Revenue increased 53% to $49.7 million for the third quarter fiscal year 2009
Earnings increased 32% to $6.7 million for the third quarter fiscal year 2009
TAIYUAN CITY, China, May 16 /PRNewswire-Asia/ -- Longwei Petroleum Investment Holding Ltd. (OTC Bulletin Board: LPIH), a China-based energy trading company and the largest privately held energy trading company in the Shanxi Province, today announced its third quarter fiscal year 2009 results for the three-month and nine-month periods, ended March 31, 2009.
Third Quarter Ended March 31, 2009
Revenues for the three months ended March 31, 2009, were $49.720 million, an increase of $17.241 million, or approximately 53.1% as compared $32.479 million for the same period in 2008. This increase was the result of stronger overall demand for petroleum products. Diesel sales were $23.056 million or approximately 10.986 million gallons, an increase of $4.918 million and approximately 3.983 million gallons, in the three months ended March 31, 2009, compared to $18.138 million, or approximately 7.003 million gallons for same period in 2008. Gasoline sales were $21.736 million or approximately 8.739 million gallons, an increase of $13.129 million, or approximately 152.5%, and an increase of 5.269 million gallons, compared to gasoline sales of $8.607 million or approximately 3.470 million gallons for the same period in 2008. This increase was mainly the result of greater purchases by our existing customers, primarily power supply companies, due to the continued growth of Shanxi Province.
Gross profit margin was 19.5% for the three months ended March 31, 2009, compared to 30.3% for the same period in 2008. The decrease was the result of the gross margins on diesel which were approximately 12.1% for the quarter ended March 31, 2009 compared to 24.3% in the quarter ended March 31, 2008. Gross margins on gasoline were approximately 16.0% in the quarter ended March 31, 2009 compared to 22.4% for the same quarter in 2008, decreasing by approximately 6.4%. The decrease of diesel and gasoline margins was the result of the company locking in fuel prices where diesel prices decreased. It is expected that gross margins will improve in the near future. The National Development and Reform Commission of China announced on March 24, 2009 that the retail prices of gasoline and diesel oil would be increased 290 RMB (US$42.43) per ton, or 5.3 percent; and 180 RMB (US$26.34) per ton, or 3.7 percent, respectively, as of March 25, 2009. Longwei's current fuel inventory is 25,980 metric tons. With the estimated 4 to 5 percent increase on the prices of diesel and gasoline made by the Chinese government, management expects gross profits will be 5 percent higher for the fourth quarter of fiscal 2009.
Net income for the quarter ended March 31, 2009 was $6.662 million, or $0.09 per share, an increase of $1.598 million or approximately 31.6% as compared to $5.064 million, or $0.07, for the quarter ended March 31, 2008. This was primarily due to the increase in sales of petroleum products, especially to power supply companies in the Shanxi Province during the quarter.
Net income margin for the quarter ended March 31, 2009 was approximately 13.4% compared to approximately 15.6% for the quarter ended March 31, 2008. This decrease was largely the result of lower profit margins on gasoline products, as described above.
Mr. Cai Yongjun, CEO of Longwei Petroleum Investment Holding, said: "We are very pleased with our revenue and earnings growth for the third quarter. The Shanxi Province in China, where we operate, continues to see increasing demand for oil products to support the mining and transportation activities in this heavily industrialized area. Shanxi power plants supply Beijing with 30 percent of its electricity, and overall China's energy demand growth is projected to remain 4 to 5 percent annually through 2015. We continue to capitalize on the opportunities to meet the growing demand for fuel in the region."
Nine Months Ended March 31, 2009
Revenues for the nine months ended March 31, 2009 were $147.84 million, an increase of $39.14 million or approximately 36% as compared to $108.697 million for the same period in 2008. This increase was the result of stronger overall demand for petroleum products. Diesel sales were $75.608 million or approximately 29.098 million gallons, an increase of $18.288 million and an increase of approximately 4.941 million gallons, in the nine-month period ended March 31, 2009, compared to $57.320 million or approximately 24.157 million gallons for the nine months ended March 31, 2008. Gasoline sales were $59.972 million or approximately 22.006 million gallons, an increase of $28.931 million or approximately 131.5% increase and an increase of 8.407 million gallons, compared to gasoline sales of $31.041 million or approximately 13.599 million gallons for the nine months ended March 31, 2008. This increase was mainly the result of greater purchases by our existing customers, primarily power supply companies, due to the continued growth of Shanxi Province. The population in China in general has become wealthier; as a result, the demand for petroleum has increased and the economy in Shanxi Province where the Company's major customers are continuing to experience growth. Management expects growth for the fiscal year 2009 to remain strong due to (i) continued strong growth in the China economy, (ii) a continued improvement in the wealth of its citizens, and (iii) business strategy of increasing storage for our products, including the Company's plans to add 70,000 metric tons of storage capacity in Guijiao City in Shanxi Province.
Our gross profit margin was 21.1% for the nine months ended March 31, 2009, compared to 29.0% for the nine months ended March 31, 2008. The decrease was the result of the gross margins on diesel were approximately 14.1% for the nine months ended March 31, 2009 compared to 24.6% in nine months ended March 31, 2008. The gross margins on gasoline were approximately 19.3% in the nine months period ended March 31, 2009 compared to 19.0% for the same quarter in 2008, improving slightly. The decrease of diesel margins was the result of the Company locking in fuel prices where diesel prices decreased. As mentioned above due to the recent increase in petroleum products we expect are gross margins to improve in the fourth quarter.
Net income in the nine-month period ended March 31, 2009 was $20.912 million, or $0.27, an increase of $2.778 million or approximately 15.3% as compared to $18.134 million, or $0.25, for the nine-month period ended March 31, 2008. This was primarily due to the increase in sales of petroleum products especially to power supply companies in the Shanxi Province during the period.
Net income margin for the nine months ended March 31, 2009 was approximately 14.1% compared to approximately 16.7% for the nine months ending March 31, 2008. This decrease was the result of a decline in diesel profit margins due to the company locking in prices well in advance prior to selling to their customers. In addition, agency fee profit decreased by $1.586. As mentioned above with the recent price increase management anticipates that net income margin will be approximately 18% in the fourth quarter offsetting costs associated with being a public company and the possible future declines in agency fees.
Longwei's primary customers are large-scale gas stations, which represent 60% of the Company's sales. These gas stations, which purchase diesel and gasoline from Longwei, are located in Taiyuan City in the Shanxi Province of China. Longwei's second largest group of customers are the coal plants and power supply companies that use the Company's fuel oil for heat and power, along with its solvents, which comprise 30% of Longwei's business. Longwei's third largest customers are the small independent gas stations. These stations purchase gasoline and diesel from Longwei and represent 10% of total sales.
LONGWEI PETROLEUM INVESTMENT HOLDING LIMITED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
FOR THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2009 AND 2008
Three months ended March 31, Nine months ended March 31,
2009 2008 2009 2008
Net revenues:
Product sales $46,622,276 $30,213,210 $139,308,969 $98,581,486
Agency service 3,097,818 2,265,492 8,529,598 10,115,682
49,720,094 32,478,702 147,838,567 108,697,168
Cost of revenues
Product sales 40,049,434 22,180,278 116,588,344 75,917,662
Agency service -- 473,088 -- 1,269,204
40,049,434 22,653,366 116,588,344 77,186,866
Gross profit 9,670,660 9,825,336 31,250,223 31,510,302
Operating Expenses
Salaries 67,026 93,336 158,872 202,998
Other selling,
general and
administrative
expenses 641,900 2,964,692 2,760,200 4,815,267
708,926 3,058,028 2,919,072 5,018,265
Operating profit 8,961,734 6,767,308 28,331,151 26,492,037
Other income and
(expenses)
Interest income 4,253 6,303 12,223 29,157
Interest expense and
financial cost (48,492) (21,466) (172,560) (24,228)
Other
income/(expense) (44,239) (15,163) (160,337) 4,929
Income before income
taxes 8,917,495 6,752,145 28,170,814 26,496,966
Income taxes (2,255,355) (1,688,036) (7,258,748) (8,363,238)
Net income 6,662,140 5,064,109 20,912,066 18,133,728
Other comprehensive
income
Foreign currency
translation
adjustment (149,874) 3,076,127 484,346 5,729,892
Comprehensive income $6,512,266 $8,140,236 $21,396,412 $23,863,620
Basic net income per
share $0.09 $0.07 $0.27 $0.25
Weighted average
number of shares
outstanding 76,205,000 75,000,000 76,205,000 72,643,636
LONGWEI PETROLEUM INVESTMENT HOLDING LIMITED
BALANCE SHEETS AS OF MARCH 31, 2009 AND JUNE 30, 2008
(Unaudited)
March 31, 2009 June 30, 2008
Unaudited
ASSETS
Current assets:
Cash and cash equivalents $9,617,989 $8,632,879
Accounts receivable 26,688,372 12,134,507
Inventories 14,370,467 29,052,841
Advance to suppliers 37,307,230 28,327,067
Deposits -- 12,683,880
Total current assets 87,984,058 90,831,174
Construction in progress 23,852,728 --
Property, plant and equipment, net 4,348,640 2,637,326
Total assets $116,185,426 $93,468,500
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $-- $165,231
Convertible notes payable, net of
discount of $ 0 and $636,742,
respectively 2,147,868 1,508,135
Accrued payables 685,677 798,436
Taxes payable 3,413,994 2,455,223
Total current liabilities 6,247,539 4,927,025
Total liabilities 6,247,539 4,927,025
STOCKHOLDERS’ EQUITY
Common Stock; no par value,
100,000,000 shares authorized,
76,205,000 and 76,205,000 shares
issued and outstanding as of
03/31/09 and 06/30/08, respectively 7,008,712 7,008,712
Additional paid-in capital 1,528,180 1,528,180
Retained earnings 89,654,719 68,742,653
Accumulated other comprehensive
income 11,746,276 11,261,930
Total stockholders’ equity 109,937,887 88,541,475
Total liabilities and stockholders’
equity $116,185,426 $93,468,500
LONGWEI PETROLEUM INVESTMENT HOLDING LIMITED
STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008
Nine months ended March 31,
2009 2008
Operating activities
Net income $20,912,066 $18,133,728
Adjustments to reconcile net income
from operations to net cash used in
operating activities:
Depreciation 289,411 269,563
Warrant expense 636,742 1,528,180
Accrued interest 170,992 (995,026)
Changes in non-cash operating working
capital items:
Accounts receivable (14,508,584) (10,560,551)
Other receivable 12,731,210 --
Inventory 14,790,786 (5,696,312)
Advance to suppliers (8,649,719) (14,306,316)
Prepaid taxes -- 1,475,158
Accounts payable (588,269) 240,502
Advance from customers -- (323,715)
Taxes payable 949,609 2,995,347
Other current liabilities 21,476 120,274
Net cash provided by (used in)
operating activities 26,755,720 (7,119,168)
Investing activities
Purchase of equipment (25,843,611) (17,353)
Net cash used in investing activities (25,843,611) (17,353)
Financing activities
Proceeds from the issuance of the
convertible notes -- 2,100,000
Payment for share issuance cost -- --
Net cash used in financing activities -- 2,100,000
Effect of exchange rate changes in
cash 73,001 5,731,187
Net increase (decrease) in cash and
cash equivalents 985,110 694,666
Cash and cash equivalents, beginning
of the period 8,632,879 6,060,428
Cash and cash equivalents, end of the
period $9,617,989 $6,755,094
Supplemental disclosure of cash flow
information
Cash paid during the period:
Income taxes paid $6,752,167 $6,005,048
About Longwei Petroleum Investment Holding Limited
Longwei Petroleum Investment Holding Limited purchases diesel, gasoline, fuel oil and kerosene from various suppliers. As an intermediary, the company seeks to earn profits by buying diesel, gasoline, fuel oil and kerosene at competitive prices and selling them to other wholesalers. In addition, Longwei also earns revenues by acting as a purchase agent where they charge an agency fee -- a fee which is charged to wholesalers who do not have a license to purchase directly from refineries. Further, the company owns a gas station located on its property where it generates additional profit and revenue. All of our operating facilities are located in Taiyuan City, China.
For further information on Longwei Petroleum Investment Holding Limited, please visit the company's website at 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.
Forward-looking statements:
The above news release contains forward-looking statements. The statements contained in this press release that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the subject Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. The actual results of the future events described in the forward-looking statements in this document could differ materially from those stated in the forward-looking statements due to numerous factors. Recipients of this document are cautioned to consider these risks and uncertainties and to not place undue reliance on these forward-looking statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances and are subject to a wide range of business risks, external factors and uncertainties. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.
