TAIYUAN CITY, China, Sept. 30, 2011 /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 provided a corporate update.
"The Company's operations continue to perform well, and we have had solid first fiscal quarter 2012 results," said Cai Yongjun, Chairman and CEO of Longwei. "This follows our strong fiscal year 2011 performance, which produced record revenues and earnings. Our revenues increased 40% to $482 million in fiscal 2011, and adjusted net income increased 44% to $68 million or $0.67 earnings per share (adjusted net of non-cash warrant derivative liability expense)."
"We are disappointed with the drop in our share price, which we believe does not correlate to our successful operating results," stated Mr. Cai. "We continue to move our operations forward and plan to complete the acquisition of the Huajie Petroleum assets during this next quarter using Company cash generated through operations."
As of June 30, 2011, Longwei had paid a RMB 550 million (approximately $85.1 million USD) deposit toward the total purchase price of RMB 700 million (approximately $108.3 million USD) for the purchase of the assets of Huajie Petroleum, a fuel storage depot in northern Shanxi Province with a 100,000-metric-ton storage capacity.
"Certain U.S.-listed Chinese stocks have been much maligned in the marketplace over accounting and corporate governance issues, which we are not involved in. We have a clean financial audit opinion as of June 30, 2011. Unfortunately, the ongoing volatility in the capital markets and the turmoil in the Chinese small-cap sector have pulled stocks in our sector down considerably," stated Michael Toups, CFO of Longwei.
Longwei has undergone two reviews of certain of its filings by the Securities and Exchange Commission ("SEC") with the effectiveness of its S-1 registration statement in March 2010 and S-3 registration statement in February 2011.
"We want to assure our shareholders that there are no outstanding issues regarding the Company that have not been fully disclosed in our recently filed Annual Report on Form 10-K," stated Mr. Cai. "Our operations remain strong, and we once again achieved robust year-over-year top and bottom line growth. We firmly believe the Company is well positioned to capitalize on the continued rising demand for oil in China, and we believe the addition of the new facility assets will further accelerate our revenue and earnings growth in fiscal 2012."
2012 Financial Outlook
The Company maintains its current guidance for fiscal 2012. The Company projects revenues of approximately $576 million with net income of approximately $78 million (adjusted net of non-cash warrant derivative liability expense) for the fiscal year ending June 30, 2012. The Company will update its fiscal 2012 guidance to reflect its purchase of the assets of Huajie Petroleum Co., Ltd. once the asset purchase is closed and online, which the Company anticipates during the second fiscal quarter. Longwei expects the facility to contribute approximately $300 million to revenues and $40 million to net income during the first 12 months of operations.
Michael Toups, CFO of Longwei, stated, "Oil consumption in China is continuing to grow, and the rapid urbanization and burgeoning automobile market remain major growth drivers for our business. In the year ahead, we will continue to focus on expanding our customer base and improving inventory management. We expect both of our existing facilities to continue generating strong revenues, and we are confident in our ability to complete and quickly integrate the Huajie Petroleum acquisition."
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.
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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.