Overview
We are a leading non-state-owned, integrated energy company in China engaged in three business segments: the wholesale distribution of finished oil and heavy oil products, the production and sale of biodiesel, and the operation of retail gas stations.
We sell primarily gasoline, diesel, and heavy oil in fourteen provinces and municipalities through seven sales offices located in various regions of China. We use four oil storage depots located in Shaanxi Province with a total capacity of 59,000m3. We have access to a 2.65-kilometer railway line at our depot in Tongchuan City, Shaanxi Province which connects to the main railway enabling us to reach Sichuan, Guizhou, and Yunnan Provinces. As a leading distributor, we are licensed to sell both finished oil and heavy oil products in Shaanxi Province. We distributed 158,100 tons and 279,000 tons of finished oil and heavy oil products in 2008 and 2009, respectively. As a high-volume distributor, we experience high inventory turnover with minimum inventory exposure, and have, therefore, been able to maintain a stable margin in our distribution business despite the volatility of global oil prices. We plan to grow our wholesale distribution of finished oil and heavy oil by increasing our coverage area and further penetrating our existing customer base and territories.
We operate a 100,000-ton biodiesel production plant located in Tongchuan City, Shaanxi Province and a 50,000-ton plant in Chongqing City, China. We leverage our wholesale distribution channels to sell our biodiesel to our existing customers, and to acquire new ones. We are the only non-state owned biodiesel producer with a nationwide distribution license. We have been awarded three patents relating to the use of multiple feedstock interchangeably in biodiesel production. Our biodiesel can be blended with regular petro-diesel and used by existing diesel engines with no change in engine performance. We will increase our total production capacity to 200,000 tons by constructing a new 50,000-ton production facility, adjacent to our 100,000-ton plant in Tongchuan City. Furthermore, we enjoy several tax incentives, as a biodiesel producer in China.
We operate seven retail gas stations located in Xi’an City and other areas in Shaanxi Province, for which we have entered into long-term leases. The average annual sales volume of each gas station is equivalent to 2.7 million gallons. We generate stable and high margins from our retail gas stations since we sell directly to retail end customers, and we have plans for expansion.
We have experienced substantial growth in recent years. Our sales increased to $289.6 million in 2009, up from $216.5 million in 2008, an increase of 33.8%. Our net income increased to $37.9 million for 2009, from $18.7 million in 2008, an increase of 102.7%.
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