Ludlow China Initiates Research Coverage on China Direct, Inc.

NEW YORK, May 24, 2007 -- New York-based Ludlow China initiates research coverage on China Direct, Inc. (OTC BB:CHND), a a diversified portfolio of Chinese companies, with a B- rating.


COVERAGE SUMMARY

Ludlow China is initiating research coverage on China Direct, Inc. based on their most recent financial earnings for the period ended March 31, 2007. With shareholders equity of around $8.3 million, and revenues of $30.9 million CHND has shown strong fundamentals and liquidity. The company is projecting $120 million in sales revenue, and net earnings of $6 million for fiscal year 2007, Ludlow China is issuing the company with a B- rating with a strong bullish outlook.


RECENT EARNINGS

Revenues for the first quarter ended March 31, 2007 increased to $30,938,940 as compared to revenues of $206,415 in the first quarter of 2006. The increase in revenues was mainly attributable to the three companies acquired in China since October 2006, Chang Magnesium, Lang Chemical and CDI Wanda Alternative Energy, as well as a strong performance from its consulting division.

Gross profit for the first quarter of 2007 was $3,471,926 as compared to $191,155 in the first quarter of 2006. Total operating expenses for the first quarter of 2007 increased to $837,509 compared to $344,140 in the first quarter of 2006. The increase in operating expenses in the 1st quarter of 2007 was primarily attributable to increasing general and administrative costs associated with the management of the three new subsidiaries as well as increased travel expenses, professional consulting fees, professional insurance premiums, and non-cash option charges for employees, management, and professional advisors.

Net income for the first quarter of 2007 increased to $1,870,869 or $0.14 per basic share as compared to $156,249 or $0.02 per basic share for the first quarter of 2006. On a fully diluted basis, the earnings per share for the first quarter of 2007 were $0.12 per share as compared to $0.01 per share for the first quarter of 2006.


FISCAL YEAR 2007 PROJECTIONS

As a result of stronger than expected performance in the first quarter and its current outlook for the remainder of the year, CHND management anticipates that annual sales will now exceed $120 million as opposed to its previous 2007 estimate of $100 million. Management also believes net earnings will exceed $6 million in 2007 as opposed to its previous guidance of net income of $5 million. Management evaluates its outlook on a quarterly basis and will communicate any changes in its business outlook following its 2nd quarter results.


RISK FACTORS

Some risk factors that may effect the valuation calculations in this report are the companies inability to meet fiscal 2007 revenue projections, an increase in shares issued and outstanding, decrease in interest or price/sales ratios of Chinese stocks, industry competition, government regulations in China, technological advances, patent and copyright litigation, decrease in energy prices, geopolitical events, accounting changes and restatements, and legal issues.


ABOUT CHINA DIRECT, INC.

China Direct, Inc.maintains active, majority stakes in a diversified portfolio of Chinese companies as well as offering consulting services for both private and publicly traded Chinese entities. China Direct provides a platform to develop and nurture these entities as they expand their businesses globally. As your direct link to China, our Company serves as a vehicle to allow investors to directly participate in the rapid growth of Chinese economy in a diversified and balanced way. For more information about China Direct, please visit http://www.cdii.net

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Contact:

Ludlow China Ventures
Gerry Salazar
Phone: (718) 855-8451
Email: gerry@ludlowchina.com 

Website: www.ludlowchina.com

Disclaimer:

This is NOT a solicitation to Buy or Sell any security, but rather is for research purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow China Ventures does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow China Ventures, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow China Ventures was NOT compensated for the distribution of this research material, and should be considered a possible conflict of interest when reviewing this report and information. 

Safe Harbor Statements:

This research report includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

(NOTE: Ludlow China Ventures is NOT a broker-dealer, and does not offer buy or sell recommendations. Ludlow Capital's reports are strictly independent investment opinions, and does not hold any positions in the companies we cover unless otherwise clearly stated in our report. Rather, we offer our subscribers a perspective on each investment from our years of experience in dealing with small and micro-cap companies. We update our investment opinions and commentaries throughout the year, and encourage any interested investors to subscribe to our yearly membership to receive regular updates on these companies.)