for approximately 23.5%. 19.0% and 2.4% of the Group's overall revenue respectively in the period under review.

Mr. Zhang Daming, Executive Director and CEO of Lumena, said, "According to the Twelfth Five-year Plan announced by the Chinese government, the new materials industry is listed as one of the seven major developing industries in China. Among others, PPS resin, PPS compounds and PPS fibre are also referred to as new materials in the State's Materials Development Strategy Plan as included in the Twelfth Five-year Plan. It will be given priority by the nation for focused cultivation and development. It is expected that the demand for PPS will further increase under supportive government policies, which will continue to support higher PPS product prices."

In terms of thenardite business, urbanization in China and the "Rural Resident White Goods Subsidy" policy included in the Twelfth Five-year Plan period promulgated by the Chinese government will stimulate the sales volume of washing machines and washing powder, which will lead to further increase in demands for powder thenardite and specialty thenardite and bring immense growth opportunities for the Company's thenardite business. With the implementation of medical reform in China, the market demand for medical thenardite will continue to grow. As the only approved and certified medical thenardite producer in China with GMP certification and the Pharmaceutical Production Permit, the Company will utilize its competitive edges and focus on the development of medical thenardite to tie-in with the State's medical reform and policies. Lumena has successfully launched thenardite for clinical and medicine uses in the first half of 2011. The Group expects that the sales of medical thenardite will eventually contribute approximately 40% to 50% of the annual thenardite revenue of the Company and will become the Group's main source of income. Going forward, it will continue to expand its medical thenardite business to gain more market share.

Benefited from the State Policy, the demand and prices for PPS is expected to increase further. The Company commenced the construction of PPS resin production line of 25,000 tonnes per annum ("tpa") and a PPS fibre production line of 15,000 tpa, both of which are expected to commence operation in the fourth quarter of 2012. The Company's PPS resin production capacity will reach 55,000 tpa and PPS fibre production capacity will reach 20,000 tpa in 2013. To enhance the Company's thenardite production capability, the Company entered into the agreement to acquire two thenardite mines, i.e. Yinglin Mining Area and Yihe Mining Area, from Sichuan Yinglin Group in June 2011. The acquired mines were located at the same ore band with the Company's four mining areas and the grade of thenardite in these areas is as high as 40%, and therefore has high value for modification. The acquisition is expected to be completed in the second half of 2011, and thereafter the Company's annual production capacity for thenardite will increase by 600,000 tonnes to 2,800,000 tonnes. The Company will continue to identify suitable thenardite operators for merger and acquisition, so as to gain market share in the industry, to improve the Company's pricing power, and to become a world's leading enterprise in the thenardite and PPS industries, with the aim to strengthen the Company's leading position in the industry and to create synergies.

In terms of R&D, the Company will continuously improve the production process and extend the scope of applications for its products. In the first half of 2011, the Company's PPS R&D team successfully produced low-chlorine PPS resin and film-grade PPS resin, developed new applications of PPS compound as insulators and other accessories for use in rail transportation and high-speed trains. Currently, the Group has been involved in the R&D of new applications of PPS in solar panels and in the field of chemical engineering The Company believes that the extended scope of new applications for PPS will effectively increase the profitability of the PPS business.

Meanwhile, with a view to support the State's policy of energy conservation and emission reduction, the Company and XJ Electric Co., Ltd. executed a letter of intent on technical cooperation in May 2011, pursuant to which the parties agreed to jointly undertake the R&D of battery cell technology for commercial vehicles, aiming to achieve mass production of battery cells for electric vehicles in 2011 to expand the Company's sources of revenue. With respect to thenardite business, in order to support the reform of the State's medical and healthcare policies, the company has vigorously promoted the application and use of medical thenardite, and developed thenardite medicines for clinical applications in the first half of 2011. The Company will also produce specialty thenardite with different properties which are customized to meet the demand of different customers. This will help boost the Company's overall gross profit margin and increase its market competitiveness.

Chairman and Executive Director, Mr. Zhang Zhigang concluded "Following the completion of the successful acquisition of Sino Polymer, we are now the world's largest PPS producer and the world's second largest thenardite producer. Looking ahead, the Twelfth Five-year Plan and expanded scope of medical subsidies launched by the Chinese government in recent years will stimulate the growth of PPS and thenardite businesses. We are confident about our future prospect and will further develop vertical integration of our business and increase our profitability, leading Lumena to reach another record high."

About China Lumena New Materials Corp.

As a leading new materials and chemical enterprise in China, Lumena New Materials is the world's largest PPS resin producer* and one of the world's leading thenardite producers**. PPS is a special engineering thermoplastic widely used in electrical and electronic, automotive, rail transportation, environmental protection and emissions reduction, aeronautics and astronautics, and coatings applications, etc. It has been listed as one of the new materials to be developed and supported by the China's government in its 12th Five-Year Plan. The Company manufactures, develops and sells PPS resin, PPS compounds and PPS fibre. Equipped with the world's largest single line production facility, the Company produces numbers of high quality thenardite products such as powder thenardite, specialty thenardite and medical thenardite. It operates four captive underground glauberite mines and is the only approved and certified producer of medical thernadite in China.

*In terms of production capacity as of December 31, 2010, according to SRI Consulting, a research service firm
** In terms of production capacity as of 31 December 2010, according to Behre Dolbear & Company (USA) Inc., an independent market research consultant

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