Longwei Petroleum Expects Revenue Growth Of 26.6% For Fiscal Year 2013
TAIYUAN CITY, China, Oct. 24, 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 updated its guidance for the fiscal year ended June 30, 2013.
Longwei expects 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 ended June 30, 2013. The growth is driven primarily by the ramp-up of the Huajie facility and organic growth at the Company's two existing facilities. The Company forecasts it can maintain profitability within the range-band of its historical margins, as proven by its track record during times of volatile fluctuations in the price of international crude oil.
"We were pleased to have closed on the Huajie asset purchase using our own cash resources without dilution to our shareholders, and we are now operational at the facility," said Michael Toups, Chief Financial Officer of Longwei. "We expect meaningful revenue contribution from Huajie beginning in the second half of fiscal 2013 as we ramp up our operations and sales efforts. Based on our experience during the Gujiao ramp-up phase in 2010, we are confident we can develop this new market quickly."
The Company's operations are concentrated in the central PRC, primarily Shanxi Province. Shanxi is the leading coal-producing region in the PRC and a growing economic gateway to central and southwest China. The region is mountainous and has no oil reserves, pipelines or refineries within the province. Therefore, petroleum products have to be brought in from outside of the province via rail or truck, either from refineries in the neighboring provinces or from the relatively more numerous refineries in the coastal provinces of the northeast PRC. Consequently, the Company has committed significant resources to its locations for ease of transportation, logistics and storage. The growing industrial and consumer base within the province is dependent on the timely delivery of petroleum products as offered by the Company.The GDP growth rate for Shanxi during 2011 was 13%, according to the 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 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 Province are advantageous to the growth of its business model. "The Huajie acquisition nearly doubles our total storage capacity to 220,000 metric tons and extends our reach into the fast-growing industrial area of northern Shanxi Province," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "With the addition of the Huajie facility, we have strengthened our lead as the largest private fuel storage and distribution business in the province and are better positioned to capitalize on the rising demand for petroleum products in our regional market." "As we continue to build upon the strong foundation we have established over our 17-year operating history, we remain committed to servicing our customers, increasing transparency in our reporting, and building value for our shareholders," added Mr. Toups.
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