-- Revenue increased 35% to $53.6 million for the second quarter fiscal
year 2009
-- Earnings increased 52% to $8.75 million for the second quarter fiscal
year 2009
-- Net margins increase to 16.3% for the second quarter fiscal year 2009
TAIYUAN CITY, China, Feb. 19 /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, China, today announced its second quarter fiscal year 2009 results, including record revenue and profit for the three- and six-month periods ended December 31, 2008.
Second Quarter Ended December 31, 2008
For the three months ended December 31, 2008, revenues were $53.64 million, an increase of $13.913 million, or approximately 35% as compared to the same period in 2007. This increase was the result of stronger overall demand for petroleum products. Diesel sales were $27.013 million or approximately 9.258 million gallons, an increase of $6.166 million and approximately .607 million gallons, in the three months period ended December 31, 2008, compared to the three months ended December 31, 2007. Gasoline sales were $21.248 million or approximately 7.274 million gallons, an increase of 114.7% compared to the three months ended December 31, 2007. 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.
Mr. Cai Yongjun, CEO of Longwei Petroleum Investment Holding said: "We are very pleased with our revenue and earnings growth. The Shanxi province of China where we operate is third largest consumer of fuel in China and is a rapidly growing industrial area, which bodes well for our future growth. Our business is a very simple, efficient and profitable. We buy our fuel products directly from refineries in China and sell our products to power plants and large gas stations. We were able to improve our net margins in the second quarter because of our relationships with the refineries and our ability to purchase large quantities of fuel at substantial discounts."
For the six months ended December 31, 2008, revenues were $98.118 million, an increase of $21.9 million or approximately 28.7% as compared to the same period in 2007. This increase was the result of stronger overall demand for petroleum products. Diesel sales were $52.552 million or approximately 18.112 million gallons, an increase of $13.369 million and an increase of approximately .958 million gallons, in the six months period year ended December 31, 2008, compared to the six months ended December 31, 2007.
Gross profit margin was 22.3% for the three months ended December 31, 2008, compared to 27.4% for the three months ended December 31, 2007. The decrease was the result of reduced gross margins on diesel of approximately 15.0% for the quarter ended December 31, 2008 compared to 29.0% in quarter ended December 31, 2007. The decrease of diesel margins was the result of the company locking in fuel prices where diesel prices decreased. The gross margins on gasoline were approximately 19.7% in the quarter ended December 31, 2008 compared to 12.1% for the same quarter in 2007, improving by approximately 7.6%. The increase in gasoline margins was the result of higher demand for gasoline in the Shanxi Province primarily by our power supply customers.
Net income for the quarter ended December 31, 2008 was $8.759 million, or $0.11 per share, an increase of $3.008 million or approximately 52.3% as compared to the quarter ended December 31, 2007. This was primarily due to the increase in sales of petroleum products especially to power supply companies in the Shanxi Province during the quarter. In the six-month period ended December 31, 2008 net income was $14.250 million, or $0.19 per share, an increase of $1.180 million or approximately 9.0% as compared to the six-month period ended December 31, 2007. 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 quarter ended December 31, 2008 was approximately 16.3% compared to approximately 14.5% for the quarter ended December 31, 2007. This increase as was largely the result of higher profit margins on gasoline products and an increase in agency fees. Agency fees are fees from companies not possessing the required license to buy direct from refineries. Longwei purchases petroleum on their behalf and arranges delivery for them. The China government continues to grant licenses to other wholesalers to buy direct. Thus, Longwei anticipates that agency fees will be reduced further in the future unless the company is able to obtain new customers that want to go direct but do not have the required license.
For the six months ended December 31, 2008, 45% of Longwei's customers were large-scale gas stations located in Taiyuan City in the Shanxi Province, compared to 60% for the six months ended December 31, 2007. Longwei's second largest group of customers is coal plants and power supply companies which use our diesel, gasoline and fuel oil to generate heat and power this group provided 45% of our business in 2008 compared to 30% in 2007. This group of customers will continue to remain strong as the local economy continues to grow and new power plants are built. Management anticipates that in the fiscal year 2009 this group will represent 55% to 60% of sales, as the company will focus on this particular customer segment due to larger bulk sales. Longwei's third largest customer is the small, independent gas station which represents 10% of Longwei's total sales. These stations buy gasoline and diesel from Longwei. This group will continue to remain strong as more cars are being used for transportation in Shanxi Province.
Income Statement
Three months ended December 31,
2008 2007
Net revenues:
Product sales $50,160,497 $36,257,575
Agency service 3,482,490 3,472,219
53,642,987 39,729,794
Cost of revenues
Product sales 41,703,435 28,302,891
Agency service -- 536,719
41,703,435 28,839,610
Gross profit 11,939,552 10,890,184
Operating Expenses
Salaries 46,048 73,653
Other selling, general and
administrative expenses (3,049) 1,529,150
42,999 1,602,803
Operating profit 11,896,553 9,287,381
Other income and (expenses)
Interest income 4,134 3,854
Interest expense and financial cost (102,474) (302,762)
Other income/(expense) (98,340) (298,908)
Income before income taxes 11,798,213 8,988,473
Income taxes (3,038,764) (3,237,624)
Net income 8,759,449 5,750,849
Other comprehensive income
Foreign currency translation adjustment (436,430) 1,871,808
Comprehensive income $8,323,019 $7,622,657
Basic net income per share $0.11 $0.08
Weighted average number of shares
outstanding 76,205,000 73,956,522
Six months ended December 31,
2008 2007
Net revenues:
Product sales $92,686,693 $68,368,276
Agency service 5,431,780 7,850,190
98,118,473 76,218,466
Cost of revenues
Product sales 76,538,910 53,737,384
Agency service -- 796,116
76,538,910 54,533,500
Gross profit 21,579,563 21,684,966
Operating Expenses
Salaries 91,846 109,662
Other selling, general and
administrative expenses 2,118,300 1,850,575
2,210,146 1,960,237
Operating profit 19,369,417 19,724,729
Other income and (expenses)
Interest income 7,970 22,854
Interest expense and financial cost (124,068) (2,762)
Other income/(expense) (116,098) 20,092
Income before income taxes 19,253,319 19,744,821
Income taxes (5,003,393) (6,675,202)
Net income 14,249,926 13,069,619
Other comprehensive income
Foreign currency translation adjustment 634,220 2,653,766
Comprehensive income $14,884,146 $15,723,385
Basic net income per share $0.19 $0.18
Weighted average number of shares
outstanding 76,205,000 71,478,261
Balance Sheet
December 31, 2008 June 30, 2008
Unaudited
ASSETS
Current assets:
Cash and cash equivalents $9,641,900 $8,632,879
Accounts receivable 27,584,670 12,134,507
Inventories 18,746,621 29,052,841
Advance to suppliers 34,174,816 28,327,067
Deposits 15,829,974 12,683,880
Total current assets 105,977,981 90,831,174
Construction in progress 820,813 --
Property, plant and equipment, net 3,628,107 2,637,326
Total assets $110,426,901 $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 2,268,000 1,508,135
Accrued payables 684,332 798,436
Taxes payable 4,048,948 2,455,223
Total current liabilities 7,001,280 4,927,025
Total liabilities 7,001,280 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
12/31/08 and 06/30/08, respectively 7,008,712 7,008,712
Additional paid-in capital 1,528,180 1,528,180
Retained earnings 82,992,579 68,742,653
Accumulated other comprehensive
income 11,896,150 11,261,930
Total stockholders' equity 103,425,621 88,541,475
Total liabilities and stockholders'
equity $110,426,901 $93,468,500
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.
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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.
