TAIYUAN CITY, China, Oct. 1, 2012 /PRNewswire-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 reported its revenues for July and August 2012 were up 11.1% year-over-year to $88.6 million.
For the two-month period ended August 31, 2012, Longwei reported its product sales volume increased 17.9% year-over-year to 74,908 metric tons ("mt") compared to 63,512mt for the two-month period ended August 31, 2011. On a quarter-over-quarter basis, product sales volume increased 6.1% for the first two-month period of the quarter ended September 30, 2012 compared to the first two-month period of the quarter ended June 30, 2012.
"We are pleased to see an up-tick on our sales volume based on the demand growth at our Taiyuan and Gujiao facilities," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "This increase, combined with our closing on the Huajie facility, positions us for strong growth in fiscal 2013."
During the year-over-year period the retail price of gasoline was adjusted seven times by the National Development and Reform Commission ("NDRC"), the PRC's top economic planning organization, to account for fluctuations in the price of international crude oil. Over this time frame, the retail price of gasoline in the PRC was adjusted upward three times and downward four times for different durations of time. The Company's overall sales price per metric ton has gone down approximately 5.2% year-over-year due to the longer periods at lower prices from $1,196mt to $1,134/mt. Since June 30, 2012, the retail price of gasoline was adjusted down in July, but increased in August and most recently on September 10, 2012. The net effect has been an overall retail price increase in gasoline of 5.7% since June 30, 2012. The Company expects to realize the higher average prices in September and in its second quarter ended December 31, 2012.
Longwei recently announced that it finalized the US $110.6 million purchase of the assets of Huajie Petroleum Co., Ltd. ("Huajie"), a fuel storage depot in northern Shanxi Province with a 100,000-metric-ton storage capacity.
"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. "Our strong cash flow allowed us to close on the Huajie asset purchase using our own resources without dilution to our shareholders."
The GDP growth rate for Shanxi Province during 2011 was 13%, according to the China Daily, March 13, 2012, and it is expected to outpace the general economic growth in the PRC for 2012. 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 the 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 are advantageous to the growth of its business model.
"The northern Shanxi region's growing industrial and vehicle market demand, combined with our proven ramp-up performance of our Gujiao facility since 2010, which has now grown to account for approximately 48% of our total product sales, or US $233.8 million at fiscal year-end 2012, strengthens our confidence that we can quickly ramp up sales at the Huajie facility," said Michael Toups, Chief Financial Officer of Longwei.
The Company recently reported revenues of US $510.6 million and net income of US $65.1 million for the fiscal year ended June 30, 2012. At the June 30, 2012 fiscal year-end, the Company reported total assets of US $342.3 million and a book value per share of $3.31.
Longwei has posted a video of the Huajie facility to its corporate website at http://www.longweipetroleum.com/operations/storage-operations. Photos and videos of the three facilities can be seen on the "Operations" section of the website.
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 firstname.lastname@example.org.
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.