While the Company is currently working to finalize the acquisition, some investors have expressed frustration over the delay. Thankfully, calmer heads have prevailed and the stock remains unaffected. Bottom line, the Company listened to shareholders and is moving forward to acquire this facility in an all-cash transaction. To that end, they have already paid for over 80% of the cost.

China is expected to account for 40% of the world’s oil demand growth this year, and as a dominant player in its regional market, LPH is strongly positioned for robust growth. The Company generated revenues of $204.8 million for the first five months of the fiscal year ending June 30, 2012. Historically, the second half of the fiscal year is stronger than the first for LPH, with revenues peaking in the fourth quarter. If this pattern holds true—and there’s no reason to believe it won’t—LPH is well on track to meet its guidance of $576 million in revenues and $78 million in net income for fiscal 2012.

LPH is tremendously undervalued, trading at less than 2x earnings while growing at double-digit rates. The Company’s stock price has yet to recover from last year’s implosion in the China small-cap sector, which depressed the valuations of numerous companies. With LPH, investors have a company with a proven business model, strong growth, and a huge pending acquisition, trading at rock-bottom prices. Investors who add LPH to their portfolio today will be positioned to profit as the shares continue to rebound.

The success of LPH’s Gujiao facility, acquired in 2009, gives investors a preview of what to expect with the Huajie asset purchase. While LPH was able to generate $188.3 million in revenues in its first full year of operations of the Gujiao facility, accounting for nearly 40% of Longwei’s fiscal 2011 sales, the Huajie acquisition is expected to generate $300 million in revenues during its first year of operations. To learn more about LPH, you can take a video tour of LPH’s Taiyuan City and Gujiao facilities or view the Company’s presentation from our latest virtual conference.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Big-bank Chinese IPOs also suffered in 2011 due to high-profile scandals such as Longtop Financial (LFT), which was dumped by its Big 4 auditor and recently deregistered by the SEC. The average China-based IPO was down 48% in 2011, according to Forbes.

Even legitimate companies got swept up in the deluge. L & L Energy (NASDAQ: LLEN), a U.S.-based coal mining company operating in China, was targeted by a short-selling outfit and subsequently hit with an attempted class-action lawsuit. Although the short seller’s “report” was easily refuted and the lawsuit never found its lead plaintiff, the strong negative sentiment sent LLEN’s stock into a tailspin from which it has yet to recover.

These days, the storm amongst China small-caps appears to finally be over. The hysteria surrounding the sector died down as the short sellers moved on to new targets. Financial journalists moved on as well, drawn by the eurozone crisis and the Occupy Wall Street movement. During the first six months of 2011, TheStreet.com published approximately 30 articles on the China reverse merger implosion. Since the beginning of July, the financial website has published only two.

In the end, the sector is undeniably stronger now that the bad apples have been shaken out. Many of the companies left standing have sound fundamentals, low valuations, proven management teams, and tremendous growth. As the trepidation surrounding China small-caps continues to fade, these stocks are poised to rebound in 2012:

Longwei Petroleum Investment Holding Ltd. (NYSE Amex: LPH), a fuel storage and distribution company operating in Shanxi Province. The Company achieved record earnings in FY11 and is set to nearly double its storage capacity with the planned acquisition of a 100,000-metric-ton storage facility. Currently trading at a steep discount to earnings, LPH has significant upside potential for investors.

Lentuo International Inc. (NYSE: LAS), an auto dealership operator based in Beijing. China is the world’s largest vehicle market, and Lentuo has a well-regarded brand name with a 16-year market presence. The Company has nearly doubled its dealership network over the past seven months and continues to grow its high-margin repair and maintenance segment.

China Bilingual Technology & Education Group Inc. (OTC BB: CBLY), which operates three private schools in central China. CBLY has 50% net margins and strong historical annual revenue and net income growth. The Company is expected to generate large returns in 2012 due to the addition of its recently acquired third school.

Dehaier Medical Systems Ltd. (NASDAQ: DHRM), a medical device developer and supplier. DHRM’s products capitalize on the rapidly growing demand for respiratory and oxygen homecare products in China. The Company grew revenues substantially for the first nine months of 2011 and recently entered the European homecare market.

To learn more about LPH, LAS, CBLY and DHRM, you can visit our Research homepage to download the most recent analyst reports on these four companies. You can also visit the archive of our latest virtual conference, which featured executive presentations from LPH, LAS and CBLY.

Disclosure: The subject securities are a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

The short sellers who stoked the rampant fear amongst investors, after shaking many of these stocks down to price-to-earnings ratios of one or less, appear to have moved on to bigger and better targets.

While it will take time for the broader space to fully recover, select China small-cap stocks, those that investors have fully vetted and have strong confidence in, have begun to rebound sharply. One example of this is the recent 70% surge in Longwei Petroleum (NYSE Amex: LPH), a fuel distributor in China with strong margins that sells fuel at a profit to industrial customers and gas stations. Coming off sub-dollar prices, LPH closed last week at an impressive $1.53 per share. To learn more about LPH, check out this exclusive video tour of its facilities.

With the growing dearth of short seller hit pieces, the true fundamentals of companies like LPH are now being weighed by investors. One reason we believe LPH has rebounded so sharply, in such a short time frame, is the fact that it has a simple business model; one that is both easy to understand and easy to verify. This has given investors the needed confidence in the stock, and as the deluge of selling has finally abated, the buyers have jumped back in full force.

Another China small-cap with a simple business model that is both easy to understand and easy to verify is China Bilingual Technology & Education Group (OTCBB: CBLY). Founded in 1998, CBLY is an education company that owns and operates high-quality, K-12 private boarding schools in China. Unlike a complicated biotech or difficult-to-understand technology company, education is something most investors can understand, and CBLY’s students, which produce the Company’s revenue via tuition, room and board, are something that is easily verifiable in the due diligence process. The Company currently operates three physical schools encompassing the kindergarten, elementary, middle and high school levels with approximately 12,600 students and 2,000 faculty and staff.

Earlier this year, Dave Gentry, president of RedChip, conducted a video tour of CBLY’s Taiyuan City campus, Shanxi Bilingual. In the video, aside from the campus tour, investors can see and hear from students, faculty and staff.

Since the recording of the video tour of Shanxi Bilingual, CBLY has closed the acquisition of an even larger school campus, Shanxi Rising. Founded in 2002, the newly acquired school is a K-12 private boarding school with approximately 3,000 students currently enrolled and a total capacity for approximately 10,000 students. The campus, located in Jinzhong City, near the Company’s headquarters in Taiyuan City, spans 82 acres and is comprised of over 2.3 million square feet of facilities, including 18 dormitories, academic classrooms, gymnasium, theater, natatorium, cafeteria, and other administrative and academic buildings. Following are pictures of this sprawling state-of-the-art campus:

The growth drivers in the China education space are also easy for investors to understand. Education is the third largest consumer spending category in China, behind only food and housing. China’s well-publicized one-child policy, wherein each child has two parents and four grandparents fully invested in the child’s future success, is fueling this trend. Additionally, the desire to help their children compete in the global business community drives parents to seek out schools like CBLY, where English language and cultural skills are a core part of the curriculum.

The broad understanding of education and the ease with which investors can verify the underlying businesses in the space are two reasons we believe the industry never succumbed to the blatant short-selling attacks that affected the broader China small-cap space. While valuations were negatively impacted, they never saw the ultra-low price-to-earnings ratios we’ve seen in other China small-caps. Companies such New Oriental Education & Technology (NYSE: EDU), ChinaEdu (NASDAQ: CEDU), and ChinaCast Education (NASDAQ: CAST) have maintained solid double digit P/E’s throughout the entire China sell-off. In fact, New Oriental today trades for 34x trailing earnings.

With a historical 25% top- and bottom-line CAGR and room for substantial organic growth with the recently acquired school, we believe it’s only a matter of time before CBLY’s stock begins a strong rebound. Moreover, thanks to its exemption from paying taxes, CBLY is able to operate at a 50% net margin. At a P/E of only 3x trailing earnings, CBLY is trading for a mere fraction of the valuation of its U.S.-listed China peers. Investors have the chance to reap exponential returns from these prices as the stock begins to recover on its way to a more realistic and fair valuation.

Be sure to tune into CBLY’s presentation this week at the RedChip 2011 Small-Cap New York Conference. You can view the webcast live on Wednesday, November 9th at 4:30 p.m. EST by clicking this link, or check back for an archived version a few days later.

Disclosure: The subject securities are clients of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Barry Sloane, Chairman and CEO of Newtek Business Services, Inc. (NASDAQ: NEWT), delivered a keynote speech, “An Economic Turnaround,” during the conference. Prior to joining Newtek Business Services, a direct distributor of business services and financial products to the small- and medium-sized business market, Mr. Sloane was a managing director of Smith Barney, Inc., where he directed the Commercial and Residential Real Estate Securitization Unit and, prior to that, was a national sales manager for institutional mortgage- and asset-backed securities sales. Previously, Mr. Sloane was the founder and president of Aegis Capital Markets, a consumer loan origination and securitization business.

Presenting companies included Local.com Corporation (NASDAQ: LOCM), L & L Energy, Inc. (NASDAQ: LLEN), Longwei Petroleum Investment Holding Ltd. (NYSE Amex: LPH), Applied Nanotech Holdings, Inc. (OTC BB: APNT), Andover Ventures Inc. (TSX-V: AOX), and Cross Border Resources, Inc. (OTC QX: XBOR). To view the archived presentations, please visit http://www.redchip.com/virtualconference.

Disclosure: The subject securities are clients of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Following the recent stock market sell-off, many investors are bargain-hunting for undervalued growth stocks. LPH is one of the best bargains out there right now.

Currently trading at a steep discount to book value, LPH stock has been unjustly beaten down as of late by the ongoing volatility in the capital markets and the continuing turmoil in the Chinese small-cap sector. Although the Company’s stellar FY11 performance gave the stock a well-deserved boost, it isn’t the only reason why LPH is poised for a strong rebound:

Rising electricity demand: China’s total power consumption increased 11.9% year-over-year during the first eight months of 2011 and is expected to increase 12% for the full year, reinforcing China’s status as the world’s largest energy consumer. Much of this growth can be attributed to China’s rapid economic development, which continues to push up household electricity usage as well as demand for vehicles, construction materials, and other manufactured goods that consume large quantities of energy in their production.

Longwei’s location in Shanxi Province, an industrial center and leading coal producer, places the Company in close proximity to its major customers, including coal mining, power generation, and manufacturing operations. Demand for fuel in Shanxi Province has experienced double-digit growth in recent years, and as a dominant player in its local market, LPH will continue to reap the benefits of China’s growing energy needs. 

Consistent margins: While oil companies Sinopec and Petrochina suffered operating losses in their refining businesses during 1H11, LPH doesn’t have that problem. The Company earns a fairly consistent margin no matter what happens to the ever-changing energy pricing dynamics. LPH buys its product from refiners and quickly sells to end customers, with average inventory turnover typically hovering around 30 days.

Shareholder-friendly acquisition: When LPH announced an agreement to acquire the assets of Huajie Petroleum, a fuel storage depot with a 100,000-metric-ton storage capacity, investors, still reeling from an equity financing related to the Company’s purchase of its Gujiao facility in early 2010, expressed great concern over the potential for further dilution. Management heeded the concern of its investors and changed course on its financing plans for Huajie.

Longwei has so far paid 81% of the RMB 700 million (approximately $108.3 million USD) purchase price using cash on hand. Additionally, the Company recently confirmed that it will also pay the remaining balance using only cash on hand. That management listened to investor concerns and arranged for a non-dilutive acquisition speaks volumes about the Company’s commitment to driving shareholder value.

Strong growth prospects: While fiscal 2011 was yet another record year, fiscal 2012 should be an even stronger year for LPH, with $576 million in revenues and $78 million in net income expected for the Company’s two existing facilities. The Huajie acquisition, once completed, is expected to contribute an additional $300 million in revenues and $40 million in net income during its first 12 months of operations.

These are just a few of the reasons investors should own LPH at current prices. RedChip analyst Thomas Pfister provides further details behind the tremendous opportunity presented by LPH shares in his recent research update on the Company. The combination of future earnings growth, strong cash flow generation and a debt-free balance sheet make investing in LPH a no-brainer. For bargain-hunting investors seeking a stock with high growth potential, there’s no stronger buy right now than LPH.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

LPH shareholders and interested parties will have two opportunities to speak one-on-one with the Company’s management this week. LPH is scheduled to present Tuesday morning at the Rodman & Renshaw Annual Global Investment Conference in New York and plans to release its fiscal 2011 financial results within the next 48 hours. Longwei will hold a conference call on Wednesday at 10 a.m. Eastern time to discuss its fiscal 2011 results.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

• Adjusted net income growthsignificantly exceeding that of the S&P 500 and industry peers, up 118% in the trailing twelve-month period
• Company has an established pattern of positive earnings per share growth; diluted EPS in most recent quarter hit $0.26 per share versus $0.12 per share in the same period last year
• ROE hitting 35% for the trailing twelve months is a signal of significant strength
• Net margins of  16% are well above broader market averages

The closest thing that one could incorrectly claim as a “negative,” the underperformance of the stock price versus the broader market, is also actually a huge positive, especially in light of the above listed facts. Great investors throughout history have made their biggest wins by building positions in stocks with great and improving fundamentals that were simply mispriced by the market.

Bottom line, LPH is trading at a steep discount to book value and has a tremendous track record of strong financial performance.  With a non-dilutive acquisition in the works set to take the Company over $900 million in revenues and $125 million in net income for the coming fiscal year, the stock is a screaming buy at these levels and higher.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv

Lentuo International Inc. (NYSE: LAS), an IPO led by Cowen and Co., HSBC and Macquarie, debuted 6 months ago and dropped precipitously from its IPO price of $8.00, landing at $2.73 in early May. This despite record fiscal year performance in 2010 and a Big Four auditor: Ernst & Young.

RedChip entered the picture on May 5th as the Company’s new investor relations firm and immediately deployed its robust platform, including: airing of live interviews with LAS management on RedChip Small-Cap Radio™, an on-site video interview from LAS headquarters in Beijing, social media marketing,  outbound institutional and retail investor introductions, and a five-city road-show in San Francisco, Los Angeles, San Diego, New York and Chicago.

This comprehensive initial campaign resulted in the stock gaining more than 100% appreciation with 10-day average daily volume increasing 250% since LAS hired RedChip just three weeks ago.

RedChip will be publishing research on the Company in the coming weeks and is pleased to have LAS presenting at our upcoming virtual conference (June 22nd and 23rd), which typically draws up to 1,000 retail and institutional investors. 

With a history spanning nearly two decades and an international presence, with offices in Orlando, Beijing, Seoul and Paris, RedChip’s long list of top-performing stocks continues to grow. Today we are hosting an investor and analyst day for longtime client L & L Energy (NASDAQ: LLEN) at the Princeton Club in New York City, with over 50 institutional investors expected to attend. In the coming days, we will also be releasing a series of on-site video documentaries of several of our China clients, including: Longwei Petroleum Investment Holding (NYSE Amex: LPH), China Bilingual Technology & Education Group (OTCBB: CBLY), ONE Bio (OTCBB: ONBI) and Shiner International (NASDAQ: BEST). 

An active advocate for Chinese small-caps, Dave Gentry, President of RedChip Companies, appeared on FOX Business News with Charles Payne on May 6th to discuss the challenges facing reverse merger companies in the space. To learn more about how RedChip can help your company, take a moment to read our references, some of the best in the business, and then give us a call.

Disclosure: The subject securities are clients of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

The target price upgrade was primarily due to Longwei’s strong results for the second quarter of fiscal 2010, in which top- and bottom-line growth exceeded both RedChip expectations and management guidance.  Revenue for the quarter was 12% higher than expected, boosted largely by sales at the company’s new oil storage facility in Gujiao, which began operations at the beginning of calendar 2010.  Higher fixed costs at the new facility brought operating margins down slightly, but increased capacity utilization and an attractive long-term inventory contract with a major supplier were expected to help lower unit costs and bring margins back up in the second half of fiscal 2010.

Explaining the rationale behind the target price increase, Sowani said:

LPIH is uniquely positioned as the sole licensed intermediary in the Gujiao area that operates its own large scale storage tanks. We expect the Company to earn contracts from the large industrial customers in Gujiao as LPIH’s 70,000 metric ton facility is able to serve seven out of the eleven largest potential customers in Gujiao.

The Gujiao facility presents a unique growth opportunity for Longwei, as it has no significant competitors in the region.  The company has already secured contracts with six major local clients who will receive service through the Gujiao facility and is aggressively pursuing business with the other seven potential customers it has identified in the region.

Another promising sign for investors is the addition of Gerald DeCiccio, Doug Cole, and Xiaoping Xue as independent directors on March 23, 2010.  By adding new board members, Longwei has demonstrated its commitment to meeting requirements in preparation for a potential uplisting to the NYSE Amex exchange, which would greatly improve its market visibility and potential for new capital inflow.

To receive a complimentary copy of the RedChip Visibility Research Report for Longwei, please visit:
http://www.redchip.com/about/aboutmain.asp?page=vreport&reportid=229&from=clientsidebar

Disclosure:  Longwei Petroleum Investment Holding, Ltd. is a client of RedChip Companies, Inc.  RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.