Zhenyong Liu – Chief Executive Officer Winston C. Yen – Chief Financial Officer

Howard Flinker – Flinker & Co. LLC

Good morning and good evening, ladies and gentlemen. Welcome to the Third Quarter 2012 Orient Paper Inc Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and all participants are in a listen-only mode. With us today are Mr. Zhenyong Liu, Orient Paper’s Chairman and Chief Executive Officer; and Mr. Winston C. Yen, the company’s Chief Financial Officer. Orient Paper has announced its third quarter 2012 financial results through a press release after trading hours yesterday and is available on the company’s website at orientpaperinc.com. Mr. Liu will brief you on the company’s key highlights, and corporate developments over the quarter and Mr. Yen will walk you through the Company's financial and business review as well as the Company’s outlook and guidance. After that there will be a question-and-answer session. Before we begin I’d like to draw your attention to our Safe Harbor statement. This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, anticipated revenues from the digital photo paper business segment; the actions and initiatives of current and potential competitors; the Company's ability to introduce new products; the Company's ability to implement the planned capacity expansion of corrugating medium paper; market acceptance of new products; general economic and business conditions; the ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. There is a presentation document featuring management prepared remarks and is now available for download from the Company's website homepage by the corporate presentation page under the Company's IR website at orientpaperinc.com. Please note there will be discussions on non-GAAP financial measure or EBITDA or earnings before interest, taxes, depreciation and amortization. Please refer to our press release for a complete reconciliation of EBITDA to net income. As a kind reminder, all numbers are in the presentation are quoted in U.S. dollars and comparisons refer to year-over-year comparisons unless otherwise stated. I would now like to turn the call over to Mr. Liu. He will give his opening remarks in Chinese after which the interpreter will read out his detail in English. Please proceed.

[[Foreign Language] Good morning, to our investors calling in today. I’d like to discuss our third quarter earnings for 2012, and give you an update of our Company’s activities. First, on slide 5, we’ll have a quick look at the key highlights for this quarter. In the third quarter, the paper industry continued to suffer from a weak pricing environment, which affected the margins of all our products. This, together with the production disruptions that occurred in the second quarter and the third quarter, has impacted our revenues as well. As a result, our revenues and profits are down. In lieu with this, we have revised down our full year guidance. However, we’re pleased that our earlier problems in operations are fully resolved and behind us now. In fact, we were able to ramp up the new production line to achieve over 72.5% utilization in September and 73.7% in October. And for the third quarter, we produce substantially more corrugating medium paper from this new line. Looking ahead, we plan to upgrade our old legacy production line and will seek future expansion to capture higher value in high growth tissue paper business. We’re also delighted to update you that the Board will implement a regular dividend pay out on top of the quarterly cash dividend declared in September this year. Now, I will let our CFO, Winston Yen, take you through the financial and business review before I return to give you a more detailed update of our operations and where we’ll like to take the company forward. Winston C. Yen: All right. Thank you, Mr. Liu. We will now take a closer look at our financial results in slide number 7, and this is the slide that you can download from our corporate website. So if you can turn to slide number 7, as you can see our total revenue for the third quarter was $37.7 million. Revenue growth has been affected as we continue to experience production disruptions caused by the installation and the inspection of the boiler in August. As you can see, both gross margin at 18.1% and operating margin at 16.4% have been under pressure in part due to the fall in product prices. If you can also see that they're back on track to trend, our operations have resumed to full functionality. Turning now to our income statement summary on slide 8, you can see our quarter figures as well as our nine month results here. Cost of sales was up 6% to $31 million, gross profit was $7 million down 15%, mainly due to the following average selling prices or ASPs. Overall, gross margin was 18% down from 22%. SG&A expense at $0.7 million up 53% mainly due to the currency exchange gain or loss between inter-company transactions. Increase in depreciation of properties and land use rights and amortization, and the increase in wages and salary in the third quarter of this year. Income from operations was $6 million, down 18%. Despite a difficult operating environment, we managed to achieve a respectable operating margin of 16.4%, which continues to lead with the industry reaffirming our cost comparative edge in this sector. EBITDA was $8 million, down 4% and net income was $4 million, down 19%. As a result, basic and diluted earnings per share was $0.24, down from $0.30 last year. Now moving on to slide 9, I am pleased to report that our financial position is healthy. The company is now better capitalized and highly liquid with strong cash flows from its operating activities compared to our financial position at the end of 2011, after the construction of the new production line, our cash is now back to normal levels. In the first nine months of 2012, net cash flow from operating activities was above $20 million, down by 10% year-over-year. Company incurred $11 million in cash expenditures for the construction of employee dormitories, ancillary facilities of the new production line, facilities to house new boiler and the addition of power substation equipment. As of September 30, 2012, cash and cash equivalents were $13 million, compared to only $4 million at the end of last year. Working capital was $14 million and short-term debt was $4 million and long term debt was $1.6 million. Shareholders' equity totaled $141 million compared to $128 million at the end of 2011. With that, we will now turn over to our business review. And please refer to slide number 11. Breaking down by product segment, we have Corrugating Medium Paper or CMP for short, which generated $24 million, that's a 126% increase contributing to 65% of total revenue. Sales revenue reached 67,000 tonnes, up 168% this is still short of our expectations as operation (inaudible) normal production levels. Revenue increase was a direct outcome of the ramp-up of the new 360,000 tonne per year production line and this line contributed for 70% of the quarter's CMP sold in the third quarter. After operations resumed to normality, utilization of the new lines improved from 31% to 73%. Across all product segments, our products continued to face downward pressure. The ASP for CMP, in particular, dropped by 12% to $360 per tonne. The decline in ASP was mainly due to the overall contraction of the manufacturing sector in China and the government effort to cool off domestic construction activity. China affected our gross margin for this segment which saw a year-over-year reduction from 27.6% to 18.9% in the third quarter. Coming to slide 12, we have our Offset Printing Paper. The ASP of Offset Printing Paper dropped by 14% to $706 per ton, due to the low ASP the company made with efficiencies to spend on trading activity in this product segment since the first quarter of this year. Hence our sales volumes went down by 45% and revenue fell as well by 53% to $12 million in the third quarter. Lastly in slide 13 is a result for our Digital Photo Paper business. ASP decreased by 3%. Sales volume was down slightly by 3% at 480 tonnes generating revenue of $2 million down by 6%. In the next slide, as you can see, the revenue mix according to our product segment. Comparing the same period a year ago, CMP has now become the largest contributor to our revenue at 64% in the third quarter compared to only 29% a year ago. In contrast this with Offset Printing Paper which has come down from 66% to 31% as trading activities have been suspended since the first quarter of this year. As the write up of the new production line accelerate, we can expect CMP to be the key revenue driver for the company. Now, I will pass you back to Mr. Liu for his interpreter who will share our operation updates and development initiatives with you.

Thank you, Winston. Now, let’s look at slide 16. I will now take you through our operational update. We are pleased to have resolved all operational issues that have disrupted productions previously. We have completed installation and the official inspection of the boiler in August and our rental new CMP production line. With the problem behind us, we manage to achieve near production milestones in September and October reaching new transition rate of 72.5% and 73.7% respectively. In fact, we are further ramping up the new production line and are inspecting an annual output to reach approximately 160,000 to 180,000 tonnes this year. Moving over to slide 17, we will embark on the renewal program of our facility by voluntarily phasing out the old 150,000 tonnes per year line and rebuild a new 250,000 tonnes line on the same foundation in the first quarter of 2013. Plans are underway to submit those renovations scheme to the government. We estimate poor renovation cost to be around $20 million to $25 million to be funded by a combination of loan or lease operating cash flows and government subsidies. We estimate that the upgraded facility can reduce energy cost by up to 40% and the estimated increment to CMP revenue is $70 million. We are taking this measure in anticipation of increasing regulatory concerns on energy efficiencies and to further upgrade the strength and quality of our CMP thereby maintaining our cost leadership position in North China paper market. I would now like to share other updates of the company in slide 18. The company's goal is to deliver long term shareholder value and to this intend, the Board is pleased to approve the payout of dividends to shareholders on a regular basis and drive cash flow from it. We understand investors sentiment have been (inaudible) towards many Chinese companies and we are committed to enter further our investor communications and corporate governance of Orient Paper to lease all our shareholders. At this juncture, I have the wish to draw your attention to my statements in the press release and clarify that it is not the Board’s plan to privatize Orient Paper. We believe that our midterm and long term growth will restore that evaluation for our investors than going private at this point. In the third quarter, we have also engaged Fleishman-Hillard as our advisor to strengthen our Investor Communications. Together with Fleishman, the company will be conducting a revamp of all its communication vehicles such as the IR website, presentations, frequently asked questions and factsheet in the coming six months to further enhance investor understanding of our company and the businesses. Looking further, I will like to share with you how we want to take the company forward. Please see slide 20. First, we want to solidify our market position to become the leading player in North China. We will do this by identifying untapped opportunities to meet the growing demand in the region and leverage on a continued industry consolidation to grow our market share. In the meantime, we will continue to focus on CMP as our key revenue driver and maintain strong cash flow to support investments in building a sustainable long term business. Secondly, we will enhance our cost leader position by maintaining cost discipline, improving operational efficiency and raising productivity. Third, our goal is to build a sustainable long term business, a scalable business to establish strong market leadership in North China. We will strive to be profitable with industry leading operating metrics and we take disciplined and strategic expansion to deepen our penetration of the market. We will also adopt prudent diversification plan to pass unmet market needs while ensuring that we maintain a strong cash flow to support our investments. I would now like to explain further our new business expansion initiatives in the next slide. China tissue paper consumption volume per capita has risen a lot in last few years, reaching 3.9 kilogram in 2011. However, penetration is still very low compared to other regions in the world. For example, 10 kg for Hong Kong, Taiwan and Macau, and 15 kg for Japan and Western Europe, and 25 kg for North America. With the rise in consumerization in China we anticipate that the currently low penetration of tissue paper in the rural areas of North China will provide a lot of upside to us as penetration increase. [Audio Gap] 15,000 tonnes per year production lines with tissue paper over the next few years in the new location at a total estimated cost of up to $43.5 million. We see this as a key future growth driver for the company and we will fund this investment from operating cash flow from operations and debt financing. Now, I will let Winston share with you our outlook and guidance. Winston C. Yen: Sure. So this is on slide 23. With the slowdown in China's economy, the outlook for the paper industry in China remained soft. In North China, we expect market corrections to continue in the construction and the real estate sector going particularly to paper products remains weak. We believe the ASP for CMP (inaudible) and they start recovery slightly towards the first quarter of 2013. Until the Chinese government announces any favorable new policies, the company will take a conservative approach and we would expect our results to be dropped down by low product prices. They were expected to increase in the sales and revenue. We also believe that the industry will experience more consolidation in the 12 months on to the weak demand in overcapacity. In lieu of this, we are revising our guidance for the full-year. So revenue are now expected to be in the range of between $146 million and $148 million, gross profit between $26 million and $28 million, net income between $15 million and $17 million, while basic and diluted earnings per share will range between $0.90 and $0.92. This concludes the management prepared remarks. We will now open the floor for questions.

Hello. Winston C. Yen: Hello.

Hi, can you hear me? Winston C. Yen: Yes, we can hear you.

Okay. Sorry, I think I was having some difficulties. So the first thing I just wanted to say is I certainly thought that company for the positive initiatives lets stay in the steps recently to bring the new line up to capacity, which results some of it production issues the amounts that to continue dividend payments as a regular thing, and the hiring of new Investor Relations firm all are very positive things. I think investors who have been committed in a long-term way to Orient Paper appreciate when you look at the stock price in the volume recently is pretty clear that there is in huge amount of interest stock right now that the average of volume at around 12,000 or so per day, shares traded and as you all know that the stock price is for undervalue. So I guess the question that I have is in light of the fact that just doesn’t seem to be a lot of either trust or interest in the sector notwithstanding the fact that the valuation was so good. What can Orient Paper do or what will it do that hasn’t already done to revive that interest? Winston C. Yen: Let me translate your question to Zhenyong Liu, before I answer your question. [Foreign Language] Winston C. Yen: I think, Steve, thank you very much for your long support for Orient Paper. We of course understand that our stock price is still very much undervalued, but we will actually like to take a long term approach to the issue of the stock price and overall value.

The speakers line disconnected. Please remain online as we reconnect the speaker’s line. Mr. Yen has rejoined. Winston C. Yen: Hello, I’m sorry, I fixed my telephone lines, so it was cut off. So just to complete my answer, we will have to take a long term view on our stock price, and I guess the best way to accomplish the regional stock price is probably to keep the expansion that continue to grow consistently and be able to prove that we can deliver we believe that this is probably at the current time we only contemplate to those stock price and to enhance the valuation of the company.

Am I still on? Winston C. Yen: Yes, Steve, I can hear you.

Okay. So I guess this is my follow-up question. Mr. Liu mentioned that there is no interest at this time of going private, does that mean that there also no interest in any kind of investment from a private equity or private investors outside of what happens in the open market? Winston C. Yen: We still, we see interest in contacts with some different groups of private equity investors and strategic investors, but I believe right now we welcome any investment from new investors, but not towards the goal of taking the company private.

Okay, very thanks.

Next question comes from Howard Flinker from Flinker & Co. Howard Flinker – Flinker & Co. LLC: I have a question about loans for related parties. Winston who are the related parties you own them at company money? Winston C. Yen: It is mixture; many years ago manage to our company. Howard Flinker – Flinker & Co. LLC: Okay, I mean you get the regular interest rate and no warrants or anything like that? Winston C. Yen: I believe we pay in 5.8% on the kind of interest. Howard Flinker – Flinker & Co. LLC: Okay. Just to stay 5.8%? Winston C. Yen: Yes. Howard Flinker – Flinker & Co. LLC: Okay. That’s it. And I'll say compared to your long-term view [never] happen to agree, if one things about the size of your business, you’re running at about $150 million of revenue per year. That’s pretty small compared to the Chinese economy. So if you look five or ten years down the road, you should be able to grow a lot and the patient investors should be rewarded, I’m telling, I have to say. Winston C. Yen: We hope so and thank you very much for… Howard Flinker – Flinker & Co. LLC: Okay. Winston C. Yen: …support, yeah. Thank you.

Please hold for your next question. Your next question comes from Bean Miller.

Thank you for taking my line. During this phase out, I suppose your sales will go down and since it will I suppose take more than three months to install a new line, for how many quarters we will be faced with a decline in sales because of the renovations of 150,000 tonne line. Winston C. Yen: Of course, there won’t be loss of revenue and profit during the lead time for this renovation project. But the way we look at it is that, if you look at the current actual output of this 150,000 capacity loss is it contributes about 80,000 tons to 90,000 tons of CMP to our actual output. And in 2013 we actually project the 360,000 tonne new production lines compared to 2012, roughly a 80,000 tonnes to 90,000 tonnes of (inaudible) to compensate the loss of that old CMP production line. So we hope that, by the end of 2013, the new capacity comes to 360,000 tonnes line will be able to make that loss of the old production lines in the period. So we hope that despite taking that old production line now, you will not have significant (inaudible).

Okay. And the new lines will be on stream by the end of 2013? Winston C. Yen: We officially target may be somehow in mid 2014. So I think we’re strictly conservative at this point is because it has less good line when we build during the 60,000 tonnes capacity in 2011. So just to be safe, we will like to schedule Q2 of 2013, but it will be the best to the completion of verification project as early as possible.

Okay. Thank you. The second question is, right now, as a producer of corrugated paper, that it is anonymous commodity, which is sold commercial industrially. A tissue paper is sold to retail buyers and with brand names. It’s a totally different market, completely different. In marketing in which you have no experience, you move new tissue paper, would you sell that to an existing brand producer or would basically a sub supplier to somebody else or would you try and start your own brand name? Winston C. Yen: Yes, you are totally correct. We are looking as a different market receptor and a totally different distribution channel for tissue paper product. Our current strategy is that we will be doing our home branding. We are actually in the process of registering a trademark in China under which we will be selling our own tissue paper. In the beginning we have enough money to package more than 50% of the tissue paper that we will make a strong to the production volumes. And so up to 50% of the tissue paper we say is OEM arrangements other companies that tissue paper. And overtime as we build strength and penetration in the market in tissue paper, we will like to increase the packaging capacity and hopefully be able to sell all of the tissue paper under our own brand. And the market technique that we are targeting right now is actually rural areas in North China, we will do not have any client (inaudible) those companies that are more established and have more pressures in big cities or metropolitan areas around their generic engine. I think they will start from rural areas of our own products and then gradually move to neighboring provinces in China and once we have a sizeable market share, we will be moving to vendors or more which part of the area.

Do you have any planned production date for the tissue paper in fiscal 2014 or so? Winston C. Yen: Yes, of course we hope – I mean if everything goes well may be in the first quarter of 2014 but again just (inaudible) we’re targeting second quarter of 2014 to our tissue paper product.

Okay, thank you very much.

Next question (inaudible) from First Associates.

Given the extreme stock price and the good job you're doing in a bad environment and certainly add credence to the shareholders if you had a small buyback of your stock, why would you announcing that a little bit of your money to still confidence in investors and you have confidence of the company buyback something around stock? Winston C. Yen: Thank you very much. The stock buyback actually has a lot to do with the company's liquidity. And at this time, I think if we strip on to the liquidity of our stock. The more importantly, our Board of Directors believe that implementing a regular dividend policy is more of a long term solution to foster investors confidence in the company. So if we have cash that we can be use to (inaudible) we would drive to use of cash through dividends for long-term. And I think the stock price, if we are able to exit our business plan, the stock price will come back once we are able to demonstrate that we have promised.

Okay. Thank you. Winston C. Yen: Thank you.

The next question is from (inaudible).

Hello, can you hear me? Winston C. Yen: Yes.

I’d like to know about paper price, calendar paper price is low or high than the average selling price than last quarter, and then how likely the paper price drop another 10% in the next few months. Winston C. Yen: Sure. That’s a very good question. Of course if you look at most of the third quarter of 2012, it looks like the average sale price is still going down, but at least that it is now an industry consensus that the Chinese paper industry has already seen the pattern of the average selling price on a lot of different type of paper products. And as a matter of fact, some industry leaders in the packaging paper has announced that they have increased their selling price in the fourth quarter but basically just into the last month and I believe they have tried to increase the total price again by the end of the year. We have also tried to raise our sales price by the end of September. We have effectively done that without making any significant reach from our customers. So I would say that even though we cannot rule out any possibility that we are little bit more optimistic now about some modest recovery of ASP in the fourth quarter and the first quarter of next year, rather than expecting some more upside in ASP during the last two months of this year.

That's really correct. Thank you very much. Winston C. Yen: No problem, thanks. Thank you.

You have two final questions. Your next question comes from (inaudible).

I would like to know two things, one is what has the government done on the closing of companies that were not up to par on their energy saving and so forth? And the second question is about what time was the boiler installed and was there trouble with the inspection or did everything go fairly well, if you could answer those two questions? Thank you. Winston C. Yen: Thank you for your questions, Gary. The Chinese government is pushing out the policy to eliminate old and outdated capacities in the industry, and we have already seen statistics (inaudible) and I believe that by now – most of the capacity that are scheduled to the faced out have already been closed down by the government. So in that sense, I think this policy and in fact the industry is real, and hopefully I think we will also help to solve the problem that some of the – with the Chinese paper industry which is the overcapacity of the purchase. And then I’m sorry what was your second question?

The boiler... Winston C. Yen: The boiler, yes.

Did that went pretty smooth? Winston C. Yen: Yes, the boiler wasn’t installed in August and the government – and before we could officially start, the government have to come in to do the inspection and give the license to the boiler. So the inspection was not completed until beginning of September. But what is still different is that, the inspection of the government will have more time to inspect all of the production lines because number one, the other three legacy production lines are approaching 10 years of use of life. At this time the government believes that it is necessary to pay a complete examination of all of these production lines. And second of all because we have these 360,000 tonnes of new production line and actually give the government more time to look at the safety measures of the facilities that were equipped this 360,000 tonne line. It actually took a lot of time because they both (inaudible) For example and that actually took pace to next space to go through. So the effect of market inspection on our production or the introduction of this inspection is more significant than the inspection that we had with regular inspections that we had in the previous year.

I think under the circumstances that the company did very well this year. I know it was tough with lot of the problems, but I think most of these things are resolved, just one last comment with this tissue paper it will (inaudible) boiler that you got now or suffice it or you’re going to have to get additional boiler for that? Winston C. Yen: The new tissue paper production lines and all of the future production line with be build on a different location. We’re running all those space in our current factory, so anything will be built in different counties (inaudible) problems. We are in the final stage of those we’re going to lease and everything with the local government. So obviously we have to build new boilers on the new location.

Thank you.

Next question comes from Camilla Humberston.

Hello, him Winston. Winston C. Yen: Hello.

I have a couple of quick questions. With the low confidence, low share price, low valuation what about the possibility of – possibly increasing the dividend and if that could be done when would that possibly take place in other words saying investors to wait well the company increases production capacity in those new lines. And then also part of that the [RTO and BIE] structure is there anything potentially that the company can do to a man with IE (inaudible) structure to make the company more appealing to potential new shareholders? Winston C. Yen: Sure. Thank you Camilla. Those are very good questions. Increasing the dividend payout decision the different payout. Simply because in the next 12 months the company will take on a lot of capital expenditures, so I believe we have two more quarterly dividends to go under the current year dividend policy. So hopefully by the end of the second quarter of next year the Board of Director was taking not assessment or cash flow acquisition and make it a decision at that time to see if that – if they can afford to increase the different payout. And on the issue of the structure in the last few months we have really examined a lot of different options, but the situation is that all of these options have their own limitations or concerns from the Chinese regulatory or tax perspective. So unable to give any specific answers right now, but for (inaudible) that I feel comfortable of disclosing at this moment that we will do everything to downplay the impact of this new IT structure to example. Today is our policy that from now all of the new capital expenditure projects will be conducted by our subsidiary in China the company that we refer to [bobbin swinger] paper (inaudible) company, which is 100% own subsidiary of Orient Paper in China. So if we keep building all of the new production lines until ownership of bobbin swinger, then I think over time we will see more and more revenue and profit generated from this – invest under direct control of Orient Paper and in the next years we’ll probably see lesser percentage from the revenues generated by the entity, which is the company that we called HTOP in our document. So I think to make sure that Orient Paper has more and bigger control over or shorter revenue in China and showing something that we can definitely do in the next few years. And theoretically during the next side maybe five to 10 years many of our 15 production line, which will probably be fully depreciated on the (inaudible) HTOP, so I think at that time we will be able to start maybe shipping more important business to our subsidiaries in China. So I think that will certainly help to improve investors confidence in Orient Paper Inc control in China.

Thank you. Winston C. Yen: Thank you very much.

At this time there are no further questions in queue. So I'd like to turn the call back over to Mr. Winston Yen, CFO for closing remarks. Winston C. Yen: Thank you very much for attending our third quarter earnings call. And last thing I want to add is that, is there any execution in investors who want to schedule a one-on-one telephone call, please contact our IR mail box and we will definitely schedule in time for a separate conference call to answer it any questions that you may have. And this concludes the entire earnings call. Thanks very much.

Ladies and gentlemen this concludes our presentation. Thank you for your participation. You may now disconnect. Have a great day.