said that, I have one more question before joining the "longs" group here .... while reading this, from petrochina latest press release :
PetroChina's third-quarter profit drop was cushioned by an improvement in its refining business, thanks to two hikes in domestic fuel prices in the period.
Operating loss at its refining and chemicals division narrowed to 8.5 billion yuan in July-September, from a loss of 17.4 billion yuan a year earlier.
Chinese refiners cannot fully pass on higher crude costs to users because of government price controls."
I would love to understand how could reasonably a storage/distributor make huge profits whilst largest chinese state-owned refiners booking huge losses ..... does anyone have a wise clue on this happening ?
This is exactly why LPH is a better business and better investment than PTR. China government dictatively ordered its biggest national refiners to hold their sales prices down to give wholesalers like LPH and retailers better margin (and that in term lower the prices consumers have to pay).
Americans just don't get it. PTR and CEO have advantage over LPH in terms of financing for expansion, but they have decisive disadantage to LPH in terms of business margin. So, LPH is at least as robust and stable as these big refiners, and you can argue that margin wise LPH may be even more stable and robust than PTR and CEO, just like EEP's margin is more stable than BP or XOM's.
However, China government does give PTR direct monetary subsidy for a big portion of its refining loss. So, essentially it is China central government subsidizing the whole nation to use more oil.
Shanxi province government alone is spending 5 billion in 5 years on infrastructures, and new mines and factories keep on popping up in the province every month. Even Apple's biggest supplier has recently opened a big factory in Taiyuan. As the biggest private wholesaler in the province, LPH just cannot get enough oil to fill all back orders from customers right now!
You are looking at a long-term money printing machine here my friend. Get in or kick yourself when the stock is over 10 in a couple years.
have you looked at how much storage there was 5 years ago compared to the US
When China wants some thing it increases profits so it get more of
So when it does not want more storage lph profits will go down
The most important thing is not to have debt
When it happens debt can be a real problem
For nationals its a guarantee of small profits over all as they do not need large profits to grow
They can borrow from nationals banks as much as needed cheaply and China will always adjust profits to be profitable