China Gengsheng Minerals (NYSE AMEX:CHGS)

First Quarter 2012 Financial Highlights:

• Revenue decreased 15.3% year-over-year to approximately $13.7 million.
  • Refractories sales were approximately $9.9 million, compared with approximately $9.9 million in the first quarter of 2011.
  • Fine precision abrasives product sales were approximately $2.4 million, compared with approximately$819,000 in the first quarter of 2011.
  • Fracture proppant sales were approximately $998,000, compared with approximately $5.2 million in the first quarter of 2011.
• Gross profit was approximately $2.7 million, or 19.8% of total sales, compared with approximately $4.3 million, or 26.5% of total sales in the same period a year ago.
• Total operating expenses increased to approximately $4.4 million, compared with approximately $3.6 millionin the first quarter of 2011.
• Net loss attributable to the Company was approximately $2.9 million, or $0.11 per share, compared with net loss of approximately $80,000, or $0.003 per share in the first quarter of 2011.
• As of March 31, 2012, the Company had cash and cash equivalents of approximately $2.7 million, total equity of approximately $51.1 million and working capital of approximately $8.4 million.

"We experienced a disappointing quarter as a result of weak sales in fracture proppants segment. The continued slowdown in the steel industry also had an unfavorable impact on us," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "While financing costs and operating expenses weighed on our results for the first quarter of 2012, we continue to work towards increasing sales and improving profitability thus create sustainable value for our shareholders."

Fourth Quarter 2011 Financial Highlights:

• Quarterly revenue increased 1.4% year-over-year to approximately $18.9 million.
  • Fracture proppant sales were approximately $5.7 million, an increase of 13.8% year-over-year compared with approximately $5.0 million in the fourth quarter of 2010;
  • Refractories sales were approximately $10.7 million, compared with approximately $12.7 million in the fourth quarter of 2010.
  • Fine precision abrasives product sales were approximately $2.9 million, an increase of 327.3% year-over-year compared with approximately $0.7 million in the fourth quarter of 2010.
• Gross profit was approximately $1.1 million, or 5.7% of total sales, compared with 20.7% of total sales in the same period a year ago.
• Total operating expenses increased to approximately 7.1 million, compared with approximately $5.2 millionin the fourth quarter of 2010.
• Net loss attributable to the Company was approximately $8.0 million, or $0.30 per share, compared with net loss of approximately $2.1 million, or $0.08 per share in the fourth quarter of 2010.
• As of December 31, 2011, the Company had cash and cash equivalents of approximately $3.6 million, stockholders' equity of approximately $53.8 million and working capital of approximately $11.8 million.

"In 2011 we continued our efforts in products positioning and strategic progress for GengSheng. We committed resources to, and expanded production capacity of targeted areas, hence to improve our ability to address the overall unstable environment in our end markets," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "During the fourth quarter and throughout the year, our bottom line was impacted by increased material, energy and labor costs, operating expenses, financing costs and non-cash impairment charges. While these increased expenses weighed on our results for 2011, we adopted stringent approaches to eliminate impaired assets in our books."

Third Quarter 2011 Financial Highlights:

• Revenue increased 28.2% year-over-year to approximately $21.5 million.
  • Fracture proppant sales totaled approximately $5.7 million, an increase of 13.4% year-over-year, compared with approximately $5.0 million in the third quarter of 2010.
  • Refractories sales were approximately $13.4 million, an increase of 17.6% year-over-year, compared with approximately $11.4 million in the third quarter of 2010.
  • Sales of fine precision abrasives totaled approximately $2.2 million, compared with approximately $184,000 in the third quarter of 2010.

• Gross profit increased 11.3% to approximately $5.5 million, or 25.6% of total sales, compared with approximately $4.9 million, or 29.5% of total sales in the same period a year ago.

• Operating income was flat at approximately $1.4 million compared with the third quarter of 2010.

• Net income attributable to the Company's common stockholders decreased slightly to approximately $853,000, or $0.03 per fully diluted share, compared with approximately $905,000 million, or $0.04 per fully diluted share in the third quarter of 2010.

• As of September 30, 2011, the Company had cash and cash equivalents of approximately $7.9 million, stockholders' equity of approximately $61.3 million and working capital of approximately $19.2 million.

"We achieved record quarterly revenue of approximately $21.5 million, generating top-line growth from all three primary business segments in the third quarter. Importantly, we made significant improvements across key operating metrics and returning to profitability following three consecutive quarters of losses," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "We achieved meaningful improvements in our business despite challenges in the steel and solar industries, as well as tightening monetary policy in China and domestic and international macroeconomic uncertainties which have impacted customer demand. We are pleased by our team's ability to execute on the primary strategic growth initiatives for each of our business segments, contributing to our solid performance in the third quarter and positioning the Company well to address the opportunities and challenges lies in ahead of us."

"Overall, we are excited by the Company's improved performance in the third quarter, particularly given the macro-level challenges we faced. We have a clearly defined growth strategy for each of our primary business segments, and are confident that our continued successful execution of these initiatives, coupled with prudent operating expense controls, will position the Company to achieve continued growth and sustainable profitability."

In anticipation of the planned presentation by China Gengsheng Minerals, Inc. (the "Company") to a group of potential investors at the Rodman & Renshaw Annual Global Investment Conference (the “Conference”) on Monday, September 12, 2011 at 4:30 pm Eastern Time, the Company is filing this current report on Form 8-K to disclose its planned presentation materials.

Second Quarter 2011 Results

• Revenue increased 36.3% year-over-year to $20.4 million.
• Net loss attributable to the Company's common stockholders was $(247,000), or $(0.01) per fully diluted share, compared with net income of $1.0 million, or $0.04 per fully diluted share in the second quarter of 2010.
   

"We achieved top-line growth across each of our three primary business segments for the second quarter, sales of our refractory products increased on a year-over-year basis for the first time in several quarters, and we achieved record quarterly sales of $5.9 million in our fracture proppant business," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "Although our bottom line weighted by increased operating expenses and finance costs, incurred to support business expansion, we remain excited by the performance and prospects of all business lines. During the first half of the year, we launched several strategic growth initiatives to address the large and growing fracture proppant market, including capacity expansion, and a joint development agreement with a North American fracture proppant distributor to address the U.S. and Canadian markets. We believe these initiatives will position GengSheng to capture additional market share as we build brand recognition, both domestically and internationally and continue to leverage the strong, rapidly growing demand from oil and gas producers

Rodman and Renshaw on CHGS                              8/15/2011

Maintaining Market Perform Rating after Mixed 2Q11 Results

Mixed 2Q11 Results

China Gengsheng Minerals (“Gengsheng”, Ticker: CHGS, Market Perform) reported its 2Q11 earnings results that beat our top-line expectation but missed our bottom-line estimate. Revenue in the quarter reached $20.4 million, up 36.3% YoY and beat our estimate of $18.0 million. Gross profit increased 8.5% YoY to $5.3 million, above our estimate of $4.8 million. Gross margin in the quarter was 26.1%, slightly below our estimate of 26.6%. Operating expenses in the quarter reached $4.5 million, above our estimate of $3.6 million. Operating income came in at $0.8 million, below our estimate of $1.2 million. The company also incurred larger than expected finance costs of $1.6 million in the quarter. As a result, Gengsheng had a net quarterly loss of $247,000, or $0.01 loss per diluted share, below our respective estimates of a net income gain of $0.7 million and $0.02 EPS.

Highlights and Discussions

Segment revenue breakdown Gengsheng delivered slightly stronger than expected 2Q11 sales performance across all of its business segments. Refractories sales reached $12.5 million, above our expectation of $11.1 million. Fracture proppant revenue came in at $5.9 million, better than our estimate of $5.4 million. Functional ceramics generated $0.5 million of revenue, a touch higher than our estimate of $0.4 million. The newest fine precision abrasives business finally delivered a stronger than expected quarterly performance, registering $1.5 million of sales in Q2, beating our expectation of $1.1 million. After a disappointing Q1, we had lowered our expectation for Gengsheng’s top-line performance in the upcoming quarters. We view the Q2 top-line results as more of a relief than a significant upside surprise. Looking forward to the rest of the year, we expect the company will deliver decent but unspectacular top-line results, with the growth of the fracture proppant and fine precision abrasives franchises being the most significant indicator for the company’s long term potential.

Watching the expenses In light of China’s increasingly inflationary environment, the company’s slightly below-expectation gross margin in Q2 did not strike us as a major surprise. The moderately higher than expected operating expenses were also not necessarily alarming, in our view. Our major concern resides in the significant increase of finance costs, and more specifically, increase in bills discounting charges, in the quarter. Based on our understanding, this bills discounting charge is effectively another form of interest expenses associated with bank acceptance that some Chinese corporate borrowers need to pay in order to receive funding. While we acknowledge Gengsheng’s capital need for its capacity expansion efforts, as illustrated by the company’s $8.3 million net cash outflow from investing activities during the quarter, the magnitude of these finance costs really was the difference between a profitable quarter and an unprofitable one. Thus we would certainly like to see the company better manage this expense item going forward.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:

Rodman & Renshaw, LLC reserves the right to monitor and review the content of all e-mail communications sent and/or received by its employees.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

REF:011707RR-MN

GONGYI, China, July 7, 2011 /PRNewswire-Asia-FirstCall/ -- China GengSheng Minerals, Inc. (AMEX:CHGS), a leading China-based high-tech industrial materials manufacturer producing heat resistant, energy efficient materials for a variety of industrial applications, today announced that Mr. Ningfang Liang has joined the company as Chief Financial Officer, effective immediately. Mr. Liang replaces Interim Chief Financial Officer, Mr. Hongfeng Jin, who has been appointed GengSheng's Financial Controller, effective immediately.

Mr. Liang has over 15 years of finance and accounting experience, including over six years at U.S. public companies, where he managed SEC reporting, internal control, GAAP compliance, as well as internal auditing, financial analysis and management reporting activities.

"We are delighted to have a seasoned financial professional such as Ningfang join our executive team, and believe that his vast experience in SEC reporting, GAAP regulations and the U.S. capital markets will prove invaluable as we continue to execute on our growth strategy and work toward the next level of success," said Mr. Shunqing Zhang, Chairman and CEO of China GengSheng Minerals. "On behalf of the entire GengSheng team, I would like to welcome Ningfang to the company and thank Hongfeng for his numerous contributions to our business during his tenure as Interim CFO. I am grateful that Hongfeng has elected to remain with the company and confident that he will thrive in his new role as Financial Controller. I believe that Ningfang and Hongfeng will be a dynamic team that will significantly bolster the capabilities of our finance department and the strength of our financial controls."

Prior to joining GengSheng, Mr. Liang worked as Finance Manager at White Mountains Re Ltd, the reinsurance subsidiary of White Mountains Insurance Group, Ltd. Additionally, he has held senior finance and accounting positions at American International Group, Inc., Celgene Corporation and China Construction Bank.

Mr. Liang is a licensed CPA in the states of New Jersey and Illinois and is a member of the American Institute of Certified Public Accountants. He holds a Bachelor's degree in finance from Shanghai University of Finance and Economics, and an MBA from the University of Illinois Urbana-Champaign.

Rodman and Renshaw on CHGS                 7/7/2011

New CFO Hire to Strengthen Management Team

New CFO announced China Gengsheng Minerals, Inc. (“Gengsheng”, Ticker: CHGS, Market Perform) announced this morning the appointment of Mr. Ningfang Liang as its new Chief Financial Officer, effective immediately. The company’s interim CFO, Mr. Hongfeng Jin, has been appointed as Gengsheng’s Financial Controller. According to the company press release, Mr. Liang has over 15 years of finance and accounting experience, including over six years at U.S. public companies where he managed SEC reporting, internal control, GAAP compliance, internal auditing, financial analysis and management reporting activities. Before joining Gengsheng, Mr. Liang served as Finance Manager at White Mountains Re Ltd. He also previously held senior finance and accounting positions at AIG, Celgene, and China Construction Bank. Mr. Liang is a licensed CPA in the states of New Jersey and Illinois, and holds a bachelor’s degree in finance from Shanghai University of Finance and Economics, and an MBA from the University of Illinois Urbana-Champaign.

Our take We are certainly encouraged by this announcement as the company, which hasn’t had a permanent CFO for quite some time, really has an urgent need for an “official” CFO. Based on our knowledge, Mr. Jin, who served as the company’s interim CFO, is more of a controller in the first place and lacks English language skills. The appointment of Mr. Liang, who primarily resides in New Jersey and is commonly known as Frank, should strengthen Gengsheng’s management team and improve its corporate communication with the investment community. We are particularly hopeful that Mr. Liang will be able to better manage Street expectation with regard to the company’s financial performance. While residing in New Jersey will no doubt make it easier for Mr. Liang to communicate with U.S. investors, we encourage him to also spend considerable time in Gongyi, China, where Gengsheng is located, as we believe it will allow him to better understand and manage the company’s financial operations.

Maintaining rating We are maintaining our Market Perform rating on the shares of Gengsheng.

Risks Major risks to our rating include the company’s heavy dependence on the steel industry, refractory market demand risk, intense industry competition, capital raising uncertainty, business execution risk, fluctuation of raw material prices, environmental liability risk, as well as political and regulatory risks related to operating in China.

Notice Regarding Privacy and Confidentiality:

Rodman & Renshaw, LLC reserves the right to monitor and review the content of all e-mail communications sent and/or received by its employees.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

GONGYI, China, June 13, 2011 /PRNewswire-Asia/ -- China GengSheng Minerals, Inc. (AMEX:CHGS), a leading China-based high-tech industrial materials manufacturer producing heat resistant, energy efficient materials for a variety of industrial applications, today announced that it has been awarded a $4.2 million follow-on fracture proppants supply contract from AMSAT International, a Florida-based technology company specializing in advanced ceramics. The Company will begin shipping fracture proppants under this new contract in July 2011, and expects to supply approximately 1,500 metric tons per month through December 2011, with specific quantities determined on a monthly basis, subject to available capacity.

This award follows the fulfillment of a $5.4 million contract with AMSAT International, under which GengSheng supplied approximately12,000 metric tons of proppant materials between January and June 2011.

"This represents our fourth supply contract with AMSAT, and we are proud that they continue to recognize GengSheng as a long-term, value-added partner and supplier of high quality proppant materials to their North American customers," said Mr. Shunqing Zhang, Chairman and CEO of China GengSheng Minerals. "This latest order reinforces our belief in the sizeable growth opportunity for fracture proppants in the overseas markets, as we continue to build our brand, expand our sales channels, increase capacity and advance our products through continued technological development."

Mr. Zhang continued, "We remain excited about the international opportunities for our proppants business, as export sales typically carry more favorable payment terms than our domestic contracts. We believe that the continued expansion of our overseas business will help reduce receivables and DSOs, while improving cash flow from operations and supporting our overall working capital needs as we grow the Company."

Similar to the Company's December 2010 order from AMSAT, this contract is for the supply of customized 69 MPa-sized proppant materials, which AMSAT will distribute to its North American customers in the oil and gas industry.

The Company launched its fracture proppant products in late 2007, and achieved revenue of $14.3 million in 2010, representing a three-year compound annual growth rate of 217%. In order to address growing domestic and international demand, GengSheng expanded manufacturing capacity to 90,000 metric tons in the first quarter of 2011, through a combination of in-house and OEM capacity. Additionally, the Company has begun construction on its second 60,000 metric ton fracture proppant manufacturing facility, which is expected to begin production in the third quarter of 2011. In 2011 to date, GengSheng has signed fracture proppant supply contracts totaling $20.1 million.

First Quarter Results:

• Revenue increased 36.4% year-over-year to approximately $16.2 million.
• Fracture proppant sales totaled approximately $5.2 million, an increase of 333% year-over-year, compared with approximately $1.2 million in the first quarter of 2010.
• Refractories sales were approximately $9.9 million, compared with approximately $10.4 million in the first quarter of 2010.
• Sales of the Company's fine precision abrasives products totaled approximately $0.8 million, compared with approximately $0.7 million in the fourth quarter of 2010, and approximately $0.2 million in the third quarter of 2010, when the product was commercially launched.
• Gross profit increased 7.9% to approximately $4.3 million, or 26.5% of total sales, compared with $4.0 million, or 33.5% of total sales in the same period a year ago.
• Total operating expenses increased to approximately $3.6 million, compared with approximately $3.1 million in the first quarter of 2010.
• Net loss attributable to the Company was approximately $80,000, or break-even per fully diluted share, compared with net income of approximately $0.4 million, or $0.02 per fully diluted share in the first quarter of 2010.

"We achieved solid year-over-year revenue growth, driven by the continued success of our fracture proppant business. While the first quarter is generally seasonally slow as a result of the Chinese Spring Festival and a slowdown in the steel industry due to reduced domestic construction during the winter months, we expect to reduce some of this seasonality as we continue to diversify our revenue mix. Our loss for the quarter was related to increased expenses associated with investment in our fracture proppants and fine precision abrasives businesses, which are key growth drivers for our business, both now and over the longer-term," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer.

"During the first quarter, we gained additional traction in the overseas markets through both supply orders and demand indications for fracture proppants as oil and gas producers increasingly recognized the quality and value of our proppant products. In addition to our capacity expansion efforts, we are expanding our international sales and marketing efforts to help build the GengSheng brand among potential proppant customers outside of China. In light of the sizeable market opportunity and our targeted growth initiatives, we expect to achieve continued strong performance from this segment going forward.

GONGYI, China, May 5, 2011 /PRNewswire-Asia-FirstCall/ -- China GengSheng Minerals, Inc. (AMEX: CHGS), a leading China-based high-tech industrial materials manufacturer producing heat-resistant, energy-efficient materials for a variety of industrial applications, today announced plans to construct a new fracture proppant manufacturing facility in Gongyi, Henan Province, which will increase the Company's annual proppant manufacturing capacity by 60,000 metric tons, to 150,000 tons, including 30,000 tons produced by third parties under OEM agreements. Construction on this new facility began in the second quarter of 2011, with production expected to commence during the second half of the year.

"New technological developments and a global surge in oil and gas drilling is driving a sharp increase in demand for high-quality, cost-effective proppant materials such as ours, and we believe that the time is right to expand our production capacity in order to capture this sizeable market opportunity," said Mr. Shunqing Zhang, Chairman and CEO of China GengSheng Minerals. "Through our organic capacity expansion, we are able to easily scale manufacturing volume, while maintaining tight quality and cost controls. In addition, we are working to further diversify our marketing channels to build the GengSheng brand among overseas customers. In light of these favorable market trends, our renewed sales and marketing initiatives and this additional capacity, we expect to achieve continued strong growth from our fracture proppants business as we move forward and the markets continue to mature."

This new facility will be constructed on approximately 87,000 square meters of land, for which the Company has signed a 20-year lease, and will include 2 production lines capable of manufacturing proppant materials to customer specifications. Total cost of the new facility is expected to be approximately $8.6 million, which will be fully funded through operating cash flow and the proceeds of GengSheng's registered direct offering, completed in January 2011.

Fourth Quarter Results:

• Revenue increased 21.8% year-over-year and 11.1% quarter-over-quarter to approximately $18.6 million.
• Gross profit was flat at approximately $3.9 million, or 20.7% of total sales, compared with 25.3% of total sales in the same period a year ago.
• Net loss attributable to the Company was approximately ($2.1) million, or ($0.08) per share, compared with net income of approximately $1.0 million, or $0.04 per share in the fourth quarter of 2009

"2010 was a year of positioning and strategic progress for GengSheng, as we extended our product portfolio, expanded production capacity, and committed resources to improving our ability to address the sizable growth opportunities in our end markets," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "During the fourth quarter and through the majority of the year, our bottom line was impacted by increased operating expenses, financing costs and a non-cash charge related to doubtful accounts. While these increased expenses weighed on our results for 2010, we eliminated some of our riskier receivables and invested in initiatives that we believe will contribute to sales across each of our businesses, supporting the Company's profitable growth in 2011 and beyond."

We have approximately $41.6 million of collateralized bank loans, which includes approximately $30.7 million of facility bank loans, maturing on January 10, January 31, March 31, April 26, May 13, May 23, June 23, September 15 and September 27, December 16, December 16, 2011, respectively, and approximately $10.9 million of bank borrowing secured by approximately $13.2 million in bank deposits. We will repay each loan when it matures with our working capital and the collateralized bank deposits. We will also consider refinancing debt. However, we cannot provide assurances that we will be able to refinance any of our debt on terms favorable to us in a timely manner.

GeoTeam Question: Have the January 10, January 31, March 31 loans been settled?

All amounts, other than percentages, are in U.S. dollars

GONGYI, China, March 29, 2011 /PRNewswire-Asia/ -- China GengSheng Minerals, Inc. today announced that it has signed a definitive agreement with a local affiliate in Gongyi, Henan Province to manufacture 30,000 metric tons of its fracture proppants through the end of 2011. With this addition, China GengSheng has increased its total annual fracture proppant capacity by 20% to 90,000 metric tons.

In conjunction with this new agreement, the Company has decided to terminate its operating lease, entered in October 2010, and ceased production of fracture proppant products at its leased manufacturing facility in Gongyi, Henan Province.

Rodman and Renshaw on CHGS                                 3/25/2011

Revising Rating to Market Perform after Share Price Exceeded PT

We are downgrading the shares of China Gengsheng Minerals (“Gengsheng”, Ticker: CHGS) from our previous rating of Market Outperform to Market Perform after the share price exceeded our $2.80 price target. Since August 11, 2010, when we assigned a price target of $2.80, the share price of Gengsheng has appreciated by more than 130% and reached beyond our price target. At the current valuation, the company is trading at 9.6x our 2011 diluted EPS estimate of $0.33. While we continue to believe the company represents a long term growth story, in the near term we believe the shares are fully valued.

Rare Earth Hype Unrealistic

The share price of Gengsheng has had a volatile ride over the past half a year, largely because of hype related to China’s rare earth policy changes. In our opinion, Gengsheng’s current business operation possesses little relation to the rare earth industry, despite the word “Minerals” in the company’s corporate name. In this regard, we believe any current CHGS price appreciation based on the rare earth talk is unsustainable.

4Q10 Outlook

The company is scheduled to release its 4Q10 and full year 2010 results on Thursday, March 31, 2011. Management will also hold a conference call at 8:00am EST on March 31. To participate in the call, please dial (877) 407-9205 in the U.S. and Canada, or (201) 689-8054 internationally.

For 4Q10, we expect the company will generate $19.2 million of revenue, with the monolithic refractory segment contributing $11.9 million, fracture proppants contributing $5.2 million, and fine precision abrasives adding $1.8 million. We estimate non-GAAP net income will reach $1.2 million, or $0.05 per diluted share, during the quarter. For full year 2011, we expect revenue will reach $88.9 million, gross profit will be $28.6 million, and non-GAAP net income will be $8.1 million, or $0.33 diluted EPS. Considering China’s current inflationary environment and potential company year-end write-downs, we believe the risks are to the downside with regard to our estimates.

Risks

Major risks to our rating and price target include the company’s heavy dependence on the steel industry, refractory market demand risk, intense industry competition, capital raising uncertainty, business execution risk, fluctuation of raw material prices, environmental liability risk, as well as political and regulatory risks related to operating in China.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

GONGYI, China, Feb. 16, 2011 /PRNewswire-Asia-FirstCall/ -- China GengSheng Minerals, Inc. today announced that it has been awarded $10.5 million a follow-on contract for its fracture proppants from a China-based distributor specializing in sales to overseas oil and gas companies. GengSheng will begin shipments to this customer in February 2011 and expects to supply approximately 27,000 tons of proppant products over a six-month period.

"During 2010, we achieved tremendous growth in our fracture proppant business, driven by robust demand from both domestic and international customers. Throughout the year, we worked to develop strong relationships with our customers and key distributors, and it is clear that these efforts are bearing fruit. We are pleased that this distributor has recognized the quality of our products and high level of customer service we provide by awarding us this significant follow-on order," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "We entered 2011 with our proppant manufacturing operations near full capacity. We expect drilling activity to remain high throughout the year, driving continued strong demand for proppant materials. In an effort to capture this anticipated demand, we are currently exploring opportunities to expand our fracture proppant manufacturing capacity later in the year."

GengSheng commercially launched its fracture proppant products in the second quarter of 2007, and reported full-year 2009 revenue from this product segment of $8 million, representing a 3-year CAGR of 323%. Fracture proppant sales in the third quarter of 2010 were a record $5 million. In order to meet the growing demand for its fracture proppant products, GengSheng signed a 3-year operating facility lease in the fourth quarter of 2010. This facility increased the Company's fracture proppant manufacturing capacity to 75,000 metric tons per year.

GONGYI, China, Feb. 1, 2011 /PRNewswire-Asia/ -- China GengSheng Minerals, Inc. today announced that GengSheng has signed a full-service refractories supply contract with Fushun New Steel Corporation. Shipments under the contract began in January 2011, and are expected to continue through December 2012. Revenue contribution from this new client is expected to begin in the first quarter of 2011.

Under the agreement, GengSheng will provide refractory materials, as well as installation and on site support services. Revenue will be recognized based on Fushun New Steel's production volume. Based on Fushun's current manufacturing capacity, GengSheng expects revenue of approximately $10 million over the two-year term of the contract.

Rodman and Renshaw on CHGS          2/01/2011

A $10 MM Full Service Contract 

China Gengsheng Minerals (“Gengsheng”, Ticker: CHGS, Market Outperform) today announced that it has signed with Fushun New Steel Corporation (“Fushun”) a two-year full-service refractories supply contract worth of approximately $10 million. Shipments under the contract have begun since January 2011 and are expected to continue through December 2012. Under the contract, Gengsheng will provide refractory materials as well as installation and on-site support services including maintenance, repair, and replacement.

Gengsheng’s full service program is an important revenue contributor and margin driver for the company. Such a program typically lasts one to two years, and helps generate stable and recurring revenue streams and contributes to higher margins than simple product sales. Gengsheng’s full service programs contributed about 52% of the total refractory revenue in the first nine months of 2010. The company currently serves nine clients with full service programs. Relatively few refractory makers in China are capable of providing such full service programs to large steel plants. As steel producers become larger as a result of the ongoing industry consolidation, Gengsheng is in a more advantageous position than smaller competitors aiming to serve these clients, largely due its experience and reputation. We expect the company will continue to win full service contracts in 2011.

We are maintaining our Market Outperform rating and $2.80 price target on the shares of Gengsheng. The $2.80 price target is based on the shares trading at 8.5x our 2011 diluted EPS estimate of $0.33. Major risks to our rating and price target include the company’s heavy dependence on the steel industry, refractory market demand risk, intense industry competition, capital raising uncertainty, business execution risk, fluctuation of raw material prices, environmental liability risk, as well as political and regulatory risks related to operating in China.


Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Third Quarter 2010 Financial Highlights:

• Revenue increased 12.2% year-over-year and 11.6% quarter-over-quarter to approximately $16.7 million.
  • Fracture proppant sales were approximately $5.0 million, an increase of 91.4% year-over-year and 62.8% quarter-over-quarter.
  • Refractories sales were approximately $11.4 million, compared with approximately $12.2 million in the third quarter of 2009.
  • Newly introduced fine precision abrasive product sales were approximately $0.2 million.
• Gross profit increased by 17.1% to approximately $4.9 million, or 29.5% of total sales, compared with approximately $4.2 million, or 28.3% of total sales in the same period a year ago.
• Total operating expense increased to approximately $3.5 million, compared with approximately $2.6 million in the third quarter of 2009.
• Net income was approximately $0.9 million, or $0.04 per share, compared with approximately $1.7 million in the third quarter of 2009.
• Comprehensive income attributable to the Company's stockholders was approximately $1.7 million for the third quarters of 2010 and 2009.
• Cash and cash equivalents of approximately $7.5 million, stockholders' equity of approximately $52.8 million and working capital of approximately $23.3 million, as of September 30, 2010.

"Our strong sales for the period were led by our fracture proppant business with significant growth in demand driven by increased drilling activity," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "Additionally, the third quarter was notable for the launch and first commercial sales of our fine precision abrasives product line. In addition to the immediate contributions, the introduction of fine precision abrasives gives us access to the sizeable, fast-growing solar market and a number of large, high-profile potential customers.

"While we achieved record revenue for the period, our refractories business continued to be impacted by economic weakness in the Chinese steel industry. We continue to offset this by transitioning to a revenue mix of higher-end monolithic refractory products. During the quarter, we also made important investments in our research and development to expand our refractory and industrial ceramics offerings, and incurred higher costs associated with increased personnel and salaries for our fracture proppant and fine precision abrasives businesses as we met new proppant sales goals and increased staff to support the launch and sales efforts of fine precision abrasives.  These investments drove an increase in operating expenses in the third quarter, which impacted our bottom line, but significantly improve the Company's overall position and, we believe, will help us achieve our longer-term growth objectives.

"Given our strong domestic foothold, we are working aggressively to expand our presence internationally in order to capitalize on the significant, untapped potential in the overseas markets. To better position the Company to pursue sales opportunities and demand in the domestic and international fracture proppant market, we recently increased our annual production capacity to 75,000 metric tons. As the near-term outlook for the Chinese steel industry remains uncertain, we continue to ramp our fracture proppant business and recently introduced fine precision abrasives products. Both business segments represent large and growing market opportunities where we can readily expand our business," Mr. Zhang concluded

On May 17, 2010 we removed China Gengsheng from the GeoSpecial List.

Added to the GeoSpecial list on October 1, 2009 @ $1.58.

Catalyst: Expected new business line to dramatically impact EPS.

Peak performance: Reached a high of $4.35 on March 8, 2010 

Current road block: Company has not been able to consistently generate above average EPS; Growth Still being effected by global recession due to weak export demand.