Tuesday, December 14, 2010

Lihua International Sees Even Higher Demand for Copper Products

Lihua International (LIWA) remains a top investment in the Opportunistic portfolios as its recycled and refined copper products remain in high demand in China. Today LIWA upped copper anodes product shipments for 2010 and increased the demand for 2011. Considering that LIWA already had demand in excess of supply even after doubling capacity, this is more great news for the company that trades at roughly 6x '11 estimates.

LIWA has already shipped 11K tons of copper anode in 2010 after only forecasting 8-10K tons back in October. Now they expect shipments of 12.5K tons for all of 2010. More great news that LIWA is exceeding internal estimates especially considering that demand continues to pile up.

Total demand has now be raised to 122-134K metric tons up from the last estimate of 110K mt. Considering they expect to increase production capacity to 75K mt in the 2nd half of 2011 it appears that demand is approaching double that of their supply. LIWA has a ton of growth opportunities to consider with this demand equation.

This stock remains a core holding and is only trading at 6x 2011 estimates due to the Chinese small cap fraud issues. LIWA continues to garner more interest in the press and could easily have a significant pop from these levels.


Via PR:


  • The Company began shipping product to this customer in the fourth quarter of 2010, and expects to supply 1,000 – 2,000 tons of copper anode per month in 2011, with specific quantities determined based upon available capacity.
  • In 2010 to date, Lihua has shipped 11,000 tons of copper anode, and expects full-year copper anode shipments to total approximately 12,500 tons. Including demand from this customer, Lihua now has 2011 copper anode supply contracts and volume demand indications totaling 122,000 – 134,000 metric tons. Upon completion of the two new smelters in the second half of 2011, Lihua expects annual copper anode production capacity to be 75,000 metric tons.
  • In order to meet the growing customer demand, Lihua recently broke ground on its second copper recycling facility, being built on 30 acres of land adjacent to the Company's existing copper recycling facility in Danyang, China. Based on the Company's construction plans, the facility will initially house two smelters, doubling Lihua's annual refined copper production capacity to 100,000 tons. The new facility is expected to commence operation in the second half of 2011.


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