Longwei Petroleum Reports October Sales Volume Increase October product revenue increased 32.8% and sales volume in metric tons increased 20.2% year-over-year
TAIYUAN CITY, China, Nov. 26, 2012 /PRNewswire-FirstCall/ -- Longwei Petroleum Investment Holding Ltd. (NYSE MKT: LPH) ("Longwei" or the "Company"), an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China ("PRC"), today announced that its October 2012 product revenue increased 32.8% and sales volume increased 20.2% year-over-year.
For the month ended October 31, 2012, Longwei reported its revenue from product sales increased 32.8% to $53.1 million, compared to $40.0 million for the month ended October 31, 2011. Longwei's product sales volume increased 20.2% year-over-year to 41,811.4 metric tons ("mt"), compared to 34,780.0mt for the month ended October 31, 2011. The increase in revenues was primarily attributable to the increase in the average sales price of petroleum and the volume growth of the new Huajie facility, which contributed $9.2 million in product revenues during its first month in operation.
Fuel prices in the PRC increased in both August and September 2012 following three consecutive retail price cuts between May and June 2012 due to the fluctuation in the international price of crude oil. The current retail price level for gasoline is RMB 9,640/mt. The Company began to realize higher average sales prices and product gross profit margin in September 2012 and expects a strong quarter ending December 31, 2012.
"The volume increase, combined with recent sales price increases and bringing the Huajie facility online, positions us for strong growth in fiscal 2013," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei.
The petroleum market continues to open and expand for non-state-owned enterprises in the PRC. Apparent oil demand in China, the world's second-largest oil consumer, is estimated to increase by 340,000 barrels a day in 2013, according to an October 31, 2012 report from Barclays PLC. The PRC recently increased import quotas to support the additional demand and for the first time issued quotas to PRC oil companies other than Sinopec (NYSE: SNP) and PetroChina (NYSE: PTR). "Compared with total crude imports, the quantity permitted by the quota is small, but has a great amount of significance," said Liao Na, Information and Operating Director of ICIS C1 Energy, a Shanghai-based energy consultancy firm. "This shows that China will be more open to crude imports and will gradually allow private companies and even foreign companies to share the market with companies with government affiliations." China Daily (November 9, 2012). One of the private companies granted an import quota from the PRC is a refinery that supplies Longwei.
"The Huajie facility nearly doubles our storage capacity to a total of 220,000 metric tons and extends our reach into the fast-growing industrial area of northern Shanxi Province," stated Mr. Cai. "Since opening the facility, we have signed contracts with 16 major regional industrial companies in mining, steel and logistics, and we are in negotiations with several more."
Longwei expects year-over-year revenue growth of approximately 26.6% to $646.3 million, and net income growth of approximately 24.2% to $77.6 million, adjusted for the warrant derivative liability, for the fiscal year ending June 30, 2013. This growth rate does not account for any external financing for inventory, which could accelerate growth. The growth is driven primarily by the ramp-up of the Huajie facility and organic growth at the Company's two existing facilities.
Longwei recently reported revenues of US $133.4 million and non-GAAP net income of $18.3 million or $0.18 per share, adjusted for the non-cash warrant derivative liability charge, for the first fiscal quarter ended September 30, 2012. The Company's product sales volume increased 17.8% year-over-year to 110,587 metric tons during the quarter. As of September 30, 2012, the Company reported total assets of US $360.0 million and book value per share of $3.47.
About Longwei Petroleum Investment Holding Limited
Longwei Petroleum Investment Holding Limited is an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China. The Company's oil and gas operations consist of transporting, storing and selling finished petroleum products, entirely in the PRC. The Company's headquarters are located in Taiyuan City, Shanxi Province. The Company has a storage capacity for its products of 220,000 metric tons located at three storage facilities within Shanxi: Taiyuan, Gujiao and Huajie, which have an individual storage capacity of approximately 50,000 metric tons ("mt"), 70,000mt, and 100,000mt, respectively. The Company has the necessary licenses to operate and sell petroleum products not only in Shanxi, but throughout the entire PRC. The Company's storage tanks have the largest storage capacity of any non-government operated entity in Shanxi.
The Company seeks to earn profits by selling its products at competitive prices with timely delivery to transportation companies, coal mining operations, power supply customers, large-scale gas stations and small, independent gas stations. The Company also earns revenue from agency fees by acting as a purchasing agent for other intermediaries in Shanxi, and through limited sales of diesel and gasoline at two retail gas stations, each located at the Company's Taiyuan and Gujiao facilities. The Company seeks to continue to expand its customer base and distribution platform through the utilization of its large storage capacity, which allows the Company the flexibility to take advantage of pricing, supply and demand fluctuations in the marketplace.
Longwei was recently named to the Forbes list of "Asia's 200 Best Under a Billion" from a universe of 15,000 companies. Forbes ranked the companies based on sales growth, earnings growth and return on equity in the past 12 months and over three years. As was reported, Longwei's three-year track record is 45% sales growth, 28% earnings per share growth and 28% return on equity. The Forbes article can be found at: http://www.forbes.com/sites/christinasettimi/2012/07/25/asias-200-best-under-a-billion.
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Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about Longwei's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Longwei's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. Other potential risks and uncertainties include but are not limited to the ability to procure, properly price, retain and successfully complete projects, and changes in products and competition. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Readers should review carefully reports or documents the Company files periodically with the Securities and Exchange Commission.
SOURCE Longwei Petroleum Investment Holding Ltd.