Guilin Paper Inc. (OTCBB: GUPR)

Dear Reader,

Today’s featured company isn’t some fancy technology play or life-changing biotech with a potential cure for some dread disease.  It also isn’t some crazy notion that might just work if the public takes a liking.

Then what is it?  A durable and pragmatic story smack dab in the middle of China’s enormous growth, which has been making paper products of all variety since 1937.  The company sells successfully to the vast Chinese market and internationally already.  All indications are that growth is likely and expansion inevitable.  And that might just be the sexy part.  Please take a moment to review our profile below.
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About Guilin Paper

Lipu County is in the triangle area of Liuzhou, Guilin and Wuzhou city, where the rich water and forests resources and convenient transportation contribute to company development.  In 2006, the sales revenue of Guilin Paper Inc. reached $31,070,000 USD after increasing steadily for the past three years.

Established in 1937, Guilin Paper has become one of the leading manufacturers and exporters in China specializing in Unique and High Grade paper products. The GUPR mill covers 220,000 square meters. There are eighteen production lines featuring the latest technology and a complete set of testing facilities. The annual output of the mill is approximately 25,000 tons. 

Guilin manufactures more than twenty items in its product line including: High quality white & colored wood pulp tissue papers (sheet & roll), MF Tissue, Glassine Paper, Printed Gift Wrapping Tissue, Food Packing Paper, Watermark Wrapping Tissue, Battery Tissue, Fruit Cover Paper, Firecracker Tissue Paper, cardboards and cartons, ordinary printing paper, colored art printing paper, and newsprint paper. 

In recent years, GUPR has developed other special packing papers that are 'light' in their basis weight. Guilin's papers and products are sold to 28 provinces, cities and autonomous regions inland, and also exported to: America, Canada, Western Europe, Middle East, Southeast Asia, Hongkong and Macao. 

Guilin practices efficiency in manufacturing, quality control,
and promotes the latest technology for waste paper recycling.

"Quality First, Reputation First"

Guilin Paper manufactures various paper products under the "LITA" brand name
and is the first paper making company in the Guangxi province to obtain
the ISO: 9001 certificate. 

Three Subsidiaries, Three Revenue Streams

GUPR's primary business is Guangxi Forestry Lipu Paper Company Limited, which produces and sells high quality paper products primarily for packaging applications, including Kraft paper, a durable, typically brown paper made from wood pulp, which is used predominantly for bags, wrapping paper and cardboard; and high-grade specialty papers designed for custom packaging applications. 

GUPR also has a diversified product portfolio with various types, grades, burst indices, stacking strengths, basis weights, printability and brands to meet a variety of customer requirements. Originally founded in 1965, Guangxi Forestry Lipu Paper Company Limited is a leading player in the papermaking industry in both Guangzhou and Guangxi Provinces. On April 7, 2000, Guangxi Lvbao Waste Paper Recycling Company Limited was founded to engage in the business of waste paper recycling and on December 24, 2003, Guangxi Hengli Power Company Limited was founded to provide stable and inexpensive electricity to the Company. Hengli has over 60 full time employees. 

Resources Advantages: 
The company is located in Guangxi province, China.  It has extremely rich water and timber resources to satisfy the company’s raw material needs.

Geographical Advantages: 
The company’s target market is located in South China which is a economic developed area. The growth potential is exceptional. South China is a heavily populated area, ample amount of waste paper provides a large product and raw material market for the company.

Multi-business Advantages: 
The company possesses several production lines and is able to make flexible production plans; it  can provide multi-services according to different packaging paper board products. It is able to fill large orders in short time due to company’s production scale, speed and efficient inventory management.

Technology and Sales Advantage: 
The company has dedicated in producing packaging paper board for many years, as a result, it has integrated an efficient model combining raw material procurement, inventory management, quality control and sales management. GUPR has also accumulated years of experiences on R&D, production and management of high quality packaging paper board. 
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The Paper Market

CHEMICALS, CONTAINERS & PACKAGING, 
PAPER & FOREST PRODUCTS

With China serving as a global manufacturing and exporting center, a massive quantity of cartons are required for China's packaging and shipping needs. According to the RISI statistics, the consumption of Kraft paper in China increased from about 13.0 million tons in 2002 to about 18.2 million tons in 2004 with a compound annual growth rate of 18.3%; the estimated consumption in 2009 is about 28.2 million tons. From 2004 to 2009, the estimated compound annual growth rate will be around 9.2%.

From 2002 to 2004, domestic consumption of kraft paper exceeded its output. This led to domestic carton shortage and required that more Kraft paper be imported. According to the RISI forecast,  in the next 10 years, the domestic consumption of kraft paper will still exceed its output.

Since its inception, GUPR has dedicated itself to environmental protection and maintained an excellent record of complying with the Environmental Protection Act. This ensured the company's ability to obtain all the necessary approvals during production expansions. During production, the company uses a large amount of waste paper to reduce the negative impact to the forest resources. Lipu is the first company in the paper making industry to build an alkali recycling and terminal sewage disposal system. This solution has created remarkable economic and social benefits, fundamentally addressing the pollution problems that have long puzzled the paper making industry.
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The main product "LITA" kraft paper and kraft liner paper, the "Green Packaging" products have been awarded as "Famous Product of Guangxi" by the government of Guangxi Chuang Autonomous Region in 2002; the registered trademark has been awarded as "Famous Brand of Guangxi" by the Administration of Industry and Commerce of Guangxi Chuang Autonomous Region in 2004.

Good Reputation, Stable Customers Resources
The company has established stable customers base through years of operation and excellent reputation. The company' s sales outreach is covering all over china, currently having over 100 long-term stable customers.

Government Support Industry, Benefit through Tax Favorable Policy
The company is located in Guilin city, Guangxi. It is one of the key regions of the Grand Development of Western China. The 3 wholly-owned subsidiaries are benefited from income tax favorable policy as well.

Cooperative Partners 
GUPR works with pulp and paper production research institutions such as China South Science and Technology University to develop new products, improve products quality and define the environmental governance plans according to the company specific situation. Guilin also works with the Guangxi Paper Production Academy to improve the steam technical processes of pulp manufacturing. 

The Guilin Domestic Sales Channels

Guangxi Chuang Autonomous Region, Guangdong Province, Guizhou Province, Hunan Province, Sichuan Province, Zhejiang Province, Fujian Province, Jiangxi Province, Henan Province, Yunnan Province, Hainan Province, Qinghai Province, Shanghai City, Beijing City, Chongqing City and Tianjing City.

GUPR concentrates on marketing, product innovation and brand recognition while maintaining a focus on high quality wrapping paper and relative product developments. In addition, the company maintains three strategic advantages, its geographical location, technology innovation and human resource training. They also continue to improve their advanced manufacturing techniques, quality, management, production scale, profit and competitiveness.

Market orientation: Continue to expand product offerings and increase market saturation with regard to the special papers market, expanding both domestically and internationally.

Innovation Driven:
GUPR is persistent on continuing its innovation: technical, management and sales.

Brand management operation:
Guilin Paper is committed to its existing brand recognition strategy. We will cultivate our own culture and expand our well-known brand name throughout China and overseas.

In the next 5 years, Guilin Paper will implement technological innovations to expand the production capacity; at the same time continuing to increase the environmental protection measures to promote its sustainable development. In addition, the company is implementing horizontal acquisitions to increase profitability.

Guilin Products, Services and Subsidiaries

It used to be the Guangxi Lipu No.1 Paper Factory when established in 1965, and was renamed as Guangxi Guilin Lipu Paper Manufacturing in 1994. 

There are approximately 600 staff members in Guangxi Lipu Paper Manufacturing Ltd., which includes 150 professional technicians. After 30 years of development, the company has 3 pulp production lines and 7 paper manufacture machines. Presently the output reaches 100,000 tons per year.

1. Ordinary Packing Paper: 
Including pure wood kraft paper, the domestic main packing paper; kraft paper, corrugated paper, cardboard, mosaic paper, sack paper and other products. Kraft paper is named cardboard paper in China and mainly used in the packaging of the textiles, small merchandises and appliances, while the pure wood kraft paper is made of 100% natural pulp, physically stronger and more moisture proof replacing the imported products.

2. Specialty Paper: 
High quality packing paper — including colored card board, pitched base paper, soft kraft and kraft imitation etc. Special paper is different from regular printing papers, such as coated paper, newsprint and offset paper. These kinds of paper which need special processes and applications when manufacturing, are rich in color, pattern and texture. Along with the development of the packing and printing industry, the demand for specialty paper is guaranteed to keep growing in the domestic market.

3. High Quality Packing Paper Colored Cardboard:
The usage of high quality paper has increased gradually in recent years. The high quality packing paper is mainly used in albums, calendars etc. Currently it is mainly imported giving us tremendous market opportunity. The company developed and produced high quality products (colored cardboard) by cooperating with the practical situation  which resulted in excellent economic benefits.

4. Insulation Paper:
Inserted between permeable and solid building materials, the pitched base paper help the interior of the building keep constant temperature and humidity. It is widely used in other countries as building materials. In china, the product is imported with higher prices. However it has a large profit spaces. It also solved the problems of insufficient wood pulp of our company. Along with the rapid development of import/export trade, the volume of paper packaging usage increased gradually, the requirements of the quality and cost also getting higher and higher. The carton factories used a lot of test liner paper with lower price instead of pure wood Kraft liner paper in order to reduce cost. The company adjusted product structure in time to match market demands.

5. Bottom Layer Paper:
The weight and component are highly scrutinized. It is used as a constituent in decorative material and paper affixed to wooden cutter. The demanding increased along with the development and extension of home decoration market. Our company adjusted the production structure of bottom layer paper combining company production situation, solved the production conflicts for insufficient wood pulp at the same time to meet the market demanding.

6. Soft Pure Wood Kraft Liner Paper:
It is a soft paper that prevents sticking to the board during high temperature. The price is relatively higher than Pure Wood Kraft, however, it has not big demanding in the market, most of manufacturers will not produce this products so that it comes from importing. Our company developing soft pure wood Kraft liner paper depends on the real situation; it not only can satisfy the market demands but also increased the economic benefits of the company.

7. Kraft Imitation Paper:
It obviously has the conflict of insufficient wood pulp since the normal running of 7 machines of our company. Some recycled kraft paper and kraft liner have already appeared on the market and accepted by many customers. It alleviated the problem of insufficient wood pulp also reduced the production cost. It solved the problem of insufficient wood pulp, furthermore reduce the production cost and increase the company economic benefit.

At Hengli Power Generation Ltd. the primary business is generating electricity for Guangxi Lipu Paper Manufacturing Ltd. which is done using coal fired generators. Using these generators they also produce a large amount of steam which is also sold to the paper manufacturer. 

The company was established in December, 2003. Its construction was the key project in Guilin City in 2004. The project was initiated in Jan. 2004, with the support of Lipu County and Guilin City governments, and after overcoming many obstacles it was completed and running in just 11 months.

Lipu Lubao Paper Recycling Ltd. was established in April 2000 to engage in the business of waste paper recycling. In order to protect the resources and avoid pollution, the company was established to assist the operation of Guangxi Lipu Paper Manufacturing Ltd.  Its purpose is to reduce the expense and time of acquiring recycled paper for Guangxi Lipu Paper Manufacturing Ltd.  The scope of its business is within the limits sets in the Resource Multipurpose Utilization Catalogue, which means it meets the industrial policy of the country on resources multipurpose utilization. It was qualified as a Recycling Enterprise by the Resources Multipurpose Utilization Production (Project) Cognizance Committee in Guangxi Chuang Autonomous Region, in 2001.

With its advanced equipments, production process and comprehensive quality control system, Lipu is the first company in the paper making industry to build an alkali recycling and terminal sewage disposal systems. This solution has created remarkable economic and social efficiency, fundamentally addressing the pollution problems that have long puzzled the paper making industry. 

Recent News from Guilin Paper

NEW YORK--(BUSINESS WIRE)--Guilin Paper, Inc. (the “Company”) (OTCBB: GUPR - News), a leading manufacturer of paper products and wood pulp in Guangdong and Guangxi provinces in China, announced today that, on November 08, 2007, as part of its strategic plan to increase production and sales of higher profit margin products, its wholly-owned subsidiary, Guangxi Forestry Lipu Paper Company Limited (“Lipu Paper”), entered into an agreement with Dongguan Dabu Paper Manufacturing, Inc. (“Dabu Paper”) to increase its supply of wood pulp to Dabu Paper.

Dabu Paper is a major manufacturer of paper packaging in southern China, with an annual production capacity of more than 300,000 tons and 2006 revenues of U.S.$13.33 million. Dabu Paper requires 60,000 tons of pure wood pulp to maintain its current production levels. This agreement could lead to Lipu Paper supplying up to 20% of Dabu Paper’s wood pulp requirements.

Fangde Zhang, the Chief Executive Officer of the Company, stated that, “we are very pleased to have entered into this strategic agreement with Dabu Paper. Part of our overall strategy is to continue to expand sales of higher profit margin products, improve paper quality and expand our geographic reach. We believe this strategy will enable us to acquire a larger customer base and increase market share. This agreement is a positive first step in this direction and one which we believe will have a significant impact on our future wood pulp revenues which in turn will have a positive effect on our financial results as a whole.”

Business Background

CORPORATE HISTORY
We were originally incorporated in the State of Nevada on March 2, 2004 under the name LogSearch, Inc. Our original business plan was to market and sell database management and analysis software to the oil & gas industry in the United States pursuant to a Commercialization Agreement with Unitech Energy Corp.

On April 18, 2007, the Company, LGSE Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), China Lipu Paper Limited, a British Virgin Islands corporation (“CLP”), and the shareholders of CLP entered into an Agreement and Plan of Merger pursuant to which Merger Sub was merged with and into CLP and the Company issued 27,027,968 shares of its common stock to the shareholders of CLP in exchange for 100% of the registered capital of CLP. The Company then changed its name to Guilin Paper, Inc.

These transactions were treated for financial reporting purposes as a reverse acquisition, with Guilin Paper, Inc. (formerly LogSearch Inc.) being the surviving entity. The Company did not recognize goodwill or any intangible assets in connection with the transaction. Prior to the reverse acquisition, the Company was a shell company with no significant assets and liabilities.

We conduct our operations principally in China through our wholly-owned operating subsidiaries, Guangxi Forestry Lipu Paper Company Limited, Guangxi Lvbao Waste Paper Recycling Company Limited and Guangxi Hengli Power Company Limited. To date, all of our sales are made domestically in China.

Business Description
Guilin Paper, Inc. mainly engages in paper making, paper pulp production and power generation. The Company uses a series of high-tech and high value-add processes to produce special packaging paper and writing paper. In the next five years, the company will strive to produce the highest quality packaging paper and writing paper, and increase its market share to rank as one of the top 10 paper manufacturers in China.

Guangxi Forestry Lipu Paper Company Limited
Our primary business is conducted through our subsidiary Guangxi Forestry Lipu Paper Company Limited, which produces and sells high quality paper products primarily for packaging applications, including kraft paper, a durable, typically brown paper made from wood pulp, which is used predominantly for bags, wrapping paper and cardboard; and high-grade specialty papers designed for custom packaging applications. The Company has a diversified product portfolio with various types, grades, burst indices, stacking strengths, basis weights, printability and brands to meet a variety of customer requirements.

Guangxi Forestry Lipu Paper Company Limited is a leading player in the papermaking industry in both Guangzhou and Guangxi provinces in China. Lipu Paper has three major production lines, seven papermaking machines and over 600 employees, with an annual production capacity of over 100,000 tons.

Guangxi Lvbao Waste Paper Recycling Company Limited
On April 7, 2000, Guangxi Lvbao Waste Paper Recycling Company Limited was founded to engage in the business of waste paper recycling.

Guangxi Hengli Power Company Limited
On December 24, 2003, Guangxi Hengli Power Company Limited was founded to provide stable and inexpensive electricity to Guilin Paper Inc. Hengli has over 60 full time employees.

For more information regarding the Company, please visit our website: www.guilinpaperinc.com
For investor relations information regarding Guilin Paper Inc., please contact Eva Wang at 646-200-6318, email: eva@guilinpaperinc.com.

Contact:

Guilin Paper Inc.
Eva Wang, 646-200-6318 (Investor Relations)
eva@guilinpaperinc.com

Source: Guilin Paper Inc.
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Management at Guilin Paper

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... some thoughts from ...
Mr. Fangde Zhang
President/CEO/General Manager

"China is an attractive country with an ever-growing economy that wields a global impact. There' s no doubt that China has become the most important market for global paper manufacturers, and this change presents us with excellent opportunities for growth in the papermaking industry. Guilin Paper Inc.'s abundant supply of resources with a rapidly expanding economy gives us dominance in the marketplace. The company has benefited greatly from the resources available and will continue to create value for its shareholders by utilizing the natural resources as efficiently and economical as possible. Meanwhile, we maintain a corporate mission to increase our investment into environmental issues while promoting broad positive social values and achieving sustainable development for the many years to come. We commit ourselves to the pursuit of the best products and services for our customers. We are in constant communication with our customers receiving feedback on our products and their current and future needs. This allows us to revise our operations to keep up with the future market trends while improving our current array of products. The passion and energy of our team is a great advantage allowing us to dedicate ourselves to servicing existing customers while acquiring new ones. One of the company's goals is to partner with well known international papermaking companies and R&D institutions for more qualified high quality products. Guilin Paper Inc. is deeply integrated with the global economy. Together combining our unique resources, management and technological advantages along with sufficiently utilizing international advanced management experience, we will expand the company to become the largest integrative forest & paper manufacturer in China."

With the direction of Mr. Zhang, the company's annual production capacity has increased from 3,000 tons to the current annual production to 100,000 tons. They then became the first paper making company in the Guangxi to obtain the ISO: 9001 certificate. As a result of their outstanding market recognition, the registered trademark "LITA" has been recognized as a "Famous Trademark of Guangxi" by the Guangxi Chuang Autonomous Region Administration for Industry and Commerce. Mr. Zhang has a global vision and is constantly focusing on the company's growth. He has increased the company's investment in environmental protection by using internationally developed advanced technologies and building new facilities such as the alkali recycling and terminal sewage disposal plant. By addressing the pollution problems that have long puzzled the Chinese paper making industry, the company has greatly increased the economic and social efficiency. Mr.Zhang has been lauded as an "Excellent Entrepreneur of Guangxi," "Labor Hero of Guilin City,"and a "Model Worker".

Financial Highlights For Guilin Paper

TO CONTACT GUILIN PAPER

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