Longwei Petroleum reports October and November sales revenue increases 35.0%
Friday, Dec 21, 2012
TAIYUAN CITY, China, Dec. 20, 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 October and November 2012 product revenue increased 35.0% and sales volume increased 26.1% year-over-year.
For the two months ended November 30, 2012, Longwei reported its revenue from product sales increased 35.0% to $107.5 million, compared to $79.6 million for the two months ended November 30, 2011.
Longwei's product sales volume increased 26.1% for this two-month period year-over-year to 86,128 metric tons ("mt"), compared to 68,310.0mt for the two-month period ended November 30, 2011. The increase in revenues was primarily attributable to the increase in the average sales price of petroleum between the periods and the volume growth of the new Huajie facility. During the month of November the Company offered Huajie customers certain one-time incentives and discounts as part of its opening strategy to capture market share in the region. The Huajie facility represented approximately 18.9% or 16,290mt of the total sales volume for the two-month period ended November 30, 2012.
"Bringing the Huajie facility online has positioned us for strong growth in fiscal 2013," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "We expect to build our market at Huajie as customers recognize our good customer service and reliable distribution, as we have at our Taiyuan and Gujiao facilities."
Fuel prices in the PRC increased in both August and September 2012 following three consecutive retail price cuts between May and June 2012 due to the fluctuation in the international price of crude oil. Fuel prices were cut for the fourth time this year on November 16, 2012 by approximately 3.5% to better reflect international crude oil prices. Oil prices during the reset period were depressed primarily due to the uncertainty in the global economy from concerns in the Eurozone and the U.S. 'fiscal cliff' prospects. In total, the PRC has raised fuel prices four times and cut prices four times this year. The average price per mt for the two months ended November 30, 2012 increased approximately 7.0% to $1,248 per mt from $1,166 per mt for the two months ended November 30, 2011.
"China will continue to make the growth of domestic demand a top priority to keep growth momentum on track in 2013," said Zhang Ping, Minister of the National Development and Reform Commission. ChinaDaily (December 19, 2012).
The chief economist for the PRC at Nomura Securities in Hong Kong, Zhang Zhiwei said "Infrastructure investment is likely to pick up further in 2013, driven by accelerated urbanization." China's economic growth will recover strongly in the first quarter of 2013, to 8.2 percent in the first half of 2013, according to Nomura's forecast. ChinaDaily (December 19, 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.
Source: Longwei Petroleum Investment Holding Ltd.
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