Oil wholesaler with 340% upside completes $110M acquisition
L_P_H, an oil wholesaler in Shanxi with a high degree of credibility just announced completion of a 110 million dollar acquisition of their third storage facility, which adds 80% or 100,000 metric tons to their existing capacity. The new facility was paid for 100% from internal profits, without ANY shareholder dilution.
LPH auditors recently performed a comprehensive reconciliation of SAIC tax filings to SEC filings to prove that earnings over the period from 2009 to 2012 were accurately reported, based on direct verification from state computers.
The new facility is turnkey, brand new, and has a dedicated rail spur. Management and sales staff were hired months ago and have been on the ground, so tanks will be able to sell oil within 2 weeks. EPS is expected to increase from TTM EPS = 0.61 to TTM EPS = 0.80 by FYE 6/30/13, and to a TTM EPS of $1 by calendar year ending 12/31/13.
Sentiment improvement from the current P/E will occur as a result from doing this acquistion without dilution, combined with the credibility increase because LPH is one of only a couple China stocks to pass with flying colors an audit of 2009 to 2012 SAIC tax filings versus SEC filings. The combined effecct should increase P/E much greater than the current 2.4 P/E. I expect P/E to rise to 5 or 6 by early next year on sentiment shift and new facility earnings.
A P/E increase factor of 5 divided by 2.4 multiplied by an EPS increase of 1.0 divided by 0.61 yields an overall upside of 340 percent.