May 11, 2011. /Lesprom Network/. Orient Paper, Inc. announced financial results for the 1Q ended March 31, 2011. For the quarter ended March 31, 2011, revenue was $33.2 million, an increase of 25.6% from $26.5 million during the same period in 2010. The significant increase in revenue was primarily attributable to strong market demand and higher average selling price (ASP) for the Company's medium-grade offset printing paper and corrugating medium paper. Gross profit increased 60.6% to $7.8 million compared to $4.8 million for the 1Q 2010, mainly driven by significant increase in ASPs of the Company's corrugating medium paper and offset printing paper products. Overall gross margin was 23.4% as compared to 18.3% in the same period last year, due to over 26% and 12% increase in ASPs of corrugating medium and offset printing paper, respectively, higher gross profit margin contribution from the Company's new digital photo paper products, and lower unit costs for electricity and coal which were partially offset by higher purchase costs for the recycled paper raw materials. Gross profit contributed by the sales of purchased finished goods was $0.43 million for the 1Q 2011. Operating income increased 55.5% to $6.8 million, or 20.6% of the revenue, from $4.4 million, or 16.6% of the revenue, in the 1Q 2010. Net income was $4.9 million, up 55.2% from $3.1 million in the same period last year. Basic and diluted earnings per share for the 1Q 2011 were $0.26 compared to $0.21 for the same period a year ago. "Our double digit growth in revenue and net income during the 1Q 2011 was largely due to higher selling prices resulting from factors related to inflation on commodity costs in China and strong market demand and a supply shortage caused by the government-mandated closure of smaller paper manufacturers in the second half of 2010," commented Mr. Zhenyong Liu, Chairman and CEO of Orient Paper. "In addition, our new digital photo paper product sales demonstrated robust year-over-year growth driven by our competitive pricing strategy and sales and marketing efforts. Our digital photo paper line is now operating at over 100% of the original estimated production capacity," added Mr. Liu. Orient Paper, Inc., through its wholly owned subsidiary, Shengde Holdings, Inc., controls and operates Baoding Shengde Paper Co., Ltd. ("Baoding Shengde"), and Hebei Baoding Orient Paper Milling Co., Ltd ("HBOP"). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugating medium paper, offset printing paper, and other paper and packaging-related products in China.