Andatee China Marine Fuel (NASDAQ:AMCF)

Notice of Delisting

On December 11, 2012, Andatee China Marine Fuel Services Corporation (the “Company”) received two letters from the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the past 30 consecutive business days, (i) the bid price for the Company’s common stock has closed below the minimum $1.00 per share continued listing requirement set forth in Nasdaq Listing Rule 5450(a)(1), and (ii) the Company failed to maintain at least $5 million in the Market Value of Publicly Held Shares (MVPHS) continued listing standard set forth in Nasdaq Listing Rule 5450(b)(1)(C).

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers’ Compensatory Arrangements of Certain Officers

Haipeng (Abraham) Wang, Chief Financial Officer of Andatee China Marine Fuel Services Corporation (the “Company”), tendered his resignation effective November 23^rd, 2012 as the Company’s CFO. Mr. Wang’s departure was not due to any disagreement with the Company. Specifically, Mr. Wang cited his inability to relocate from Shanghai to Dalian as the Company’s executive offices move to Dalian. The Company is thankful to him for his service and dedication as the Company’s CFO since January 2012 and wishes his success in his future professional endeavors.

The Company is currently in search of suitable CFO candidate following Mr. Wang’s departure and will provide appropriate disclosures when such engagement is completed.

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Item 4.01 Changes in Registrant’s Certifying Accountant

Resignation of Daszkal Bolton LLP

On October 18, 2012, Andatee China Marine Fuel Services Corporation (the “Company”) received a notice from Daszkal Bolton LLP, the Company’s independent registered public accounting firm (“DB”) stating that, effective October 20, 2012, DB would cease its services as the Company’s independent auditors. DB cited “changes in the marketplace” for its inability to continue to provide services to the Company.

DB reported on the Company’s financial statements for the year ended December 31, 2011. The DB reports on the Company’s financial statements as of December 31, 2011 and for the fiscal year ended December 31, 2011 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the Company's the fiscal year ended December 31, 2011 and the interim period through the effective date of DB's resignation, (i) there were no disagreements with DB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to DB’s satisfaction, would have caused DB to make reference to the subject matter of such disagreements in its reports on the Company’s consolidated financial statements for such year, and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

The Company has provided DB with a copy of the foregoing disclosures to DB and requested that DB furnish a letter to the Securities and Exchange Commission stating whether or not it agrees with the above statements. A copy of such letter is filed as Exhibit 16.1 to this Current Report on Form 8-K.

The Company is in the process of seeking to engage a replacement independent registered public accounting firm and will provide public disclosures when such engagement is completed.

On September 5, 2012, An Fengbin, Chief Executive Officer of Andatee China Marine Fuel Services Corporation, a Delaware corporation (the “Company”), delivered a written notice to the Special Committee of the Board of Directors of the Company (the “Special Committee”) stating that, effective immediately, he had withdrawn his previously submitted non-binding “going private” proposal to acquire all outstanding shares of the Company not already owned by him and his affiliates. He cited challenging market conditions and volatility as reasons for the withdrawal determination. The withdrawal of the “going private” proposal completes the task of the Special Committee of the Board. As previously disclosed, the Special Committee, consisting solely of independent directors, was established by the Board of Directors in November 2011, following the Board’s receipt of an indication of interest from Mr. An to negotiate the possible acquisition of all of the outstanding shares of the Company not already owned by him and his affiliates. Specifically, he proposed to negotiate the acquisition of all such outstanding shares at a price of $4.21 per share in cash, subject to financing and other conditions.

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these condensed consolidated financial statements.

10K filed on February 14, 2012

In the first half of fiscal 2011, fishing and logistics activities were depressed due to unfavorable weather and economic conditions, which resulted in decreased demand for our products as compared with the same period in fiscal 2010.

In the third quarter of fiscal 2011, we intensified our marketing efforts of 1# and 4# marine fuel products by finding more reliable distributors in Southern China, who could distribute 1# marine fuels products in greater quantities. As a result of these efforts, we were able to recover the losses sustained in the first half of the year.

In the fourth quarter of 2011, we experienced significant decreased demand due to the continued tightening of credit policies by the Chinese government in response to fear of the overall economic conditions..  The sales volume and gross margins decreased as compared with the same period in 2010.

Business Development and Outlook

Since our inception in 2001, we have taken several steps to increase investment in facilities and product line expansion in order to provide our customers with easier access to our products and services and to build a delivery network closer to target market. These steps include acquiring additional local companies and facilities, and development of new products, all aimed at meeting customer demands in various markets. Historically, we have funded these activities from our working capital.

We continue to ramp up expansion of our distribution network by expanding organically through the opening of new sales and marketing branches in new port locations, building new facilities improving our existing facilities, and signing sole supply agreements with long-term supply partners.

Furthermore, we are setting up market developing offices in large cities, such as Shanghai, Shenzhen, etc. to recruit capable local hands in a bid to establish effective network of information for providing solid foundations to pursue our acquisition-driven growth strategy in neighboring areas around the cities.

DALIAN, China, March 21, 2012 /PRNewswire-Asia/ -- Andatee China Marine Fuel Services Corporation (NASDAQ: AMCF)("Andatee" or "the Company"), a leading producer, distributor, and retailer of quality marine fuel for small cargo and fishing vessels in China, today announced that the Special Committee of its Board of Directors, consisting of two of the Company's independent directors, Mr. Francis N.S. Leong and Mr. Wen Jiang, has retained Duff & Phelps, LLC as its independent financial advisor.

The independent financial advisor will assist the Special Committee in evaluating the previously disclosed proposal from An Fengbin, Chief Executive Officer of the Company, to acquire all of the outstanding shares of Andatee that he does not already own. The Special Committee is continuing its evaluation of the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

Morris James LLP serves as the Special Committee's legal counsel.

Notice to Investors

The tender offer for the outstanding shares of Andatee has not yet commenced. No statement in the press release is an offer to purchase or a solicitation of an offer to sell securities. At the time the tender offer is commenced, An Fengbin and his affiliates will file a tender offer statement on Schedule TO with the Securities and Exchange Commission, and Andatee will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the tender offer. The tender offer statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will contain important information that should be read carefully before any decision is made with respect to the tender offer. Such materials will be made available to Andatee's stockholders at no expense to them. In addition, such materials (and all other offer documents filed with the SEC) will be available at no charge on the SEC's Web site: www.sec.gov

INVESTORS AND SECURITIES HOLDERS ARE URGED TO READ BOTH THE TENDER OFFER STATEMENT AND THE SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE OFFER, AS THEY MAY BE AMENDED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

DALIAN, China, Nov. 23, 2011 /PRNewswire-Asia/ -- Andatee China Marine Fuel Services Corporation (NASDAQ: AMCF) ("Andatee"), a leading producer, distributor, and retailer of quality marine fuel for small cargo and fishing vessels in China, today confirmed that it has received notice from An Fengbin of his intention to launch a tender offer to acquire all of the outstanding shares of Andatee that he does not already own at a price of $4.21 per share in cash, subject to financing, due diligence and other conditions.

The Board of Directors has established a Special Committee to consider the offer. The Special Committee will consider and take a position with respect to the offer in accordance with applicable legal requirements. Andatee shareholders are advised to take no action with respect to the offer until they have been advised of the Company's position.

Third Quarter 2011 Results

Rodman and Renshaw on AMCF                8/17/2011

AMCF: 2Q11 Earnings Update; Lowering Rating To Market Perform

Lowering Rating: We are lowering our rating on AMCF from Market Outperform to Market Perform driven by 1) substantially lowered revenue and net income guidance for 2011 and 2) margin uncertainty as a result of crude oil volatility. The lowered guidance and expected margin pressure results in our 2011 financial projections reflecting an EPS decline of ~40% compared to 2010. Our attraction to AMCF was partly predicated on earnings growth potential in the story. As a smaller company we can understand that management may not have all the tools at their disposal to immediately take corrective measures. Though we anticipate that the company will remain profitable and continue establishing a brand presence for their blended marine fuels, we believe investors may remain on the sidelines until they see some tangible evidence of earnings growth being re-established. AMCF is currently trading at a P/E multiple of ~3.0x to our lowered 2011 EPS expectation of $0.57 (from $1.11). We are also delaying the introduction of our 2012 projections until we have better visibility into demand conditions.

2Q11 Missed: AMCF reported 2Q11 revenue and net income of $63.1 MM and $1.4 MM, with diluted EPS of $0.14, below our estimates of $73.9 MM, $2.6 MM, and $0.26, respectively.

Revenue Mix: Quarterly sales volume reached 81,4000 tons, growing by 8,400 tons or 11.5% y-o-y from 73,000 tons in 2Q10. This implies an average selling price of $775.7/ton. Currently 57.1% of total sales are through wholesale distributors and 42.9% are directly from retail customers.

Crude Oil Price Volatility Weighs on Margin: In 2Q, AMCF’s gross margin dropped significantly from 11.8% in 1Q to only 6.6%. Management attributed this margin deterioration to the volatility in crude oil price during the quarter.

Guidance Lowered: AMCF has again lowered its financial guidance for FY11 to $225 MM ~ $275 MM in revenue and $5 MM ~ $8 MM in net income from previously announced $275 MM ~ $325 MM in revenue and $11 MM ~ $13 MM in earnings.

2011 Revised Estimates: We are lowering our estimates for 3Q revenue, net income, and EPS to $85.4 MM, $1.02 MM, and $0.10, from $87.1 MM, $3.2 MM, and $0.32, respectively to reflect the uncertainties overall weaker demand and ongoing margin headwinds. For full year FY11, we are now projecting $275.1 MM, $5.6 MM, and $0.57 for top-line, bottom-line, and diluted EPS.

Risks (1) Customer Concentration (2) Supplier Concentration (3) Acquisition Based Growth Creates Additional Risks (4) Cyclical Nature of the Petroleum and Petrochemicals Market (5) Seasonality of Fishing Business and Commercial Activities (6) Government and Environmental Regulations (7) Macroeconomic Risk (8) Political and Regulatory Risks Related to Operating in China.

Notice Regarding Privacy and Confidentiality:

Rodman & Renshaw, LLC reserves the right to monitor and review the content of all e-mail communications sent and/or received by its employees.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

Rodman and Renshaw on AMCF                        5/16/2011

AMCF: 1Q11 Earnings Update

1Q11 Results: AMCF reported 1Q11 revenue and net income of $44.3 MM and $2.3 MM, with diluted EPS of $0.23, compared to our estimates of $45.8 MM, $1.6 MM, and $0.17, respectively. AMCF ended the quarter with $8.0 MM in cash and $10.4 MM in inventory, total debt including short-term loan and bank note payable amounted $34.8 MM.

Oil Price Volatility May be A Headwind: AMCF managed to keep its gross margin stable at 11.8% level, compared to 12.0% in 1Q10 and 10.7% in 4Q10. However, on a going forward basis, we are being cautious on the margin impact from global crude oil price volatility. Management stated that due to the government control over oil fuel price in China, the company’s ability to pass on higher cost to its customer may be limited. The company expects to grow its retail operation faster in order to boost its overall gross margin and offset the negative impact from the rising costs.

New Blending Facilities: AMCF is currently building two new blending facilities, one in Panjin City, Liaoning Province and the other one in Zibo City, Shandong Province. Total capacity of the two facilities is 32,000 m² and total cost is approximately $19.4 MM. Construction is expected to be completed by June 2011.

Lower Net Income Guidance: Management maintained revenue guidance of $275 MM ~ $325 MM for FY11, while trimming the earnings guidance to $10 MM ~ $12 MM from previously announced $11 MM ~ $13 MM. It is also guiding a y-o-y volume growth of 28%~52% without factoring any acquisitions.

2Q11 Estimates: For 2Q11, we are now projecting revenue and net income of $73.9 MM and $2.6 MM, with diluted EPS of $0.26. For full year FY11, our estimates are $287.7 MM for top-line, $10.9 MM for bottom-line, and $1.11 for diluted EPS. We are targeting approximately 10.2% in gross margin and 5.8% in operating margin on a full year basis.

Valuation: At current levels AMCF is trading at P/E multiples of ~3.0x to our FY11 earnings estimates. This multiple is below the peer group. We are comfortable maintaining a $7.00 price target on AMCF, which translates into P/E multiple of ~6x to our earnings estimates for FY11, still implying a discount compared to ~18x multiples for its peer group listed in US, and ~14x for comparables listed in China.

Risks: (1) Customer Concentration (2) Supplier Concentration (3) Acquisition Based Growth Creates Additional Risks (4) Cyclical Nature of the Petroleum and Petrochemicals Market (5) Seasonality of Fishing Business and Commercial Activities (6) Government and Environmental Regulations (7) Macroeconomic Risk (8) Political and Regulatory Risks Related to Operating in China

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

First Quarter Results:

• Total revenues of $44.3 million, an increase of 48.6% year over year
• Net income attributable to Andatee shareholders of $2.3 million, up 65.0% year over year
• Earnings per share of $0.23

Mr. An Fengbin, Chairman, CEO, and President of Andatee China Marine Fuel Services Corporation, stated, "We are pleased to report strong operational and financial growth during the 2011 first quarter, a period that is typically affected by seasonality due to the Chinese New Year holiday. During this time, both cargo and fishing traffic tend to decrease, which directly impacts demand for our marine blended fuel products. Despite this, Andatee's revenues grew over 48% from the prior-year period. We attribute this growth to the rising oil price environment, and, more importantly, our continued focus on improving all aspects of our operations, including raw material procurement through an expanding supplier network, expansion of blending capacity by building and acquiring additional facilities, improved distribution, and a diversified customer base. We continue to closely monitor the demand for our fuel products given a rising cost environment, especially in April 2011, as one of our competitive advantages is the cost efficiency for our customers compared with traditional diesel fuel. Despite these headwinds, we feel that the quality and recognition of our 'Xingyuan' brand continues to resonate with our customers. Our retail operations are expanding, and we are confident that the year and future quarters will show stable and steady growth."

Full Year 2011 Guidance

Total Revenue: $275-$325 million

Net Income: $10-$12 million

Rodman and Renshaw on AMCF                     4/01/2011

AMCF: 4Q10 Earnings Update

4Q10 Results: AMCF reported 4Q10 revenue and net income of $59.8 MM and $2.2 MM, with diluted EPS of $0.24, beating our estimates of $47.7 MM, $2.1 MM, and $0.21, respectively. Top-line grew by 53.5% y-o-y from $39.0 MM and 4% sequentially from $57.5 MM driven by 100% in sales volume and a higher ASP. Gross profit increased by 64.7% y-o-y from $3.9 MM to $6.4 MM, representing a gross margin of 10.7%, compared to 10.0% in 4Q09. AMCF generated operating income of $3.7 MM, or 6.1% in EBIT margin, a y-o-y increase of 31.1% from 4Q09. Earnings of $2.2 MM implies a 3.7% net margin, compared to 4.4% in 4Q09 and 4.6% in 3Q10. Diluted EPS was $0.24 for the quarter, compared to $0.28 in 4Q09.

Strong Volume Growth: During 4Q, total volume reached 88,000 tons, a 100% increase from 4Q09’s 44,000 tons. Full year volume grew by 22.1% from 240,000 tons to 293,000 tons. Top-line also benefited from the increasing oil price: average oil price in FY10 rose from ~$64/barrel to $81/barrel.

M&A Strategy Continues: Management mentioned during the earnings call that the company will continue to execute its growth strategy through acquisitions in order to expand its port space and distribution infrastructure, and eventually make its “Xingyuan” a well known brand for retail customers.

FY11 Guidance: The company is guiding for revenue and net income of $275 MM~$325 MM, $11 MM~$13 MM, with total volume growth in a range of 55%~107.5%. We are projecting 1Q11 revenue, net income, and diluted EPS of $45.8 MM, $1.6 MM, and $0.17 per share. Our full year estimates are $289.3 MM, $10.8 MM, and $1.15, respectively.

Valuation: At current levels AMCF is trading at P/E multiples of ~3.6x to our FY11 earnings estimates. This multiple is below the peer group. We are comfortable maintaining a $7.00 price target on AMCF, which translates into P/E multiple of ~6x to our earnings estimates for FY11, still implying a discount compared to ~13.5x multiples for its peer group listed in US, and ~22.2x for comparables listed in China. We believe this is a very reasonable multiple for an emerging company that has substantial growth opportunities ahead, a strong market position and a healthy balance sheet. Historically energy distribution companies have traded within a range of 11x to 20x on a P/E basis.

Risks: (1) Customer Concentration (2) Supplier Concentration (3) Acquisition Based Growth Creates Additional Risks (4) Cyclical Nature of the Petroleum and Petrochemicals Market (5) Seasonality of Fishing Business and Commercial Activities (6) Government and Environmental Regulations (7) Macroeconomic Risk (8) Political and Regulatory Risks Related to Operating in China

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Q4 2010 Financial Highlights

• Total revenues of $59.8 million, an increase of 53.5% year over year
• Net income attributable to Andatee shareholders of $2.2 million, up 29.7% year over year
• Earnings per share of $0.24 VS. $0.28

Full-year 2010 Financial Highlights

• Total revenues of $191.2 million, an increase of 53.8% from the prior year
• Net income attributable to Andatee shareholders of $8.9 million, up 38.7% from the prior year
• Earnings per share of $0.95 VS. $1.11 
• Cash flow from operations of $3.8 million

Outlook for 2011 (Excludes any acquisitions that the Company may consummate this year)

• Company expects revenues to be between $275 million and $325 million and net income between $11 million and $13 million for the year ending December 31, 2011 
• Expects total sales volume to increase between 55.0% and 107.5% for the year ending December 31, 2011

Mr. An Fengbin, Chairman, CEO and President of Andatee China Marine Fuel Services Corporation, stated, "We are pleased to report solid operating results, which included strong cash generation and stable growth. Our focus has been on improving all aspects of our operations, including raw material procurement through an expanding supplier network, improved distribution, and a diversified customer base. As the result of these initiatives and a rising oil price environment, our revenues increased over 50% in 2010. Throughout the year, the demand for our portfolio of blended fuel products remained strong, which we feel is an indication that a fragmented market is beginning to recognize and trust our 'Xingyuan' brand. We also continued to make progress in expanding our retail customer base through actively building and acquiring port space and distribution infrastructure. Our goal remains becoming a 'one-stop shop' for all marine port services—providing petroleum products, maintenance, payment services, and marine supplies for boat operators."

Mr. An concluded, "We are optimistic about the outlook of the marine fuel market in China because of growing demand, improving brand recognition, and balanced fleet growth. Andatee is continuing to generate excess cash flow and is well positioned to continue organic growth through the opening of new regional facilities, new products, and expanded service offerings such as direct refueling at sea. Finally, we also will strategically identify, research, and if appropriate, look to acquire target companies with desired facilities in areas that fit into Andatee's growth plans. We continue to remain cautious, as we are not willing to pay premium multiples for retail locations unless we can acquire a strong and growing customer base. We have attempted to geographically position our company with the ability to achieve stable growth through a variety of means."

Rodman & Renshaw on AMCF

Overview: AMCF reported 3Q10 revenue and net income of $57.5 MM and $2.6 MM, with diluted EPS of $0.27, beating our estimates of $32.3 MM, $1.7 MM, and $0.18, respectively. Top-line grew by 78.5% Y-o-Y from $32.2 MM in 3Q09 and 30.4% sequentially from $44.1 MM in 2Q10, largely driven by an 82% Y-o-Y increase in total shipment volume. Gross profit reached $5.8 MM or 10.0% in gross margin, compared to $3.8 MM or 11.7% in 3Q09 and $5.3 MM or 12.0% in 2Q10. Net income grew by 73.5% to $2.6 MM from $1.5 MM in 3Q09. AMCF ended the quarter with a total of $17.2 MM in cash, $3.9 MM of accounts receivable, and $13.5 MM of inventory with total debt of $27.2 MM. The company generated $5.5 MM in operating cash flow, compared to ($0.1 MM) in 3Q09. 

Top-Line Growth Driven By Higher Volume And ASP: AMCF experienced strong growth in both shipment volume and selling price during the quarter. Total volume sold reached 86,000 tons, a Y-o-Y growth of 82% from 47,000 tons in 3Q09. The company has made progress in marketing 1# fuel products through new distributors in the South. Additionally the two acquisitions, Mashan and Hailong, contributed ~6,000 tons of shipment volume in 3Q10. ASP also drove the top-line higher, due to the price increase in international crude oil from ~$59/barrel in 3Q09 to ~$79/barrel. 

Retail Sales Should Play A Larger Role: For the 9-month period of 2010, retail business contributed ~38.3% of total revenue, compared to 40.8% in 2009. Normally retail business generates a higher gross margin than wholesale distribution, and could potentially reduce the overall risk from volatility in crude oil price. The company plans to expand the retail business in the next three years through (1) acquiring retail facilities close enough to its end markets (2) building retail sales branches in strategically important locations to create a higher brand awareness, and eventually increase its revenue contribution to ~60% of total sales. 

M&A Strategy Intact: We continue to believe that China’s marine fuel market is highly fragmented, representing a tremendous opportunity for AMCF to become market consolidator. The company is likely to continue to gain market shares through acquiring smaller players with similar core expertise. 

Financial Projections: For 4Q10, we expect the company to deliver revenue and net income of $47.7 MM and $2.1 MM, with diluted EPS of $0.21. This implies full year FY10 revenue, net income, and EPS of $179.1 MM, $8.8 MM, and $0.94. For FY11, our estimates are $210.7 MM, $10.1 MM, and $1.04, respectively. 

Valuation: At current levels AMCF is trading at P/E multiples of ~6.2x and ~5.6x to our FY10 and FY11 earnings estimates. These multiples are below the peer group. We are comfortable assigning AMCF a $7.00 price target, which translates into P/E multiple of ~7.5x and ~6.8x to our earnings estimates for FY10 and FY11.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Third Quarter 2010 Highlights

• Revenue increased 78.5% to approximately $57.5 million 

• Gross profit was  up 52.8% to $5.7 million

• Income from operations was $3.8 million, up 63.4% from $2.3 millionin the same period of 2009

• Operating margin was 6.7%

• Net income attributable to Andatee shareholders was $2.6 million, increased 73.5%

• Earnings per share was approximately $0.27 vs. $0.25

"We are delighted with the solid business results we delivered in the third quarter 2010. During the period in September 2010, we have achieved a major milestone by signing agreements with Haiyu Fishery Limited Corporation and Jinghai Group to supply marine fuel, on an exclusive basis, for a period of 10 years. We also acquired 52% stake in Mashan Xingyuan and Hailong Petrochemical Co., Ltd. respectively. As a result, we have expanded our footprint into Tianjin market, which is the largest port cities in China," said Mr. An Fengbin, Chairman, CEO and President of Andatee China Marine Fuel Services Corporation. "In addition, we have expanded our business in the markets in southern China by finding more reliable distributors of 1# marine fuel products."

Business Outlook

Sea freight shipping activities at ports in China remained relatively strong, driving steady growth in the marine bunkering industry in China. Fishing activities continued to pick up during the third quarter of 2010 due to the peak season and the increasing demand from the fishing industry. Andatee believes its success in implementing its business strategies to explore increasing market opportunities for retail sales, to acquire and upgrade retail facilities to reduce risk of fluctuation of crude oil prices, and to build retail points in strategic locations to capture market growth continue to strengthen the Company's market position in the marine fuel services industry in China.

"Given the highly fragmented nature of the marine fuel industry for fishing and smaller vessels, we are committed in our effort to expand our geographic footprint to capture market share and build our "Xingyuan" brand. During the third quarter, we intensified our marketing efforts of 1# marine fuel products by finding more reliable distributors in Southern China, who could distribute 1# marine fuels products in large numbers." said Mr. An. "We believe that a solid foundation for our marine fuel business will be established step by step along with development of more value-added products as well as exploration into more high margin strategic positions."

• Our revenue increased by US$16.2 million, or 58.2%, from US$27.8 million for the second quarter ended June 30, 2009 to US$44.1 million for second quarter ended June 30, 2010. The increase in our revenues was due to the increased sales volume and higher average crude oil price.
  
• Net income increased by US$0.9 million, or 52.7%, from US$1.7 million for the second quarter of 2009 to US$2.6 million for 2010.
  
• EPS was $0.28 vs. $0.29.

Our overall strategies are to (i) increase our share of retail sales since such sales are less price-sensitive than sales to the distributors, (ii) acquire our own retail facilities to reduce the risk of opportunistic negotiations from our retail customers during periods of volatile oil prices and (iii) build retail points in strategic locations (often close to recently acquired locations) to capture a majority of active local markets.

During the first half of 2010, crude oil prices fluctuated around $79 a barrel, an average increase of approximately $24 per barrel as compared with the same period in 2009.  We had seen that the demand from fishing industry has been substantially picking up, as the water temperature returned to normal level, the whole industry has stepped up its efforts in a bid to gain back what they missed in the first quarter.  From Donggang in the north down to Zhejiang province, the fishing activities have surged as compared with the first quarter, which boosted the demand for our marine fuel products. Therefore, the revenue for the six months ended June 30, 2010 has increased by 39.1% to $73.8 million as compared with the same period in 2009, along with that the sales volume has increased by 4.3% to 120,000 tons as compared with the same period in 2009. The increase in revenue is mainly due to the rise of the average marine fuel product price, growth in sales volume and the increase in revenue from retail customers. In the first half of 2010, 48.8% of our sales were to retail customers as compared with 38% in 2009.

We believe that improving our retail sales and distribution channels will generate stable gross margins which, in turn, will offset the pressure imposed on our profit margin by crude oil prices. We believe that higher retail sales and closer ties with our end users as well as wider distribution network are at the core of our strength and business viability going forward. We intend to (i) control more facilities closer to end markets, through business acquisitions, partner cooperation, building local platform for our products and added-value services, which would enhance the brand awareness of the “Xingyuan” and (ii) expand our product line and upgrade production facilities to explore the increasing markets opportunities and increase our share in retail market.

We believe our ability to generate cash from operating activities is one of our fundamental financial strengths. In addition to cash from operating activities, we also maintain a revolving loan arrangement with Shenzhen Development Bank Co., Ltd., as discussed below, for our capital requirements.  Our future capital expenditures will include building new fueling facilities, improving and upgrading our existing production facilities, expanding product lines, research and development capabilities, and making acquisitions as we deem appropriate.
 
We estimate $8.1 million will be needed in 2010 to fund the construction projects for new manufacturing facilities and the improvement and upgrades of our existing manufacturing facilities. In addition, we intend to reserve approximately $5.3 million for future acquisitions.

On January 26, 2010, the Company completed its initial public offering of common stock (“IPO”) of 3,134,921 shares of common stock at an offering price of $6.30 per share resulting in net proceeds to the Company of approximately $17.2 million, after deducting offering costs of $2.5 million. On March 4, 2010 the underwriters of the initial public offering of common stock had exercised their over-allotment option, which resulted in the issuance of an additional 470,238 shares of common stock. The Company received proceeds of another $2.6 million, net of offering costs of $227,750.

We believe that the net proceeds of approximately $20 million from our IPO, together with our cash flow from operating activities and bank borrowings, will be sufficient to meet our anticipated cash requirements for the next 12 months. If we need additional cash, we may seek to raise capital either through the issuance of stock or increase our borrowing level with our lender.

Mr. An commented: "We expect growth for the fiscal year 2010 to remain strong due to the expected further strong growth in the Chinese economy, particularly the Northeast developing region and Eastern seaports. We maintain focused on a business strategy of increasing storage for our products, including potential acquisition targets to expand our reach along the Eastern coast. We continue to maintain focus on capitalizing on the opportunities to meet the growing demand for marine fuel in the region."

Source: PR Newswire (March 2, 2010)