-- New higher-margin product line represents significant growth opportunity for the Company --
WUHAN, China, Feb. 18, 2011 /PRNewswire-Asia/ -- Kingold Jewelry, Inc. ("Kingold" or the "Company") (Nasdaq: KGJI), one of China's leading manufacturers and designers of 24-Karat gold jewelry and ornaments, announced today that it has entered into an agreement with China Merchants Bank Limited ("China Merchants Bank") to manufacture 24-Karat gold investment related products, such as gold coins and bars, for resale by China Merchants Bank to its customers throughout its expansive retail banking network across China.
Kingold intends to leverage its gold jewelry manufacturing expertise, while capitalizing on available production capacity, to grow this new line of complimentary gold investment products. It is expected that the new product line, which caters to Chinese consumer affinity for gold as a store of wealth, will on average generate more than double the gross margin of the Company's traditional gold jewelry and ornament line.
The Company's new products, including custom designed gold coins and gold bars, have been well received during initial trials based on feedback from China Merchants Bank. Kingold expects gold investment oriented products, as a group, to begin contributing meaningfully to the Company's overall revenue in the second half of 2011. The Company's contract with China Merchants Bank will automatically renew at end of the term in December 2011, absent specific objections by either party. While Kingold will hire additional labor to produce these gold coins and bars, the Company does not require additional capital expenditures on manufacturing equipment or facilities.
Mr. Zhihong Jia, Chairman and CEO of Kingold, commented, "We are very pleased to announce this exciting agreement with one of China's leading financial institutions, China Merchants Bank, and plan to further build our partnership by delivering superior quality investment oriented gold products. Our management team is working hard to develop similar relationships with other world class financial institutions with an eye toward growing earnings and enhancing shareholder value."
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 $250 million in FY 2009 with net income growing from $1.3 million to $8.7 million over the same period.
About China Merchants Bank:
Founded in 1987, headquartered in Shenzhen, and listed both on the Shanghai Stock Exchange (under the stock code 600036) and on the main board of the Hong Kong Stock Exchange (under stock code 3968), China Merchants Bank is a leading retail bank in China. China Merchants Bank provides customers with both corporate and retail banking products and services and conducts treasury activities for proprietary purposes and on behalf of its customers.
China Merchants Bank has two wholly-owned subsidiaries in Hong Kong, namely Wing Lung Bank and CMB International Capital Corporation, Ltd.; a branch in Hong Kong; a branch and a representative office in New York; and a representative office in London. The Bank's outlets are primarily located in China's relatively more economically affluent regions such as Yangtze River Delta, Pearl River Delta and Bohai Rim, and certain large cities in other regions.
China Merchants Bank has received many domestic and international honors for its business performance, management capability and corporate culture. For example, it ranked first in "The Best Banking Institution in China" and third in "The Best Banking Institution in Asia" by Euromoney in 2008. The company was awarded the honor of "China's Best Local Bank for 2008" by Asia Money. The Asian Banker magazine named the company "The Best Retail Bank in China" for three consecutive years. The company won three awards, namely, "The Best Management Company," "The Best Corporate Governance" and "The Best Investor Relationship" by Finance Asia. Additionally, it was voted as one of the "Most Respected Chinese Enterprises" by the Management Case Studies Center of Peking University and the Economic Observer for the consecutive sixth year. In 2009, the company won two awards, namely, "The Most Preferred RMB Wealth Management Bank" and "The Most Preferred Credit Card Issuer" for multimillionaires, respectively for five consecutive years in the "Result Release on the Survey of Preferred Brand Names of Chinese Multimillionaires" held by Chinese Hurun Report. In the selection of the "2009 Excellence in Retail Financial Services Awards" organized by The Asian Banker, the company received "The Best Retail Bank in China" award for the third time and "The Best Joint Stock Retail Bank in China" award for five consecutive years. In the selection of best private bank organized by Asia Money, the company was honored "The Best Private Bank in China." In 2010, the company was again awarded the honour of "The Best Private Bank in China" by Euromoney, and was dubbed the "Best Professional Custody Bank in China" by the international authoritative magazine The Asset. In addition, the company's 6S Comprehensive Assets Custody Service System was granted the "Award of Financial Innovation of People's Government of Shenzhen."
For additional information on CMB please visit: http://english.cmbchina.com/
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.
