In early July LPH announced unaudited sales and gross profit results for the months of April and May 2010.Recent revenue growth for LPH has been driven by higher output from the Guijao facility which enjoys a monopoly position in the Gujiao region, making it the only option for local wholesalers, fuel pump operators and the mining industry. We remain positive on LPH due to the expected 4QFY10 and FY11 growth in the revenue from the Gujiao facility and consequently have raised our earnings estimates for 4QFY10 and FY11. Maintaining our forward P/E multiple of 10x we derive a target price of $6.50, an upside of 195%.
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Longwei Petroleum is a fuel distributor in north eastern China. With the largest non state owned storage capacity in the Shanxi province, and current annual doubledigit revenue and earnings growth rate, RedChip believes this stock should trade at $6.50. Current upside of over 100%.

Longwei Petroleum Investment Holdings, Ltd. Third Quarter Fiscal Year 2010 Conference Call To participate in the call please dial (877) 545-1407, or (719) 325-4758 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found via the Company’s website at http://www.longweipetroleum.com, or alternately at http://Viavid.net. Click Here To Listen A replay of the call will be available for two weeks from 4:00 p.m. EST on May 17, 2010, until 11:59 p.m. EST on May 31, 2010. The number for the replay is (888) 203-1112, or (719) 457-0820 for international calls; the passcode for the replay is 4537973. In addition, a recording of the call will be available via the company’s website at http://www.longweipetroleum.com for one year.

• China’s stimulus spending on infrastructure and development of its domestic consumer markets will require vast amounts of machinery that consume large amounts of oil. This will drive oil demand growth rates of 4% to 5% annually through 2015.
• Demand for fuel oil in Shanxi province, where LPH operates, has experienced double-digit growth in the past several years, yet Shanxi has no oil fields or oil refineries. This presents an opportunity for LPH to purchase and distribute fuel from refineries further away. In order to do so, LPH has been granted a Finish Oil Wholesale license by the Chinese central government. This license has no expiration date and is very difficult to obtain.
• LPH has large storage capabilities, secure supply of fuel oil, and stable pricing. The Company’s recently opened facility in Gujiao, more than double LPH’s capacity allowing the Company’s service network to expand from the central region of Shanxi Province to the province’s undersupplied northern and southern regions.

• Revenues for the fiscal year 2010 third quarter totaled $96.9 million, up from $49.7 million achieved in the third quarter of 2009, representing an increase of $47.2 million, or 94.9%.
• Adjusted Net Income for the third quarter increased 99.7% to $13.3 million with Adjusted EPS of $0.15 above and beyond the Adjusted Net Income of $6.7 million and Adjusted EPS of $0.09 achieved in the same period a year ago.
• The company reaffirms its previously stated guidance for the fiscal year 2011 financial results projecting Revenue for the fiscal year ending June 30, 2011 of $494.7 million with Adjusted Net Income of $73.0 million and GAAP Net Income of $57.3 million. The projection for Adjusted EPS is $0.71 and GAAP EPS is $0.56, respectively.

Longwei Petroleum Investment Holding Limited (LPH), purchases diesel, gasoline, fuel oil and kerosene from various suppliers and earn profits by buying these products at competitive prices and selling them to other wholesalers. In addition, LPH also earns revenue by the ownership of a gas station located on its property and by acting as a purchase agent where it charges an agency fee. The Company’s primary customers are gas stations located in Taiyuan City in the Shanxi Province of China. They primarily buy diesel and gasoline. LPH’s second largest group of customers is coal plants and power supply companies, which use diesel, gasoline and fuel oil for heat and power along with its solvents. The Company’s third largest customer is the small, independent gas station. Longwei has 14 storage tanks that allow the Company to store 50,000 metric tons of its products and is constructing a new storage facility of 70,000 metric tons in Gujiao.