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Marine Fuel Provider Andatee Makes Progress On Growth Strategy

|Includes: Andatee China Marine Fuel Services Corporation (AMCF)
Andatee China Marine Fuel Services Corporation (NasdaqGM: AMCF), the largest independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China, is continuing to expand its market presence. Most recently, the Company signed agreements with Haiyu Fishery Limited Corporation and Jinghai Group to supply marine fuel on an exclusive basis for a period of 10 years. Under the agreements, the Company will also receive exclusive rights for 10 years to operate in the Haiyu and Jinghai port areas. Andatee expects both agreements to generate RMB 135 million (approximately US $19.76 million) in revenue and RMB 5 million (approximately US $0.73 million) in net income.

Previously, in May, the Company announced plans to acquire a 52% equity stake in Mashan Xingyuan Co., Ltd., a leading marine fuel retail outlet in Shandong Province. The deal would give AMCF control of Mashan Xingyuan’s assets and greatly expand AMCF’s market opportunity in the region. The Company expects the deal to contribute approximately $5.9 million in revenue and $0.31 million in net income annually.

China has the world’s largest fishing fleet, with over 300,000 motorized vessels requiring vast amounts of fuel. However, a large segment of China’s marine fuels market is underserved: Small and medium-sized vessels are faced with limited competition, resulting in product shortages, price volatility, poor service, and uneven product quality. Vessel operators, who are often at the mercy of fuel suppliers, are willing to pay a premium for a reliable supply of high-quality fuel. AMCF’s blended fuels are marine diesel substitutes that are 20% cheaper than commercially available marine diesel while maintaining the same fuel efficiency. The Company employs stringent quality control standards to ensure the integrity of its products. As a result, AMCF’s “Xing Yuan” brand fuels are well regarded for their superior quality and energy efficiency.

This commitment to quality has helped make AMCF the largest provider of premium blended marine fuel in northern China. AMCF is a vertically integrated company with its own fuel storage, fuel blending and distribution network. The Company serves vessels under 3,000 tons operating at ports in the provinces of Liaoning, Shandong and Zhejiang. Demand for marine fuel is expected to more than double from 5 million tons to 12 million tons by 2013, and AMCF is poised to capture a large share of this market.

AMCF’s goal is to become a “one-stop shop” for the marine fuel services industry. The Company is currently pursuing an aggressive growth strategy through the use of expanded product offerings, improved production efficiency, increased focus on retail sales, and strategic acquisitions such as the Mashan Xingyuan deal. From our standpoint, AMCF is strongly positioned to execute a roll-up in the marine fuel market.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit