700% Profit Increase Projected for 1H 2008

According to the company's 1Q 2008 Report issued on 28 Apr 2008, the company’s net profit for 1H 2008 was projected to increase by more than 1100% over the same period in 2007, when the net profit was RMB 3,074,002 and EPS were RMB 0.01. However, following a downward revision, it is currently estimated that net profit has increased by just more than 700%.

The company's rayon pulp products met quality requirements as commissioned following a trial production in March 2008, however, their market price dropped by over 30% as compared to that of the beginning of the year due to the continuing appreciation of the RMB and a sharp drop in the export growth of textile products. In addition, the increasing price of raw materials such as imported scrap paper and coal for production in 2Q 2008, together with rising power tariffs and transportation costs, forced the cost of production of newsprints and its related expenses to rise, resulting in a decline in the company's profit.

Detailed figures can be found in the 1H 2008 Report of the company.

Board of Directors
11 Jul 2008


Source: www.cninfo.com.cn

Date: 11 Jul 2008

CN01/FL/SW/BT/KM