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
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV