Longwei Petroleum Investment Holding Ltd. (OTC BB: LPIH), a China-based energy trading company and the largest privately held energy trading company in the Shanxi Province, 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.
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.
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:
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