FUQING CITY, CHINA -- (Marketwire) -- 08/16/10 -- Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), today reported that a second quarter plant expansion and refurbishment, and lower gross margins, produced lower than planned revenue and profit comparisons in its second quarter ended June 30, 2010. Revenues in the 2010 second quarter grew 16.59% to $9,116,737, from $7,819,356 in the same period last year. As gross margins declined from 48.52% in last year's second quarter to 31.01% in the 2010 second quarter, net income declined 32.17% to $1,670,985, compared with $2,463,329 in the same period last year. EPS in the 2010 second quarter was $0.09.

Anticipated Strong Second Half Pickup/Continuing Market Advantage

Mr. Chen Min, Chairman and CEO of the Company, stated, "During the recent second quarter we undertook an expansion of our manufacturing facility that wasn't completed until July. During construction, despite strong demand for our products, our through-put was reduced below planned levels. Additionally, gross margins in the second quarter returned to a normal 30%+ range from the much higher 48.52% margin a year ago, which really was an anomaly due to abnormally low raw materials prices."

"The good news," Mr. Chen said, "is that a warehouse expansion we started in the quarter to ensure our capacity for continuing growth is now approaching completion and will help us make up lost ground with plans for greatly increased production in the third and fourth quarter. The production increase will be supported by the new supply agreements in Germany we announced recently and the continued very strong demand for recycled LDPE."

An Attractive Product in Good Times and Bad

"I am confident that we will continue to be able to provide a substitutable product for virgin LDPE at prices at least 30% lower while maintaining our 30% margins," Mr. Chen added. "Further," he said, "should China's economy show signs of slowing, we will remain well positioned with a product that is likely to become even more attractive as plastic users seek to lower their production costs. Through the first half of the year we continued to see the selling price of LDPE rising due to strong demand."

Second Quarter Highlights

In the second quarter ended June 30, 2010, the Company sold 8,501 tons of recycled LDPE -- an increase of 10.55% from 7,690 tons sold in the corresponding period of 2009. This gain was much lower than anticipated due to the decision to expand and upgrade the Company's washing and smashing plant, a project that was completed in July. Nevertheless, the volume gain in the quarter was accompanied by price increases. The average selling price of recycled LDPE increased 4.61% from approximately $996 per ton in the three months ended June 30, 2009 to approximately $1,042 per ton in the same period in 2010. In fact, average selling prices of recycled LDPE have been steadily increasing and in July and August have been above $1,100 per ton. Coupled with strong demand for the Company's products and anticipated sales gains, this is expected to positively impact revenues going forward.

Increase in Raw Material Costs

During the 2010 second quarter, the Company's cost of revenues -- consisting of imported plastic waste, transportation, custom tax and labor -- increased substantially. The increase was primarily due to the fact that in early 2009, the Company took advantage of its strong financial position to stockpile raw materials at abnormally lower prices immediately following the global financial crisis and, accordingly, material costs in the three months ended June 30, 2009 were comparatively lower. Average manufacturing costs of recycled LDPE and sorted non-LDPE materials increased from approximately $467 per ton in the 2009 second quarter to an average cost of $647 per ton for the same period of 2010.

Q2 Gross Margin About Matched Margin in Q1

Reflecting the higher raw material costs in the 2010 second quarter, the Company's gross profit margin decreased to 31.01% from 48.52% in the year earlier period. While this represents a difference of 17.51%, the 31.01% gross margin is in line with historical results, and was about even with the gross margin reported in the first quarter of 2010

In order to reduce costs and increase profit margins, the Company has continued to focus heavily on developing relationships with new suppliers and increasing the amount of high quality raw material purchased directly from European suppliers, as opposed to purchasing from a wholesaler. It is able to do so because it maintains the highest "green" standards and is audited by Germany's TÜV Rheinland Cert GmbH. In this regard, as previously announced, in May 2010 and July 2010, Guanwei entered into supply arrangements with two German suppliers for the purchase of at least 35,000 tons of plastic waste. As of the end of the quarter the Company had developed supply relationships with ten different European suppliers and believes this will be a key element in its ability to ramp up production in coming months to meet the strong demand from its more than 300 customers.

Six Month Results As Reported

For the six months ended June 30, 2010, reported net revenues were $18,610,963, compared with $30,447,450 in the first half of 2009. Net income in the first six months of 2010 increased 3.83% to $3,875,589 from $3,732,719 in the same period a year earlier. EPS for the first six months of 2010 was $0.20 or nearly the same level of $0.19 in fully diluted EPS for the same period in 2009.

2010 First Half Revenues From Sales of Manufactured LDPE Were Up 20.10% Year Over Year

In order to understand the underlying growth dynamic in the first half of 2010, an "apples-to-apples" comparison of the Company's sales of self-manufactured recycled LDPE is necessary because the Company also engaged in resales of recycled LDPE purchased from other manufacturers and sales of raw materials inventory in the first half of 2009 -- in which the Company did not engage in 2010. Revenue in the first half of 2010 from the sale of manufactured recycled LDPE was $18,178,715, as compared to $15,136,877 for the same period of 2009, an increase of 20.10% due to an increase in both the sales volume and selling price of recycled LDPE. Guanwei sold 17,371 tons of manufactured recycled LDPE in the six months ended June 30, 2010 -- an increase of 11.79% from 15,539 tons sold in the corresponding period of 2009. The average selling price of manufactured recycled LDPE increased 7.39% from approximately $974 per ton in the six months ended June 30, 2009 to approximately $1,046 per ton in the same period in 2010.

Six Month Gross Margin Grew To 33.03%

Another factor contributing to the decrease in cost of revenue between the first half of 2010 and the first half of 2009 was that a portion of the plastic waste used in production during early 2009 was purchased at high prices agreed upon before the global financial crisis struck in late 2008. This occurred while the Company also took advantage of its strong financial position to purchase large amounts of raw materials at reduced cost during the financial crisis. Average manufacturing costs were $648 per ton for the six months ended June 30, 2009 and $639 for the six months ended June 30, 2010.

In the first six months of 2010, the overall gross profit margin increased to 33.03% from 18.82% in the same period of 2009. The increase was partially offset by lower gross margin resulting from the cessation of sales of purchased recycled LDPE and raw materials in 2010.

Financial Strength

As of June 30, 2010, the Company had no long term debt and cash and cash equivalents of $10,447,264. Its working capital as of June 30, 2010 was $7,579,639. Accounts payable as of June 30, 2010 decreased to $3,009,493 as compared to $8,685,324 as of December 31, 2009. Accounts receivable as of June 30, 2010 were only $325,804, reflecting the Company's practice to receive payments before making delivery.

Outlook

"The outlook for excellent full year results and the longer term continued rapid development of the Company remains extremely bright," stated Mr. Chen. He added, "With the expansion of our warehousing facility nearing completion, we fully intend to capitalize on the strengths we have developed. In particular, this includes our secure supply of raw materials which we will utilize to substantially increase production to meet the strong demand for lower cost, high quality recycled LDPE in the wide variety of industries represented by our customers. While the cost of plastic waste has risen, this is manageable by continuing to strengthen and expand our supplier relationships, and we see a clear opportunity for a continuation of historical profit advances."

Conference Call Invitation

To participate in the call, interested participants should call 1-877-941-4774 when calling within the United States or 1-480-629-9764 when calling internationally. Please ask for the Guanwei Recycling Corp. 2010 Second Quarter Earnings Conference Call, Conference ID: 4349204. There will be a playback available until August 25, 2010. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4349204.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=000079B7 or at ViaVid's website at www.viavid.net.

SEE ATTACHED TABLE

Description of Guanwei Recycling Corp.

Guanwei Recycling Corp. is China's largest manufacturer of recycled low density polyethylene (LDPE). Adhering to the highest "green" standards, it has generated rapid growth producing LDPE from plastic waste procured mostly in Europe for sales to more than 300 customers in ten different industries in China. Guanwei Recycling Corp. is one of the few plastic recyclers in China that has been audited by TÜV Rheinland Cert GmbH for compliance with German pollution and environmental standards, which allows the company to procure high quality plastic waste directly from Germany and other European countries (Spain and Holland), with no middlemen, and permits highly economic production of the highest grades of LDPE. Additional information regarding Guanwei Recycling Corp. is available at www.guanweirecycling.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

                         GUANWEI RECYCLING CORP.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                        AND COMPREHENSIVE INCOME
                       (Expressed in U.S. dollars)


                           Three Months Ended         Six Months Ended
                                 June 30,                  June 30,
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------

Net revenue             $ 9,116,737  $ 7,819,356  $18,610,963  $30,447,450

Cost of revenue           6,289,854    4,025,245   12,463,206   24,717,529
                        -----------  -----------  -----------  -----------
Gross profit              2,826,883    3,794,111    6,147,757    5,729,921
                        -----------  -----------  -----------  -----------

Operating expenses

Selling and marketing
 expenses                    59,682      289,624      108,181      335,744

General and
 administrative
 expenses                   396,208      200,390      719,164      384,313
                        -----------  -----------  -----------  -----------
                            455,890      490,014      827,345      720,057
                        -----------  -----------  -----------  -----------

Income from operations    2,370,993    3,304,097    5,320,412    5,009,864

Interest income               8,576          700       16,828        1,714

Interest expenses           (21,626)     (21,527)     (41,786)     (35,788)

Income before income                               ----------
 taxes                    2,357,943    3,283,270    5,295,454    4,975,790

Income taxes                686,958      819,941    1,419,865    1,243,071
                        -----------  -----------  -----------  -----------

Net income              $ 1,670,985  $ 2,463,329  $ 3,875,589  $ 3,732,719
                        ===========  ===========  ===========  ===========

Comprehensive Income:

Net income              $ 1,670,985  $ 2,463,329  $ 3,875,589  $ 3,732,719

Other comprehensive
 income (loss)

  - Foreign currency
    translation
    adjustments              64,213          113       67,046        8,401
                        -----------  -----------  -----------  -----------

Comprehensive income    $ 1,735,198  $ 2,463,442  $ 3,942,635  $ 3,741,120
                        ===========  ===========  ===========  ===========

Earnings per share
 attributable to
 shareholders of
 Guanwei Recycling
 Corp.

  - basic and diluted   $      0.09  $      0.21  $      0.20  $      0.31
                        ===========  ===========  ===========  ===========

 Weighted average
  number of share of
  common stock used in
  computing basic and
  diluted earnings per
  share                  20,000,006   12,000,000   20,000,006   12,000,000
                        ===========  ===========  ===========  ===========