DGAP-News: Asian Bamboo extends its value chain into bamboo fibre processing

Asian Bamboo AG  / Key word(s): Product Launch

12.11.2010 06:00
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Hamburg, 12 November 2010 - Asian Bamboo AG ('Asian Bamboo', 'the Company',
ISIN: DE000A0M6M79, ticker symbol: '5AB', ADR ticker symbol 'ASIBY'), a
world-leading integrated bamboo company, is pleased to announce that it
will further extend its involvement in the bamboo industry value chain
through the production of Acetified Dissolving Bamboo Pulp ('ADBP' or
'bamboo fibre') in 2011. ADBP has a wide range of applications but is
expected to be primarily used in the textile market. It is a direct
substitute for other textile fibres and due to the increasing costs of
cotton and viscose, as well as overall environmental concerns, demand for
substitutes like ADBP has risen considerably

Since 2008, Asian Bamboo has extended its involvement in the value chain in
order to further grow the Company and enhance shareholder value. It has
entered into strategic partnerships with companies producing pulp and paper
('Zhongzhu'), plywood ('Xinlifeng') and components for flooring
('Xinchen'). Through its strategic partnership with Zhongzhu, the Company
has been able to identify the potential for ADBP, which is produced through
a similar manufacturing process to that of pulp and paper. Following more
than a year of intensive research and development, the Management Board is
confident that the Company can manufacture a superior product to what is
currently being offered by domestic suppliers. It has also identified
distribution channels for expected future annual sales of around 100,000
tonnes of bamboo fibre. Furthermore, the local government has expressed its
firm support for the project which is in line with the central government's
aim of developing sustainable businesses as highlighted at the recent Party
Congress.

Asian Bamboo is well positioned to enter the bamboo fibre business due to
its leading position in the bamboo industry, strategic partnership with
Zhongzhu, research and development capabilities, financial strength and
strong position in the raw material supply chain. The Management Board
expects that this project will have a very positive impact on Asian
Bamboo's future financial performance. At full capacity of an annual
production of 100,000 tonnes of bamboo fibre, at the current market price
of around EUR 1,000 per tonne, sales of ADBP would generate annual revenue
of around EUR 100 million. The main cost is the supply of bamboo trees and
the Management Board estimates that a total of 28 million trees are
required on an annual basis, which, at the current average price of around
EUR 2 per tree, would generate sales for the Company (and costs for the
fibre business) of around EUR 56 million. The profit margins in the ADBP
segment are expected to be healthy due to the Company's monopolistic
position in this market where it is the only domestic producer of such a
high quality bamboo fibre.

The project is divided in three phases which stretch over two years. In the
first phase, which is expected to start generating output in the second
half of 2011, Asian Bamboo will use Zhongzhu as an OEM supplier for the
production of around 20,000 tonnes of bamboo fibre, which should require
around six million bamboo trees. In phase two and three, when more
equipment will be purchased, the total production capacity is planned to
increase to 50,000 tonnes and 100,000 tonnes, respectively, and the amount
of bamboo trees used will increase correspondingly. Total investment
amounts to EUR 42 million (RMB 400 million) of which EUR 2.4 million (RMB
23 million) will be invested in the first phase. All investments will be
funded internally and do not require additional fund raising. Asian Bamboo
has established a new company- Fujian Xinrixian Bamboo Fibre Technology
Co., Ltd. - for this purpose. It is a 100% owned subsidiary of Asian Bamboo
(Hong Kong) Industrial Co., Ltd., which in turn is 100% owned by Asian
Bamboo AG.

Lin Zuojun, CEO and founder of Asian Bamboo, commented: 'Since founding the
Company around 20 years ago, we have gradually developed from a pure
trading operation into an integrated business model. Each strategic move
has helped us reach the next level in terms of revenue and profit
contribution. This project will further solidify our leadership position in
the bamboo industry, generate additional revenue and net profit streams and
create significant additional demand for our bamboo trees.'



For enquiries, please contact: 

Asian Bamboo AG:
Peter Sjovall   +852-9385 3868
Chief Financial Officer
Anja Holst   +49-(0)40 37644 798
Investor Relations Manager







12.11.2010 Dissemination of a Corporate News, transmitted by DGAP - 
a company of EquityStory AG.
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Language:     English
Company:      Asian Bamboo AG
              Stadthausbrücke 1-3
              20355 Hamburg
              Deutschland
Phone:        +49 40 37644 798
Fax:          +49 40 37644 500
E-mail:       info@asian-bamboo.de
Internet:     www.asian-bamboo.de
ISIN:         DE000A0M6M79, DE000A0M6M79
WKN:          A0M6M7, A0M6M7
Listed:       Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
              in München, Berlin, Düsseldorf, Stuttgart
 
End of Announcement                             DGAP News-Service
 
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