Orient Paper (NYSE AMEX:ONP)

Not only did GeoSpecial, Orient Paper report 2009 third quarter financial results that came in well above what we had expected; But Company commentary in its SEC 10Q filing was very encouraging pointing to further growth in coming quarters.

"While sales of corrugating medium paper still remain strong due to a healthy level of manufacturing activities around the region of Northern China, the demand for our medium-grade offset printing paper, which primary use is for monochrome printing materials, including school textbooks, grew even faster. A large portion of our writing paper production capacity was converted to make more medium-grade offset printing paper.

Generally, unit sales prices for our paper products during the third quarter of 2009 remained stable as compared to the first two quarters of the year, and were even slightly lower as compared to the same period ended September 30, 2008, when commodities prices rose sharply, including the costs of our raw materials. Nevertheless, we have seen unit sales prices for the corrugating medium and offset printing paper products going upward starting in September 2009, and believe the trend may continue through the next few months. During the three months ended September 30, 2009, we obtained 12 new customers, which accounted for 6.28% of the quarterly revenue, with the largest new customer (a paper distributor in Shanghai, China) contributing 4.78% of quarterly revenue."

We need to be cognizant that ORPN's outlook is contingent on the closing of a digital photo paper plant to enter into the high-margin digital photo paper business.

ORPN could be poised for P/E expansion if investors view this quarter as a break out. The Company's P/E currently stands at 6.57 on trailing EPS of $1.08.

On May 22, 2009 the GeoTeam® coded Orient Paper as GeoSpecial ($0.42) due to an improvement in its liquidity position.  

We also cited two concerns:

1. The company has not addressed previously stated financial guidance.

• issue still open

2. The company did not have any United States investor relations representation.

• This concern can now be put to rest as the company has retained the services of a United States investor relations firm.

The GeoTeam® is hopeful that this news will result in more investors discovering the Orient Paper story.  More updates will be provided when warranted.