Longwei (LPIH) Posts Strong Preliminary Q4 Results

Posted by on Jul 12, 2010 | No comment

Longwei Petroleum stock price recovered due to strong preliminary results for Q4 FY2010 and strong demand for oil in China

Longwei Petroleum Investment Hold Ltd (OTC BB: LPIH) share price has declined from April 12 high of $3 to July 6 low of $1.84 ,mainly due to disappointing global economic data and feeble economic recovery that was considered by many investors as a sign that world financial crises could reverse. However, the Company’s stock reversed lately closing at $2.24 on July 9.

LPIH is one of the leading diesel, gasoline, fuel oil and solvent oil distributors in Taiyuan City, Shanxi Province, in the People’s Republic of China, the world’s second-largest oil-consuming nation. In addition to its 50,000 metric ton capacity fuel storage facility in Taiyuan, Longwei owns a dedicated rail system to transport its products to customers and plans to expand into Gujiao with the addition of a 70,000 metric ton capacity oil depot.

The company reported record revenue for the third quarter of FY 2010 ended March 31, 2010, with revenues reaching $96.9 million as compared to $49.7 million for the three months ended March 31, 2009. The increase was primarily due to sales to new customers, including sales generated by the new Gujiao facility. The Company expects revenue of $310.8 million and GAAP basic EPS of $0.13 for FY 2010. For fiscal 2011, it expects revenue of $494.7 million and GAAP EPS of $0.56.

On July 9, LPIH announced unaudited financial results for the two-month period ended May 31, 2010. Total revenues for the two months period were $72.9 million, up 128% from $32.0 million for the same period last year. In addition, management reaffirmed that the company’s performance in the fiscal year ended June 30, 2010, could exceed its earlier guidance.

The new Gujiao facility has contributed $59.1 million in revenues since coming on-line full-time in January 2010. The company has added seven new, large customers using the Gujiao facility, including Shanxi Thermoelectricity Factory, Zhangzhe Power Plant, and Tonghang Bus Shipping Company, which have committed to minimum annual purchases of 10,000 metric tons, 7,000 metric tons, and 5,000 metric tons, respectively.

The favorable trends of Chinese oil market and industry conditions could boost LPIH revenue growth and profitability beyond previously announced guidance in the first half of fiscal 2011. The Chinese government has recently announced that it expects China’s oil demand to grow 9% in the second half of 2010 over the same period of 2009 and could reach 35.5 million metric tons per month. China is also projected to add roughly 30 million tons of oil-refining capacity in 2010, which represents a 10% increase over 2009 and is expected to heighten demand for fuel storage facilities like those operated by LPIH.

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BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock market today, which have traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

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