Longwei Petroleum Reports November Sales Volume Increase at Its
Huajie Facility
TAIYUAN CITY, China,
Dec. 19, 2012 /PRNewswire/ -- 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 November 2012
product sales volume increased 23.2% month-over-month at its Huajie
facility.
For the month ended November 30,
2012, Longwei reported its product sales volume at its newly
acquired Huajie facility increased 23.2% month-over-month to
approximately 8,990 metric tons ("mt"), compared to 7,300mt for the
month ended October 31, 2012. The
increase in sales volume is attributable to the increase in new
customer business at the Huajie facility, which profitably
contributed $9.5 million in product
revenues during November.
"The Huajie facility is ahead of schedule in its output," said
Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "The
new 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."
Since operations began in early October
2012, the Company has signed contracts with more than 16
major regional industrial companies in mining, steel and logistics.
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 forty-six 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 more than sixteen new
major customers for its Huajie facility within the first two months
of operations.
Longwei consummated an Asset Purchase Agreement for the purchase
of the assets of Huajie Petroleum Co., Ltd. ("Huajie") on
September 26, 2012. The Company
acquired the assets of Huajie, a fuel storage depot in northern
Shanxi Province (located in
Xingyuan, Shanxi) including fuel
tanks with a 100,000 metric ton storage capacity. The Company paid
RMB700 million (approximately
US$110.6 million) for the
assets. The assets were non-operational with no
revenue-producing history and included land use rights for 52,950
square meters of land, 100,000 tonnage fuel tanks with accessory
facilities and equipment, a special transportation railway line,
and a 3,000-square-meter office building. By way of clarification
of the land area of the land use rights, the Company previously
disclosed 52,950 square meters as equating to approximately 98
acres. The land area metric conversion from 52,950 square meters is
approximately 79.4 Chinese Acres (or MU), or 13.1 U.S. Survey
Acres.
Photos and video of the Huajie facility can be found on the
company's website:
http://www.longweipetroleum.com/operations/storage-operations/huajie-facility
The Company will file a current report on Form 8-K today
disclosing the clarification of the land use rights acreage
conversion. The Form 8-K filing will also include a copy of the
October 8, 2012 independent valuation
report on the assets purchased from Huajie Petroleum Co., Ltd. The
valuation was performed by Shanxi Wan Jia Assets Appraisal LLP
("Shanxi Wan Jia"), a government-certified valuation firm, to
inspect and perform an independent valuation report of the Huajie
assets purchased on September 26,
2012. The appraisal value of the Huajie assets was
RMB752,066,600 (approximately
$119.4 million), a 7.4% increase in
value over the purchase price. The asset valuation was calculated
based on national appraisal standards, including land use rights
based on comparable land values in the area, especially given the
Huajie facility proximity to the main train station in a valuable
commercial area adjacent to the rail line. Shanxi Wan Jia is a
certified member of the China Appraisal Society.
The Company is expecting strong quarterly results for the period
ending December 31, 2012. According
to a Reuters article dated December 4,
2012, "China's economic
growth may quicken to 8.2 percent in 2013 from an expected 7.7
percent this year in response to official growth-promoting polices
according to the Chinese Academy of Social Sciences (CASS)." The
article goes on to say, "The PRC has not yet issued an official GDP
forecast for 2013, but CASS's status as the premier state-backed
center for academic and policy research means its outlook to a
certain extent reflects the central government thinking."
"There are already signs of economic revival in the world's
second largest economy, with two purchasing managers' index (PMI)
surveys earlier this week showing the pace of growth in the
manufacturing sector has quickened." Reuters (December 4, 2012). HSBC economist Hongbin Qu said in a note accompanying the PMI
release that, "A broad macroeconomic pick-up appeared to be
underway, predicting that data for the fourth quarter would back up
the view of expansion at a faster clip." MarketWatch
(December 3, 2012).
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.
For further information on Longwei, please visit
http://www.longweipetroleum.com. You may register to receive the
Company's future press releases on the website under 'Email
Alert.'
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
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.