Jan. 9, 2007 (China Knowledge) – Ouhua Energy Holdings, a supplier of liquefied petroleum gas (LPG) in China, is forecasting a 20% increase for the fiscal 2006, thanks to strong demand, said CFO Denis Mao. Revenue jumped by 40%, from RMB 1.77 billion in 2004 to RMB 2.49 billion in 2005.

Looking forward, Mao hoped that revenue will maintain a double-digit compounded annual growth rate. He does not foresee the possibility that higher operating costs in the third quarter from higher freight rates will recur in the fourth quarter, as increase in distribution costs has already been passed on to customers. To prevent occasional bottle-necks in deliveries, Ouhua plans to buy its own fleet of delivery trucks and vessels instead of chartering them. Acquisitions and establishing joint ventures in China and South-east Asia are also in the horizon to achieve rapid growth.

For the 11 months to November, Ouhua delivered more than 40,000 tons of LPG to customers outside of China through seven distributors, which accounted for 5% of its revenue. To improve profit margins, it is expected that the company plans to start supplying LPG directly to end-users instead of through distributors.