TAIYUAN CITY, China, March 15, 2012 PRNewswire-Asia-FirstCall/ -- Longwei Petroleum Investment Holding Ltd. (NYSE Amex: 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 shareholder communication initiatives, including a planned reconciliation of its Securities and Exchange Commission ("SEC") filings and PRC tax filings.
"2011 was a challenging year for U.S.-listed PRC small-cap companies, but we continue to stay focused on achieving strong operational results and have positioned the Company for strategic growth within our region in 2012," stated Mr. Cai Yongjun, Chairman and CEO of Longwei. "After months of gathering and reviewing questions and suggestions from our investors and analysts, we have decided to implement several communication initiatives to improve our level of transparency with our shareholders. We hope this will be a catalyst to boost shareholders' confidence in our Company and lead to an improved earnings multiple that reflects our operating performance."
First, the Audit Committee has engaged the Company's independent PCAOB audit firm, Child, Van Wagoner & Bradshaw, PLLC, to verify and attest to the accuracy of the reconciliation of the Company's financial statements filed with the SEC to its reports filed with the relevant PRC government tax authorities, including the State Administration of Taxation ("SAT").
The SAT is the ministry-level department within the PRC government responsible for the collection of taxes and enforcement of the PRC's revenue laws. The Company's PRC tax reports are prepared in accordance with PRC accounting rules and policies, and reflect financial information relating to each operating subsidiary on an unconsolidated basis. Accordingly, there are certain intercompany and U.S. GAAP adjustments that are made to the financial statements during the U.S. GAAP consolidation that are appropriately not reflected in the PRC tax filings. These adjustments generally include intercompany sales, costs incurred by offshore holding companies, and U.S. GAAP non-cash adjustments such as entries related to offshore financing transactions, and valuation of related debt, equity and derivative instruments based in the equity of the offshore holding corporations. In summary, there are legitimate, and often material, reconciling items that must be taken into consideration when bridging from PRC tax reports to U.S. GAAP reported financial results.
The Company's subsidiaries make quarterly estimated income tax payments throughout the year based on operating results and then file an income tax return after the calendar year-end (December 31) with the SAT to true-up any amounts owed. The SAT report is a calendar year-end report, while the Company reports its SEC filings on a fiscal year-end basis as of June 30. Based on the Company's preliminary reconciliation results, giving effect to adjustments, management estimates the results contained in Longwei's tax reports are consistent with results reported in the Company's U.S. GAAP audited financial statements as filed with the SEC.
The Company recently completed its full-year tax filing for calendar year 2011 and is working with its auditor to independently obtain a certified copy of the tax filing from the SAT. Once the auditor completes a review of the documentation and reconciliation procedures, the Company will publish the reconciliation.
Secondly, the Company plans to update its website, www.longweipetroleum.com, with new photos and recorded videos of the activities at the Company's Taiyuan and Gujiao facilities. At the present time, the Company is not allowed to stream a live video feed of its operations due to the sensitive nature of its industry and customer base.
Finally, the Company recently hosted site visits that could potentially develop into independent research on the Company's operations. The Company views it as important to garner the attention of the larger investment community through independent third-party analysis of its operations.
"Management believes the Company's stock price has been depressed over the past year due to the alleged fraud in several other U.S.-listed PRC small-cap companies. Collectively holding approximately 67% of the Company's outstanding common shares, the management team is in the same boat as all public shareholders and is extremely frustrated by the current low valuation of the Company's share price," stated Mr. Cai. "Unlike some other small caps, Longwei has a straightforward business model, highly visible assets and ongoing business operations at our storage facilities. Longwei is one of the largest non-state-owned petroleum wholesalers in central China and is regarded as a critical company, operating in a critical industry, for Shanxi Province."
The Company's wholly-owned operating subsidiary, Taiyuan Longwei Economy & Trading Co., Ltd., was one of 15 companies in Taiyuan City and one of only 140 companies in Shanxi Province recognized on February 15, 2012 as a "Provincial Honorable and Credible Enterprise" for 2010. The Company received the award from the Shanxi Administration for Industry and Commerce based on Longwei's reputation as a company that honors its contractual obligations and maintains its credibility with customers. "We have worked hard to build a good reputation for the Company. The management team and all of our employees labor diligently to service our customers and the community for the betterment of our surrounding region," stated Mr. Cai.
"Given the demand for petroleum products in China and rising worldwide petroleum prices, we expect revenue and earnings growth to increase during the second half of our fiscal year. We are working diligently to close on the asset purchase of Huajie Petroleum, and once completed it will provide an additional catalyst for potential growth by nearly doubling our storage capacity and expanding our footprint in central China," stated Mr. Toups. "We believe our strong market position and proven business model will continue to result in long-term revenue and earnings growth. We are also committed to improving transparency and communications with our shareholders."
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, storage 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 120,000 metric tons located at storage facilities in Taiyuan and Gujiao, Shanxi. The Company's Taiyuan and Gujiao facilities can store 50,000 metric tons and 70,000 metric tons, 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 coal mining operations, power supply customers, large-scale gas stations and small, independent gas stations. The Company also earns revenue under an agency fee 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 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.
For further information on Longwei Petroleum Investment Holding Limited, please visit http://www.longweipetroleum.com. You may register to receive Longwei Petroleum Investment Holding Limited's future press releases or request to be added to the Company's distribution list by contacting Dave Gentry at [email protected].
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.