May 13, 2009 - 4:51 PM EDT
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China Bio-Energy Reports Record First Quarter 2009 Financial Results
China Bio-Energy Reports Record First Quarter 2009 Financial Results

XI'AN, China, May 13 /PRNewswire-Asia-FirstCall/ -- China Bio Energy Holdings Group (OTC Bulletin Board: CBEH), a leading manufacturer and distributor of biodiesel and distributor of petroleum-related products including gasoline, diesel, and heavy oil in China, today announced its financial results for the first quarter of 2009.

    -- First quarter 2009 sales increase 65.0% to $58.6 million, net income
       increases 54.4% to $7.2 million with EPS of $0.21 vs. $0.15
    -- Company reported $35.4 million in cash and equivalents on March 31,
       2009 and generated $11.7 million in cash flow from operations for Q1
    -- Reaffirms 2009 Guidance: Revenues and Net Income of at least
       $240.7 million and $33.7 million, respectively
    -- Management to Host Earnings Conference Call on May 14, 2009 at
       4:15pm EDT

    SUMMARY FINANCIALS

    First Quarter 2009 Results
                                Q1 2009        Q1 2008                CHANGE
    Net Sales             $58.7 million  $35.6 million                +65.0%
    Gross Profit           $7.7 million   $5.0 million                +53.1%
    Net Income             $7.2 million   $4.7 million                +54.4%
    EPS (Fully Diluted)           $0.21          $0.15                +40.0%

First Quarter 2009 Financial Results

Net Sales -- Net Sales for the first quarter of 2009 were $58.7 million compared to $35.6 million in the first quarter of 2008, an increase of 65.0%. The increase was mainly due to strong growth among its three business segments, finished oil distribution, biodiesel production and sales generated by five fully operational gas stations. China Bio Energy also reports revenue in its three business segments as shown in the chart below:

    First Quarter 2009 Revenue Breakdown (Unaudited)

                                 Q1 2009         Q1 2008              CHANGE
    Distribution of
     Finished Oil          $39.3 million   $27.9 million              +40.9%
    % of Sales                     67.0%           78.4%
    Biodiesel Production   $11.3 million    $6.8 million              +66.2%
    % of Sales                     19.3%           19.1%
    Retail Gas Stations     $8.1 million   $0.88 million             +820.5%
    % of Sales                     13.7%            2.5%
    Total Sales            $58.7 million   $35.6 million              +65.0%

'We are very pleased with our results for the first quarter which was the culmination of strong growth across all three business segments,' stated Mr. Gao Xincheng, Chief Executive Officer of China Bio Energy Holdings Group. 'Despite a current environment of lower oil prices in China and worldwide, we believe that several fundamental factors are firmly in place which will drive future revenue and earnings growth for our Company. These include China's increasing demand for energy to accommodate future organic domestic growth, which will benefit directly from the stimulus plan, an increase in utilization of both consumer and commercial vehicles, a shortage of domestic oil resources and dependence on foreign sources, in addition to government initiatives to increase the utilization rate for alternative fuel while decreasing pollution emissions.'

Cost of Sales -- Cost of sales for the first quarter of 2009 was $51.0 million compared to $30.5 million in 2008, an increase of 66.9%. The increase was due to the rise in production and sales activities. Cost of sales as a percentage of sales was approximately 86.9% for the first quarter of 2009 and 85.9% for same period in 2008. The increase was due to higher inventory cost of finished oil carried over from the forth quarter of 2008, a modest increase in the cost of biodiesel feedstock, and rental expense for the four additional gas stations.

Gross Profit and Gross Margin -- Gross profit was $7.7 million for the first quarter of 2009 compared to $5.0 million for the same period in 2008, an increase of 53.1% and represented gross margins of approximately 13% and 14%, respectively. The slight decrease in gross margin is primarily due to factors listed above which impacted costs of sales. During the first quarter of 2009, the gross profit margin for biodiesel production and sales was approximately 24.0% while gross profit margin for distribution of finished oil products, such as gasoline and diesel oil, was approximately 10.5% and retail gas stations generated a gross margin of 11.6%.

Operating Expenses -- Selling, general and administrative expenses for the first quarter of 2009 were approximately $0.56 million compared to $0.32 million for the same period in 2008, an increase of 73.8%. Total operating expenses as a percentage of sales for the first quarter of 2009 and 2008 were 0.95% and 0.90%, respectively. The increase was mainly attributed to legal fees, stock option expenses for the independent directors and employees, and other expenses in connection with the Company becoming a publicly traded company in the United States.

Net Income -- Net income for the first quarter of 2009, was $7.2 million or $0.21 per diluted share, up 54.4% compared with net income of approximately $4.7 million, or $0.15 per diluted share, during the same period in 2008. In the first quarter of fiscal year 2009, the average weighted shares outstanding were 34.6 million shares versus 31.5 million shares in the first quarter of 2008.

Liquidity and Capital Resources

Cash and cash equivalents were $35.4 million on March 31, 2009, compared to $23.1 million on December 31, 2008. The Company had working capital of $75.5 million on March 31, 2009 and a current ratio of 19.3 to 1. Inventories were $20.6 million and the accounts receivable balance was $5.6 million on March 31, 2009, compared to $22.3 and $8.2 million on December 31, 2008, respectively. The annualized days sales outstanding for the first quarter 2009 were 10 days. Net cash provided by operations was $11.7 million in the first quarter of 2009, compared to $1.1 million provided by operations in the first quarter of 2008. The net cash inflow increased during the first quarter of 2009 was primarily due to a large increase in net income.

Financial Outlook for 2009

Management reaffirms 2009 guidance and expects to report calendar 2009 revenues of at least $240.7 million and net income of at least $33.7 million, representing an increase of 11% and 18% compared to 2008 revenue and adjusted net income, respectively. Guidance includes the addition of 50,000 tons of incremental biodiesel production capacity expected to come online during Q3 2009 and include the planned acquisition or lease of additional retail gas stations.

Business Outlook for 2009

The Company plans to expand its current biodiesel production capacity of 100,000 tons to 150,000 tons, either through strategic acquisitions or through a new build-out in 2009. The Company anticipates $15 million in capital expenditures to accomplish this goal. China Bio Energy utilizes a proprietary biodiesel production process which can accommodate two disparate feedstocks, thus minimizing input costs while ensuring optimal supply to maximize capacity utilization. CBEH is the only integrated biodiesel producer in China with a distribution license and are one of only three companies in Shaanxi licensed to distribute both finished and heavy oil, two factors which create significant barriers to entry and strong competitive advantages.

China Bio Energy's management plans to grow its biodiesel production, distribution business, while further expanding the footprint of its retail service stations. On the distribution and retail side, the Company benefits from its advantageous location, well-established supplier relationships as well as an extensive distribution network that has valuable railway access to reach remote parts of China that other distribution companies cannot currently reach. The company plans to strengthen its outreach in certain key distribution areas in costal and northwestern regions of China such as Shandong Province, Guangdong Province, and Xinjiang Province. It has also established additional sales offices within the provinces with which it currently is doing business for more in-depth penetration of distribution network and channels. It also plans to add another five to seven retail gas stations through acquisition or lease, which will benefit its overall distribution profit margins. Management believes the increase in sales volume from these initiatives will drive incremental revenue and profitability even in a low oil price environment.

Conference Call Information

Management will hold a conference call to discuss its 2009 first quarter at 4:15 pm EDT on May 14, 2009. Interested parties may access the call by dialing +1-800-877-941-7133 from within the United States, or +1-480-629-9031 if calling internationally. The conference ID is 4077348. It is advisable to dial in approximately 5-10 minutes prior to the start of the call. A replay will be available through May 21, 2009 and can be accessed by dialing +1-800-406-7325 (U.S.), +1-303- 590-3030 (Int'l), passcode 4077348.

This call is being web cast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.net or at the following link: http://viavid.net/dce.aspx?sid=00006468 . To access the web cast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp .

About China Bio Energy Holdings Group

CBEH is a distributor of refined oil products including gasoline, diesel, and heavy oil, and a manufacturer and distributor of biodiesel fuel. CBEH's biodiesel fuel is made at its 100,000-ton capacity facility in Shaanxi Province. Feedstock consists of naturally growing non-edible seeds and waste oil from restaurants. CBEH's biodiesel can be used as a complete substitute for petro-diesel or can be blended with petro-diesel. The Company's products are sold via its own distribution network, which includes four fuel depots in Shaanxi Province that have both road and rail access.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements.' All statements other than statements of historical fact included herein are 'forward-looking statements.' These forward-looking statements are often identified by the use of forward-looking terminology such as 'believes,' 'expects' or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

    For more information, please contact:

    China Bio Energy Holdings Group
     Alex Gong, VP of Capital Market
     Tel:   +86-136-0127-9912
     Email: alexgong08@gmail.com
     Web:   http://www.cbeh.net.cn/

    HC International, Inc.
     Ted Haberfield, Executive VP
     Tel:   +1-760-755-2716
     Email: thaberfield@hcinternational.net
     Web:   http://www.hcinternational.net



            CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
    (Unaudited)                                March 31,        December 31,
                                                 2009               2008
    ASSETS
    CURRENT ASSETS
        Cash and cash equivalents              $35,386,602       $23,119,028
        Restricted cash                            396,857           919,351
        Accounts receivable                      5,565,717         8,164,320
        Other receivables and deposits             194,460         3,986,984
        Prepaid expenses                         2,000,531         1,884,102
        Advance to suppliers                    15,467,225        17,945,487
        Inventories, net                        20,642,907        22,268,903
        Due from related party                          --                --
        Total current assets                    79,654,299        78,288,175

        Prepaid rents                            5,970,499         6,408,568
        Property and equipment, net              9,709,457         9,997,674
        Total noncurrent assets                 15,679,956        16,406,242
    TOTAL ASSETS                               $95,334,255       $94,694,417
    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES
        Accounts payable                            $1,463               $--
        Advance from customers                     874,178         4,580,462
        Taxes payable                              820,369           735,461
        Other payables                             203,259         3,232,088
        Loans payable                            2,233,040         2,247,197
        Total current liabilities                4,132,309        10,795,208
    Loans payable - Non-current                         --                --
    TOTAL LIABILITIES                            4,132,309        10,795,208

    STOCKHOLDERS' EQUITY
        Preferred stock, $.001 par value;
         authorized shares 10,000,000;
         issued and outstanding 3,465,753
         and 3,465,753 shares at March
         31, 2009 and December 31 2008,
         respectively                                3,465             3,465
        Common stock, $.0001 par value;
         authorized shares 79,000,000;
         issued and outstanding
         27,169,091 and 27,169,091 shares
         at March 31, 2009 and December
         31, 2008, respectively                      2,716             2,716
        Additional paid in capital              44,516,840        44,434,250
        Statutory reserve                        4,920,114         4,920,114
        Accumulated other comprehensive
         income                                  5,355,898         5,337,003
        Retained earnings                       36,402,913        29,201,661
        Total stockholders' equity              91,201,946        83,899,209
    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                    $95,334,255       $94,694,417



            CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

    (Unaudited)                          For The Three Months Ended March 31,
                                                  2009              2008
    Sales                                      $58,658,668       $35,560,840
    Cost of goods sold                          50,981,714        30,547,663
    Gross profit                                 7,676,954         5,013,177
    Selling, general and administrative
     expenses                                      555,849           319,806

    Income from operations                       7,121,105         4,693,371
    Non-operating income (expenses)
        Interest expenses                          (33,518)          (28,271)
        Subsidy income                             116,964                --
        Other expense                               (3,299)             (195)
        Stock based compensation - make
         good provision                                 --                --
        Total non-operating expenses                80,147           (28,466)
    Net income                                   7,201,252         4,664,905
    Other comprehensive item
        Foreign currency translation gain          (50,784)        1,243,160
    Comprehensive Income                        $7,150,468        $5,908,065
    Basic and diluted weighted average
     shares outstanding
    Basic                                       27,169,091        25,454,545
    Diluted                                     34,622,712        31,459,006
    Basic and diluted net earnings per
     share available to common
     stockholders
    Basic                                            $0.27             $0.18
    Diluted                                          $0.21             $0.15



          CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND ITS SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

    (Unaudited)               Preferred stock               Common stock
                            Shares       Amount         Shares         Amount

    Balance at
     December 31, 2006          --           --     23,954,545          2,395
    Capital
     contribution               --           --             --             --
    Recapitalization
     on reverse
     acquisition                --           --      1,500,000            150
    Shares issued for
     cash                1,000,000        1,000             --             --
    Net income for the
     year                       --           --             --             --
    Transfer to
     statutory
     reserves                   --           --             --             --
    Foreign currency
     translation gain           --           --             --             --
    Balance at
     December 31, 2007   1,000,000        1,000     25,454,545          2,545
    Preferred shares
     issued for cash     2,465,753        2,465             --             --
    Warrant exercised           --           --      1,704,546            170
    Employee stock
     issued                     --           --         10,000              1
    Net income for the
     year                       --           --             --             --
    Beneficial
     Conversion -
     Deemed dividend            --           --             --             --
    Stock-based
     compensation -
     Make good
     provision                  --           --             --             --
    Transfer to
     statutory
     reserves                   --           --             --             --
    Foreign currency
     translation gain           --           --             --             --
    Balance at
     December 31, 2008   3,465,753       $3,465     27,169,091         $2,716
    Shares issued to
     employees                  --           --             --             --
    Stock purchase
     option -
     directors                  --           --             --             --
    Net income for the
     period                     --           --             --             --
    Foreign currency
     translation gain
     (loss)                     --           --             --             --
    Balance at March
     31, 2009            3,465,753        3,465     27,169,091          2,716


                        Additional                       Other
                           paid in    Statutory  comprehensive
                           capital     reserves         income
    Balance at
     December 31, 2006   2,533,837    1,110,374        624,806
    Capital
     contribution        3,905,724           --             --
    Recapitalization
     on reverse
     acquisition              (150)          --             --
    Shares issued for
     cash               13,172,527           --             --
    Net income for the
     year                       --           --             --
    Transfer to
     statutory
     reserves                   --      940,656             --
    Foreign currency
     translation gain           --           --      1,694,926
    Balance at
     December 31, 2007  19,611,938    2,051,030      2,319,732
    Preferred shares
     issued for cash     8,997,535           --             --
    Warrant exercised    5,113,465           --             --
    Employee stock
     issued                  9,944           --             --
    Net income for the
     year                       --           --             --
    Beneficial
     Conversion -
     Deemed dividend       863,014           --             --
    Stock-based
     compensation -
     Make good
     provision           9,838,354           --             --
    Transfer to
     statutory
     reserves                   --    2,869,084             --
    Foreign currency
     translation gain           --           --      3,017,271
    Balance at
     December 31, 2008 $44,434,250   $4,920,114     $5,337,003
    Shares issued to
     employees              19,890           --             --
    Stock purchase
     option -
     directors              62,700           --             --
    Net income for the
     period                     --           --             --
    Foreign currency
     translation gain
     (loss)                     --           --         18,895
    Balance at March
     31, 2009           44,516,840    4,920,114      5,355,898


                                            Total
                           Retained  stockholders'
                           earnings        equity
    Balance at
     December 31, 2006    9,969,017    14,240,429
    Capital
     contribution                --     3,905,724
    Recapitalization
     on reverse
     acquisition                 --            --
    Shares issued for
     cash                (3,398,534)    9,774,993
    Net income for the
     year                 8,579,565     8,579,565
    Transfer to
     statutory
     reserves              (940,656)           --
    Foreign currency
     translation gain            --     1,694,926
    Balance at
     December 31, 2007   14,209,392    38,195,637
    Preferred shares
     issued for cash             --     9,000,000
    Warrant exercised            --     5,113,635
    Employee stock
     issued                      --         9,945
    Net income for the
     year                18,724,367    18,724,367
    Beneficial
     Conversion -
     Deemed dividend       (863,014)           --
    Stock-based
     compensation -
     Make good
     provision                   --     9,838,354
    Transfer to
     statutory
     reserves            (2,869,084)           --
    Foreign currency
     translation gain            --     3,017,271
    Balance at
     December 31, 2008  $29,201,661   $83,899,209
    Shares issued to
     employees                   --        19,890
    Stock purchase
     option -
     directors                   --        62,700
    Net income for the
     period               7,201,252     7,201,252
    Foreign currency
     translation gain
     (loss)                      --        18,895
    Balance at March
     31, 2009            36,402,913    91,201,946



            CHINA BIO ENERGY HOLDING GROUP CO., LTD. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOW

    (Unaudited)                          For The Three Months Ended March 31,
                                                    2009               2008
    CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income                               $7,201,252        $4,664,905
        Adjustments to reconcile net
         income to net cash provided by
         (used in) operating activities:
        Depreciation                                292,744           225,045
        Stock based compensation                     82,590                --
        (Increase) decrease in current
         assets:
        Accounts receivable                       2,597,481        (5,481,284)
        Other receivables, deposits and
         prepaid expenses                         4,112,288           251,082
        Advance to suppliers                      2,478,674         2,279,926
        Inventories                               1,627,802           162,999
        Due from related party                           --           (38,069)
        Increase (decrease) in current
         liabilities:
        Accounts payable                                 --          (182,927)
        Advance from customers                   (3,703,649)        1,421,163
        Taxes payable                                84,725           156,005
        Other payables and accrued
         expenses                                (3,025,122)       (2,384,782)
        Net cash provided by (used in)
         operating activities                    11,748,785         1,074,063

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Sale of investment                               --                --
        Acquisition of property and
         equipment                                   (3,324)          (82,235)
        Construction in progress                         --          (865,607)
        Net cash used in investing
         activities                                  (3,324)         (947,842)

    CASH FLOWS FROM FINANCING ACTIVITIES:
        Restricted cash released                    522,500                --
        Repayment of auto loans long term
         notes payable                              (14,473)          (12,783)
        Net cash provided by financing
         activities                                 508,027           (12,783)

    EFFECT OF EXCHANGE RATE CHANGE ON
     CASH AND CASH EQUIVALENTS                       14,086            56,410
    NET INCREASE IN CASH AND CASH
     EQUIVALENTS                                 12,267,574           169,848
    CASH AND CASH EQUIVALENTS, BEGINNING
     OF YEAR                                     23,119,028         1,382,371
    CASH AND CASH EQUIVALENTS, END OF
     YEAR                                       $35,386,602        $1,552,219
    Supplemental Cash flow data:
        Income tax paid                                 $--               $--
        Interest paid                               $38,372           $27,658

SOURCE China Bio Energy Holdings Group


Source: PR Newswire (May 13, 2009 - 4:51 PM EDT)

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