This
last development has the following positive implications on Longwei Petroleum
(LPH):
- This indicates that demand
for fuel energies is strong in Shanxi province, particularly in Taiyuan metropolitan.
It also indicates that growth in supply is probably limited and cannot
satisfy growth in demand.
- It means that economy in
Taiyuan area is doing very well and consumers are not slowing down in
consuming more energy. Note that Shanxi’s yearly GDP growth rate has been
higher than national average by significant extent for the past 15 years.
- Because natural gas is a
competition to gasoline and diesel (i.e. gasoline/diesel and natural gas
are alternative goods for many people), under economic principal higher
natural gas price will decrease sales volume of natural gas and increase
sales volume of gasoline and diesel in the area.
In
conclusion, with this last development, the outlook for Longwei’s revenue
growth is brightened further in my opinion.
Disclaimer
I
am a completely independent analyst and am not paid by any company of which the
stock I cover or write articles about. However, I may have long or short
position on a stock I cover or write about at any time.
My ratings and/or analyses of a stock only
represent my personal view on the stock and/or my assessment on the probable
movement of the stock price in the next 12 months. They are by no means a
guarantee of performance on any long or short trades on a stock and should not
be relied upon solely for buying or selling a stock. Every investment, no
matter how compellingly appealing it seems, involves risk. Investors should do
their own due diligence and consider personal risk tolerance, preferences and
needs when making an investment or a trading decision. All materials are
subject to change without notice. Information is obtained from sources believed
to be reliable, but its accuracy and completeness are not guaranteed.
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