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Longwei Petroleum Investment Holding Limited Message Board

  • portfolioman22 portfolioman22 Dec 4, 2012 3:22 PM Flag

    a different style of investor interested in LPH now

    a different style of investor interested in LPH now - fewer daytraders who go after an entry price when they smell blood in the streets in conjunction with a single-event type of catalyst. The daytrader crowd runs after bankruptcy candidates and stocks beaten to a P/E of below 1 that as far as we all know fit the exact mold for a scam. LPH is now a stark contrast to that mold because of the following:

    (1) On July 2, 2012 LPH published a SAIC/SAT tax filing reconciliation versus SEC filings covering three years from July 1, 2009 to March 31, 2012 in which their auditor signed off after directly observing the tax filing data on PRC computers in the state tax filing office. Results agreed 100% with no material differences. Legitimacy WAY beyond what the SEC requires and compared to 98% of other Chinese companies.

    (2) The fact that, starting in early 2011, LPH decided to act to fully preserve shareholder value speaks volumes. LPH is about the only Chinese stock to RESCIND an S-3 filing (back in early 2011) that would have issued $50M worth of new shares to use for acquisition purposes. The CEO announced that he respected that the company's shares were worth far more than current share price and that he did not think it was fair to shareholders to issue shares at a price below $3. He has kept his word now for more than 1.5 years.

    (3) The fact that LPH was committed to perform an all-cash acquisition using only internal profits, and they saved their cash for 18 months to acquire Huajie Petroleum. The company plowed all of their cash profits back into growing the company with the Huajie acquisition, which maximizes shareholder value instead of sitting on enormous piles of cash like other Chinese companies claim to be doing - not only is that not a good use of capital, but it also makes you wonder if they really have the cash at all. LPH proved legitimacy in their earnings by having the cash to acquire Huajie for $110 million.

    (4) The fact that the CEO has been with the company for 17 years since its inception, and is not a suitcase CEO of a short duration, hopping between companies, also speaks volumes about his career abilities at managing this company.

    (5) The fact that LPH has now done TWO acquisitions in the space of 3 years, growing from one facility and 50,000 metric tons storage capacity, to three facilities and 220,000 metric tons storage capacity, proves that the company is on a solid growth trajectory for the future.

    (6) The fact that LPH had sales staff on the ground for several months before closing the deal on Huajie explains why they were able to achieve 16 major customers signing contracts within 30 days of the deal closing, thereby contributing to a 32.8% increase in net volume sold for the month of October YoY, and this only included half of the month with Huajie revenues.

    So the best is yet to come. Quarter after quarter, this company is growing. And with a new IR firm that competently releases all the information and with a CEO that makes sure the company is transparent and lives up to its promises to shareholders, one of two things is going to happen within 4 to 8 months: Either shareholders are joined by institutions and the stock is bid upwards closer to the valuation multiple it is really worth, or the comprehensive body of due dilligence information and the actions of the management and new IR firm will attract some big fish to carry the company private to relist on the Hong Kong exchange.

    Sentiment: Strong Buy

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    • Of course, when price gets into the 3$ range there will be a second "different type of investor"...one that takes your shares without your blessing and sells them in the selfish interest of trying to make the stock shareholders lose money on their investment.

      Sentiment: Strong Buy

    • One has to wonder that if LPH is such a hidden treasure with its never-ending stellar earnings year-after-year despite terrible economic conditions (as some have claimed economic conditions do not apply to LPH) then why wouldn’t JPMorgan, Citi, Vanguard, Black Rock, etc. jump into this gold mine, a company that defies macro economic condition?

      With such a large number of analysts from these W.S. institutions one has to wonder that they must have done a thorough research and DD in any stocks falls under their radar yet LPH has escaped their attention, not even a snippet of opinion.

      Why is that?

    • One has to wonder that if LPH is such a hidden treasure with its never-ending stellar earnings year-after-year despite terrible economic conditions (as some have claimed economic conditions do not apply to LPH) then why wouldn’t JPMorgan, Citi, Vanguard, Black Rock, etc. jump into this gold mine, a company that defies macro economic condition?

      With such a large number of analysts from these Wall Street institutions one has to wonder that they must have done a thorough research and DD in any stocks falls under their radar yet LPH has escaped their attention, not even a snippet of opinion.

      Why is that?

    • Warren Buffet types love this stock -- steady growth, strong and growing demand, a simple business model, and the CEO having many years of experience with this company.

      Sentiment: Strong Buy

 
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