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    Hot OTCBB Stock – China Shuangji Cement Spikes 63% – Shares Rally on Upcoming New Facility Opening

    China Shuangji Cement Ltd. (OTCBB: CSGJ) stock price increased 63% since the September 10 low of $0.35 to the September 15 high of $0.57 on positive news concerning imminent opening of a new production facility and strong growth outlook. The daily trading volume increased accordingly from an average of 50,000 shares over the last three months to 425,000 on September 14 and 648,000 shares on September 15.

    China Shuangji Cement is a producer of high-quality Portland cement in Shandong and Hainan Provinces of People’s Republic of China. The company currently produces approximately 1.5 million tons of Portland cement annually from two facilities in Hainan and one facility in Shandong, and expects its output to increase by 1.0 million tons to a total of 2.5 million tons once the new Zhaoyuan (Shandong Province) plant and upgrades are completed.

    The company plans to start operation of the new capacities in the first week of October. As a result, China Shuangji Cement’s production capacity would increase approximately 66% over the current level. Accordingly, the company’s management is expecting a similar increase in revenue and net profit run rates. That is, China Shuangji Cement’s annual revenue could approach $100 million, while net profit could range around $8 million at full capacity.

    The company experienced strong revenue growth ranging at 11.5% in Q2 2010 as a result of increased production from existent cement plants and rising demand for bulk cement due to the construction of new buildings, roads, and other infrastructure projects in the company’s core markets – Shandong and Hainan Provinces.  Revenues for the six months ended June 30, 2010, totaled $27.2 million, compared to revenues of $25.2 million for the same period last year, an increase of 8.1%. Net income for the first six months of 2010 was $1.9 million, or $0.06 per diluted share, versus net income of $2.4 million, or $0.09 per diluted share, in the same period in 2009.

    China is enjoying strong economic growth and the construction industry continues to be driven by demand for new buildings and cement intensive infrastructure projects. This development is supported by the government’s $586 billion stimulus package that calls for substantial investments in cement intensive projects for many years to come and the closure of outdated cement facilities. The company intends to benefit from this program and obtain a new production permit to update and upgrade its production line in Dongfang, which currently has an annual production capacity of 500,000 metric tons of cement.

    China Shuangji Cement is well positioned to capitalize on growing infrastructure investment in China and the opening of a new facility could significantly increase its revenue and profit over the next quarters. The eventual announcement that the new production facility becomes operational on expected dates would support a further appreciation in China Shuangji Cement’s stock price.

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