China GengSheng signs two-year supply contract with Fushun New Steel
Industrial materials manufacturer China GengSheng Minerals (AMEX: CHGS) said Tuesday it has signed a two year full-service supply contract with Fushun New Steel Corp, a deal from which GengSheng expects to make roughly $10 million in revenue.
The news sent GengSheng's stock price up by more than 17% on Tuesday, to trade at $3.13 as of 11:30am EST.
Under the agreement, GengSheng will supply Fushun with refractories, materials that can retain their strength at high temperatures, and which are used in linings for furnaces, kilns, reactors and incinerators. Installation and on site support services are also included.
Shipments under the contract began last month, and are expected to continue through December 2012. The company expects to begin receiving revenue from its new client in the first quarter of this year. The amount of revenue will depend on Fushun's ouput capacity, GenhSheng said.
GengSheng launched its full-service program for refractory customers, which includes installation, testing, repair and maintenance, in late 2003, as they generate stable and recurring revenue streams and have higher margins than product sales alone.
"Our full service programs are an ideal solution for steel manufacturers who face an increasingly challenging market environment, as they are able to adjust purchasing and implementation based on output," said Shunqing Zhang, CEO of China GengSheng Minerals.
Founded in 1986 and based in China's Henan province, GengSheng currently has more than 200 customers in the iron, steel, oil, glass, cement, aluminum and chemical businesses.
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