Revenue increases 67% year-over-year to $30.5 million

Net income rose 107% to $4.8 million

BAODING, Hebei, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- Orient Paper, Inc. (OTC Bulletin Board: ORPN) ("Orient Paper" or the "Company"), which controls and operates Hebei Baoding Orient Paper Milling Co., Ltd. ("HBOP"), a leading manufacturer and distributor of diversified paper products in Hebei, China, today announced financial results for the third quarter ended September 30, 2009.

    Third Quarter 2009 Highlights
    -- Revenue for the third quarter of 2009 increased 67.3% year-over-year to
       approximately $30.5 million
    -- Gross profit increased 107.4% year-over-year to approximately $7.1
       million
    -- Gross margin was 23.3%, up 4.5 percentage points year-over-year
    -- Operating income rose 107.0% year-over-year to approximately $6.6
       million
    -- Net income increased 107.1% year-over-year to approximately $4.8
       million, or $0.41 (post reverse split) per diluted share

"In the third quarter, we continued to see growing demand for our products, especially our high-margin, medium-grade offset printing paper, which increased fourfold year-over-year and accounted for almost half of our revenue. We also took advantage of short-term declines in the purchase cost of recycled paperboard, thereby reducing our average unit cost of this key raw material by 27% quarter-over-quarter and significantly enhancing our profitability during the quarter," commented Mr. Liu Zhenyong, chairman and chief executive officer of Orient Paper. "We added 12 new customers during the quarter, including a large paper distributor in Shanghai, further expanding our market reach in China's rapidly growing paper industry," added Mr. Liu.

Third Quarter 2009 Financial Results

Revenue for the third quarter of 2009 was approximately $30.5 million compared to $18.3 million for the same period in 2008, an increase of 67.3%. The increase in revenue was primarily attributable to increased sales of the Company's medium-grade offset printing paper and corrugating medium paper products as a result of the relatively healthy (as opposed to the same period last year) level of manufacturing activities around Northern China. Revenue from medium-grade offset printing paper was approximately $14.1 million, up 447.7% from approximately $2.6 million for the same period in 2008, as we converted a significant portion of the production capacities of writing paper and high-grade offset printing paper to the production of medium-grade offset printing paper to meet the strong market demand for medium-grade. The Company also added twelve new customers during the quarter, which accounted for 6.3% of the total sales revenue. Revenue from corrugating medium paper was approximately $10.3 million compared to approximately $8.2 million for the same period in 2008, an increase of 25.4%. Revenue from high-grade offset printing paper declined 20.1% to approximately $2.3 million from approximately $2.8 million for the same period in 2008. Revenue from writing paper decreased 56.6% to $2.0 million from approximately $4.6 million during the same period in 2008. The Company also produced 2,269 tons of white card paper for $1.8 million in July 2009 to fill a special order.

Gross profit for the third quarter of 2009 increased 107.4% to approximately $7.1 million from approximately $3.4 million for the third quarter of 2008. The Company reported gross margin of 23.3%, an increase of 4.5 percentage points, from 18.8% in the third quarter of 2008. The significant improvement in gross margin was a mainly attributable to a temporary decline in recycled paperboard prices, which lowered the Company's average cost of this raw material and, to a lesser extent, a higher portion of the gross profit mix contributed by our white paper products, which usually command a higher gross profit margin.

Selling, general and administrative expenses for three months ended September 30, 2009 were approximately $0.5 million, up 112.7% from approximately $0.2 million in the same period last year. The increase in selling, general and administrative expenses was primarily attributable to increase in professional fees and expenses related to the Company's status as a public company.

Operating income for third quarter of 2009 was approximately $6.6 million, up 107.0% from approximately $3.2 million in the third quarter of 2008. The increase was primarily attributable to revenue and gross profit growth in the quarter ended September 30, 2009.

Net income in the third quarter of 2009 was approximately $4.8 million, up 107.1% from approximately $2.3 million in the same period last year. Basic and diluted earnings per share for the third quarter of 2009 were $0.41. Weighted average shares used in the calculation of diluted earnings per share were 11,716,579 in the quarter ended September 30, 2009 compared to 11,275,497 a year ago.

Nine Months Results

Total revenue for the first nine months of 2009 was approximately $70.8 million, up 43.5% from the first nine months of 2008. Gross profit for the first nine months of 2009 was approximately $14.4 million, up 58.8% from gross profit of approximately $9.1 million in the comparable period a year ago. Gross margin was 20.4% for the first nine months of 2009, an increase of approximately 2.0 percentage points from 18.4% for the same period a year ago. Operating income was approximately $13.5 million, up 59.6% from approximately $8.4 million in the first nine months of 2008. Net income for the first nine months of 2009 was approximately $9.6 million, up 57.8% from approximately $6.1 million in the first nine months of 2008. Basic and diluted earnings per share were $0.84 for the first nine months of 2009 compared to $0.57 in the first nine months of 2008. Weighted average shares used in the calculation of diluted earnings per share were 11,424,749 in the nine months ended September 30, 2009 compared to 10,600,132 a year ago.

Financial Condition

As of September 30, 2009, Orient Paper had approximately $11.5 million in unrestricted cash and approximately $11.2 million in working capital. Short term debt stood at approximately $5.2 million and the company had approximately $6.1 million in long term debt, of which approximately $4.1 million is from a group of related parties. Inventory totaled approximately $7.1 million, up from approximately $0.9 million at year end. Approximately 90% of the inventory was raw materials inventory, as the Company increased its stock of recycled paper board in anticipation of the continued rising raw material prices. As of September 30, 2009, shareholders' equity was approximately $47.7 million, up 39.7% from shareholder's equity of approximately $34.1 million as of December 31, 2008. For the first nine months of 2009, the Company generated net cash flow from operating activities of approximately $10.2 million.

Recent Events

On October 7, 2009, Orient Paper closed a private placement financing to support its future growth. It issued approximately 2.1 million post-reverse split shares of the Company's common stock for an approximate aggregate purchase price of $5.0 million.

On October 14, 2009, Orient Paper announced that it has engaged BDO Limited, the Hong Kong member firm of the BDO International network, as its new independent auditor.

On October 29, 2009, the Company announced the appointment of Mr. Drew Bernstein, Mr. Wenbing Christopher Wang, and Ms. Zhaofang Wang to its Board of Directors as independent directors effective October 28, 2009. The Company also announced that effective October 28, 2009, Mr. Xiaodong Liu and Mr. Chen Li resigned as directors of the Company. The Company also established Audit, Nominating, and Compensation Committees.

On November 5, 2009, the Company has effected a one-for-four reverse split of the Company's common stock and traded on the Over the Counter Bulletin Board under the new ticker symbol "ORPN.OB" effective at the open of the market on November 5, 2009. As a result of the reverse split, the Company now has approximately 14,579,420 shares of common stock issued and outstanding.

Business Outlook

Orient Paper is using the proceeds of its recent financing to acquire a digital photo paper plant to enter into the high-margin digital photo paper business. The Company expects to close the acquisition by the middle of December 2009.

"We expect to continue our strong revenue and net income growth trend for the rest of the year and into 2010. We believe our entry into the high-end digital photo paper market will expand our product portfolio, accelerate our revenue growth, improve our profitability and further strengthen our position in the industry," commented Mr. Liu Zhenyong, Chief Executive Officer of Orient Paper. "In addition to our commitment to business expansion, we enhanced our corporate governance and oversight with the addition of three new and highly experienced independent directors to our Board."

The Company has already achieved its fiscal year 2009 make good target ($10.0 million minus a 10% margin of error as defined in the financing documents) in the first nine months of 2009. Orient Paper expects to achieve its make good guidance of $18.0 million for fiscal year 2010, provided the digital photo paper project proceeds as planned.

About Orient Paper, Inc.

Orient Paper, Inc., through its wholly owned subsidiaries, Shengde Holdings, Inc. and Baoding Shengde Paper Co., Ltd., controls and operates Hebei Baoding Orient Paper Milling Co., Ltd ("HBOP"). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugating medium paper, offset printing paper, writing paper, and other paper and packaging-related products in China. The Company uses recycled paper as its primary raw material. As one of the largest paper producers in Hebei Province, China, the Company is strategically located in Baoding, a city in close proximity to Beijing where the majority of publishing houses are based. Orient Paper is led by an experienced management team committed to diversifying the Company's product offering and delivering tailored services to its customers. For more information, please visit http://www.orientalpapercorporation.com .

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the availability of funds and working capital to finance its activities; the actions and initiatives of current and potential competitors; the Company's ability to introduce new products; market acceptance of new products; general economic and business conditions; the ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

                         -- Financial tables follow --



                               ORIENT PAPER, INC.
                                  BALANCE SHEETS
                  AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
                                   (Unaudited)

                                      ASSETS
                                                 As of               As of
                                             September 30,        December 31,
                                                  2009                2008

    Current Assets:
      Cash and cash equivalents                $11,542,958         $3,234,419
      Restricted cash                              260,158                 --
      Accounts receivable -
      Trade (net of allowance for doubtful
       accounts of $56,764 and $0 as of
       September 30, 2009 and December 31,
       2008, respectively)                       2,781,415          1,425,899
      Other                                            150                 --
      Inventories                                7,069,798          2,821,063
      Prepaid consulting fees and other             59,018                 --

         Total current assets                   21,713,497          7,481,381

    Property, Plant, and Equipment:
      Building and improvements                  9,846,424          9,876,637
      Machinery and equipment                   47,202,267         47,347,109
      Vehicles                                     543,004            544,670

                                                57,591,695         57,768,416

      Less - Accumulated depreciation
       and amortization                        (15,023,408)       (12,427,735)

         Net property, plant, and
          equipment                             42,568,287         45,340,681

    Total Assets                               $64,281,784        $52,822,062

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
      Short-term loans                          $5,195,229         $6,858,652
      Accounts payable - Trade and
       accrued liabilities                       3,810,761            740,846
      Income taxes payable                       1,547,007          1,047,678

         Total current liabilities              10,552,997          8,647,176

    Long-Term Debt, less current
     portion:
      Loan from credit union                     1,942,202          1,948,176
      Related party notes                        4,110,494          8,137,554

         Total long-term debt                    6,052,696         10,085,730

         Total liabilities                      16,605,693         18,732,906

    Commitments and Contingencies

    Stockholders' Equity:
      Common stock, 500,000,000 shares
       authorized, $0.001 par value per
       share, 12,496,088 and 11,275,497
       shares issued and outstanding as
       of September 30, 2009 and December
       31, 2008, respectively                       12,496             11,275
      Additional paid-in capital                13,695,913          9,598,944
      Statutory earnings reserve                 3,079,063          3,079,063
      Accumulated other comprehensive
       income                                    3,494,728          3,592,839
      Retained earnings                         27,393,891         17,807,035

         Total stockholders' equity             47,676,091         34,089,156

    Total Liabilities and Stockholders'
     Equity                                    $64,281,784        $52,822,062




                                ORIENT PAPER, INC.
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                      FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 2009 AND 2008
                                   (Unaudited)

                               Three Months Ended        Nine Months Ended
                                  September 30,             September 30,
                               2009         2008         2009        2008
    Revenues:
      Sales, net            $30,548,611  $18,256,309  70,786,472  $49,337,596

    Cost of Sales:
      Cost of sales          23,369,005   14,731,043  56,223,156   40,044,007
      Business tax and
       surcharges                53,915       89,673     132,204      204,322

        Total cost of sales  23,422,920   14,820,716  56,355,360   40,248,329

    Gross Profit              7,125,691    3,435,593  14,431,112    9,089,267

    Selling, General and
     Administrative
     Expenses                   491,676      231,116     966,238      654,889

    Income from Operations    6,634,015    3,204,477  13,464,874    8,434,378

    Other Income (Expense):
      Interest income            35,522       34,621      67,464       37,920
      Interest (expense)       (208,471)    (139,799)   (624,551)    (373,232)
        Total other (expense)  (172,949)    (105,178)   (557,087)    (335,312)

    Income before Income
     Taxes                    6,461,067    3,099,299  12,907,788    8,099,066

    Provision for Income
     Taxes                   (1,647,468)    (774,825) (3,320,931)  (2,024,767)

    Net Income                4,813,598    2,324,474   9,586,856    6,074,299

    Comprehensive Income:
      Foreign currency
       translation
       adjustment                48,155      223,619     (98,111)   1,963,066

    Total Comprehensive
     Income                  $4,861,753   $2,548,093   9,488,745   $8,037,365

    Earnings Per Share:

    Basic Earning per Share       $0.41        $0.21       $0.84        $0.57

    Fully Diluted Earning
     per Share                    $0.41        $0.21       $0.84        $0.57

    Weighted Average Number
     of Shares
      Outstanding - Basic    11,697,557   11,275,497  11,418,338   10,600,132
      Outstanding - Fully
       Diluted               11,716,579   11,275,497  11,424,749   10,600,132



                                ORIENT PAPER, INC.
                             STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                           SEPTEMBER 30, 2009 AND 2008
                                   (Unaudited)

                                                      Nine Months Ended
                                                        September 30,
                                                   2009               2008
    Cash Flows from Operating
     Activities:
      Net income                                $9,586,856         $6,074,299
      Adjustments to reconcile net
       income to net cash provided
       by operating activities:
        Depreciation and amortization            2,595,673          2,956,454
        Non-cash warrants compensation              17,723                 --
        Non-cash issuance of stock for
         services                                   27,300            500,000
      Changes in net assets and
       liabilities:
        Accounts receivable - Trade             (1,355,665)          (750,313)
        Inventories                             (4,248,735)          (499,031)
        Prepaid expenses                            (5,851)          (130,000)
        Accounts payable - Trade and
         accrued liabilities                     3,069,915          2,065,846
        Income taxes payable                       499,328            499,918

    Net Cash Provided by Operating
     Activities                                 10,186,544         10,717,173

    Cash Flows from Investing
     Activities:
      Purchases of property, plant, and
       equipment                                   176,721        (12,554,348)

    Net Cash (Used in) Investing
     Activities                                    176,721        (12,554,348)

    Cash Flows from Financing
     Activities:
      Proceeds from related party loans                 --          4,304,045
      Payments on related party loans              (27,060)                --
      Payments on short term loans              (1,663,423)                --
      Payments on loan from credit union            (5,974)                --
      Proceeds from borrowing on credit
       facility                                         --          1,124,413

    Net Cash Provided by (Used in)
     Financing Activities                       (1,696,457)         5,428,458

    Effect of Exchange Rate Changes on
     Cash and Cash Equivalents                     (98,111)         1,963,066

    Net Increase in Cash and Cash
     Equivalents                                 8,568,697          5,554,349

    Cash and Cash Equivalents -
     Beginning of Period                         3,234,419            622,661

    Less: Restricted Cash                         (260,158)                --

    Cash and Cash Equivalents - End of
     Period                                    $11,542,958         $6,177,010

    Supplemental Disclosure of Cash Flow
     Information:
      Cash paid for interest                      $503,093           $373,232
      Cash paid for income taxes                  $275,497         $1,729,172



                                ORIENT PAPER, INC.
                             STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                           SEPTEMBER 30, 2009 AND 2008

    Supplemental Disclosure of Cash Flow Information:

On October 29, 2007, the Company entered into an Agreement and Plan of Merger between

Orient Paper; CARZ Merger Sub, Inc., a Nevada corporation, and wholly owned subsidiary of the Company; DZH Limited; and the stockholders of DZH Limited. Under the terms of the Agreement and Plan of Merger, the Company issued to the stockholders of DZH Limited 7,450,497 (post reverse split) shares of the Company's common stock, par value $.001, in exchange for all of the issued and outstanding shares of stock of DZH Limited (50,000 shares).

In May 2008, the Company issued 1,250,000 (post reverse split) shares of common stock to three consultants for services rendered during the year ending December 31, 2008, valued at $500,000.

On May 10, 2009 the Company issued 1,250 (post reverse split) shares of common stock to its CFO as compensation with a fair value of $900. No cash is received as a result of the issuance of stock.

On June 24, 2009 the Company issued 15,000 (post reverse split) shares of common stock for legal fees with a fair value of $26,400. No cash is received for the issuance of stock.

On July 23, 2009, the Company issued a two-year warrant to purchase 25,000 (post reverse split) shares of the Company's common stock at $4.00 (post reverse split) per share as an incentive for certain consulting services. The value of the warrant was determined to be $70,890, and has an amortization period of 12 months. No cash was received from the issuance of the warrant.

On August 31, 2009 Mr. Zhenyong Liu, Chairman and CEO of the Company, converted $4,000,000 of his loan to the Company into 1,204,341 (post reverse split) shares of common stock. No cash is paid for the retirement of the $4,000,000 loan.

    For more information, please contact:

    Orient Paper, Inc.
     Winston C. Yen, Chief Financial Officer
     Tel:   +1-562-818-3817 (Los Angeles)
     Email: info@orientalpapercorporation.com

    CCG Investor Relations Inc.
     Mr. Crocker Coulson, President
     Tel:   +1-646-213-1915 (New York)
     Email: crocker.coulson@ccgir.com
     Web:   http://www.ccgirasia.com

SOURCE Orient Paper, Inc.

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