TAIYUAN CITY, China, Nov. 15, 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 it has signed purchase
agreements with seven major customers for its Huajie facility,
bringing the total since the Company commenced operations in early
October to 16 new customers.
Longwei defines "major" customer as those customers with the
purchase capacity to order at least 1.0% of the Company's total
revenues. At fiscal year end June 30,
2012, Longwei had 46 major customers at its Taiyuan and
Gujiao facilities, which each accounted for at least 1.0% (or
approximately $5.1 million) or more
of total annual revenues. During the fiscal year ended
2012, no single customer accounted for more than 2.7% of total
revenues. The Company has now added 16 new major customers
for its Huajie facility.
"Since opening the facility, we signed contracts with at least
16 major regional industrial companies in mining, steel and
logistics," said Cai Yongjun, Chairman and Chief Executive Officer
of Longwei. "We are pleased to receive the full support of
local government and business leaders, as well as their endorsement
to help us build our customer base. We are confident we can
develop this new market quickly based on our experience during the
Gujiao ramp-up phase in 2010."
At a site visit to the Huajie facility on October 23, 2012, local government leaders
offered their support to ensure the success of the Huajie facility
by assisting Longwei to expand its customer base by encouraging
local enterprises in Fanshi County, Shanxi Province, to utilize the new facility
and increase their petroleum consumption. The local leaders
view the new facility as a stimulant for regional growth and as a
key piece of infrastructure to support local employment and
economic development.
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% 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.
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 non-cash 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.
In the U.S., even Jim Cramer, the
host of Mad Money on CNBC, seems to have weighed in
on the Chinese economy "stabilizing," as China's trade surplus
increased in October to its widest level in nearly four years and
export growth rose to a five-month high. "Both the macro data
and the micro from individual companies that do business in
China are saying the same thing:
the Chinese economy is stabilizing," said Mr. Cramer. "They've got
inflation whipped and 2013 should be a better year for the People's
Republic than 2012." CNBC (November
12, 2012).
Recent economic indicators show that the PRC economy has
stabilized and expects higher growth in the fourth quarter of
2012. "Now is a critical point for the country's industrial
economy. Positive factors are accumulating," said Zhu
Hongren, Chief Engineer of the Ministry of Industry and Information
Technology. The PRC also surpassed the United States as the world's largest
recipient of global foreign direct investment in the first half of
2012, showing that global investors have confidence in the world's
second-largest economy. China Daily
(October 26, 2012).
The GDP growth rate for Shanxi
Province during 2011 was 13%, according to China Daily (March
13, 2012), and it is expected to be approximately 10% for
2012, which outpaces the general economic growth estimates of 7.5%
in the PRC. The provincial government has estimated the fixed-asset
investment in Shanxi to be
RMB 5 trillion (approximately
$790 billion) over the next five
years, according to China
Daily (September 13,
2011). The provincial government also recently announced an
additional RMB 1 trillion
(approximately $158 billion) in local
development projects as part of the region's industrial stimulus
plan, according to China Securities News (August 23, 2012). The Company believes its
locations within Shanxi Province
are advantageous to the growth of its business model.
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.
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 info@redchip.com.
Forward-Looking Statements
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.
Contact:
At the Company:
Michael Toups, Chief Financial Officer
Tel: U.S. Office +1-727-641-1357
Email: mtoups@longweipetroleum.com
Web: http://www.longweipetroleum.com
Investor Relations:
Mike Bowdoin
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 110
Email: mike@redchip.com
Web: http://www.redchip.com
Tina Xiao
Weitian Group LLC
Tel: +1-917-609-0333
Email: tina.xiao@weitian-ir.com
Web: http://www.weitian-ir.com
SOURCE Longwei Petroleum Investment Holding Ltd.