WUHAN CITY, China, April 6, 2011 /PRNewswire-Asia/ -- Kingold Jewelry, Inc (NASDAQ: KGJI), one of China's leading manufacturers and designers of 24-karat gold jewelry and ornaments, today announced that it has entered into an agreement with Bank of Communications Co., Ltd. to design and manufacture 24-karat gold investment-oriented products for resale by the Bank to customers in its retail banking network throughout Hubei Province, China. The deal will serve as a pilot project which Kingold ultimately hopes will extend to the Bank's other locations throughout China.
Under the agreement, Kingold will design and manufacture 24-karat gold investment-oriented products, including coins, bars and ornaments, on behalf of the Bank. Kingold's contract with the Bank extends for one year, and is renewable at end of that term. While Kingold expects to hire additional labor to assist in the production of 24-karat gold products for the Bank, Kingold does not anticipate that it will incur incremental capital expenditures for either manufacturing equipment or for facilities in connection with this agreement. Kingold expects this relationship to begin contributing meaningfully to its overall revenue in the second half of 2011.
The agreement with the Bank further advances Kingold's strategy to build a new line of complimentary 24-karat gold investment-oriented products. It is expected that the new product line, which caters to the affinity of Chinese consumers for gold as a store of wealth will, on average, generate higher gross margin than that of its traditional gold jewelry and ornament lines.
"We are very pleased to announce this new relationship with Bank of Communications Co., Ltd. on the heels of our recent agreement with China Merchants Bank," said Mr. Zhihong Jia, Chairman and CEO of Kingold. "The Bank has a strong presence in Hubei, one of China's largest provinces with a population of roughly 60 million. We intend to provide the finest quality 24-karat gold products to customers located throughout the Bank's network of 79 retail branches across Hubei Province. We will continue to pursue similar arrangements with other world class financial institutions in China, aiming to grow Kingold's revenues and enhance overall profitability."
About Kingold Jewelry, Inc.:
Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, China's fourth largest city, was founded in 2002 and today is one of China's leading designers and manufacturers of 24-karat gold jewelry and ornaments sold by weight. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. Sales have grown from $29 million in FY 2006 to $523 million in FY 2010 with net income attributable to common stockholders growing from $1.3 million to $18.2 million over the same period. For more information, please visit www.kingoldjewelry.com.
About Bank of Communications Co., Ltd.
Bank of Communications Co., Ltd. is one of the leading banks in the world and was founded in 1908. The Bank has 2,643 retail branches across China with total assets of roughly $600 billion at the end of 2010. Bank of Communications Co. Ltd's Hubei Division covers the entire Hubei Province, with a total of 79 branches and 150 sub-branches, and total assets of more than $15 billion.
Business Risks and Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the risk factors contained in Kingold's SEC filings available at www.sec.gov, including Kingold's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements for any reason.
SOURCE Kingold Jewelry, Inc.