Longwei Petroleum Reports October Sales Volume Increase
TAIYUAN CITY, China, Nov. 26, 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 that its October 2012 product revenue increased 32.8% and sales volume increased 20.2% year-over-year.
For the month ended October 31, 2012, Longwei reported its revenue from product sales increased 32.8% to $53.1 million, compared to $40.0 million for the month ended October 31, 2011. Longwei's product sales volume increased 20.2% year-over-year to 41,811.4 metric tons ("mt"), compared to 34,780.0mt for the month ended October 31, 2011. The increase in revenues was primarily attributable to the increase in the average sales price of petroleum and the volume growth of the new Huajie facility, which contributed $9.2 million in product revenues during its first month in operation.
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. The current retail price level for gasoline is RMB 9,640/mt. The Company began to realize higher average sales prices and product gross profit margin in September 2012 and expects a strong quarter ending December 31, 2012.
"The volume increase, combined with recent sales price increases and bringing the Huajie facility online, positions us for strong growth in fiscal 2013," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei.The petroleum market continues to open and expand for non-state-owned enterprises in the PRC. Apparent oil demand in China, the world's second-largest oil consumer, is estimated to increase by 340,000 barrels a day in 2013, according to an October 31, 2012 report from Barclays PLC. The PRC recently increased import quotas to support the additional demand and for the first time issued quotas to PRC oil companies other than Sinopec (NYSE: SNP) and PetroChina (NYSE: PTR). "Compared with total crude imports, the quantity permitted by the quota is small, but has a great amount of significance," said Liao Na, Information and Operating Director of ICIS C1 Energy, a Shanghai-based energy consultancy firm. "This shows that China will be more open to crude imports and will gradually allow private companies and even foreign companies to share the market with companies with government affiliations." China Daily ( November 9, 2012). One of the private companies granted an import quota from the PRC is a refinery that supplies Longwei. "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. "Since opening the facility, we have signed contracts with 16 major regional industrial companies in mining, steel and logistics, and we are in negotiations with several more." 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
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