BEIJING, Aug. 15 /Xinhua-PRNewswire-FirstCall/ -- Sinoenergy Corporation (Nasdaq: SNEN - News), ("Sinoenergy" or the "Company"), a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment and a designer, developer and operator of retail CNG filling stations in the People's Republic of China (PRC), today announced financial results for the quarter and nine months ended June 30, 2008.

Net revenue was $10.2 million in the third quarter of 2008, an increase of 65.1% from the third quarter of 2007

Gross profit was $3.9 million in the third quarter of 2008, an increase of 22.2% from the third quarter of 2007

Net income was $4.0 million in the third quarter of 2008, an increase of 106.4% from the third quarter of 2007, or$0.26 and $0.24 per basic and diluted share

Received a $17.87 million strategic investment from a group of investors into Sinoenergy's subsidiary Qingdao Sinogas General Machinery ("Qingdao Sinogas")

Opened a new retail CNG filling station and completed construction of another new retail CNG filling station, both in Pingdingshan city, Henan province

Sold ownership of Giant Power International, Limited ("GPI") to Greka SNU, Ltd. for $10.68 million, resulting in a $1.7 million pre-tax gain

Engaged Grobstein, Horwath & Company as independent registered accounting firm

Appointed Ms. Lan Gu as new CFO

"The third quarter was a successful period with remarkable financial performance and significant business developments for Sinoenergy. We continued our strong growth with record quarterly revenue, resulting mostly from the rapid growth of our CNG equipment manufacturing business. The successful disposal of GPI provided us with a good return on investment and additional capital to devote to developing our CNG processing plants and filling station network," said Mr. Bo Huang, CEO of Sinoenergy Corporation. "We restructured our subsidiaries along business functions and our Qingdao Sinogas subsidiary benefited from an $18 million dollar investment, a portion of which will be used to establish a new production line for steel containers," continued Mr. Huang. "Shortly after the end of the quarter, we began trading on the Nasdaq Capital Market, an important step in increasing our presence in the investment community."

Total revenue was $10.2 million in the quarter ended June 30, 2008, a 65.1% increase from $6.2 million in the quarter ended June 30, 2007. Revenue increased mostly because of an increase in sales of CNG station facilities, including transport trailers used for hauling CNG, which generated revenue of $5.3 million, or 51.6% of revenues in the quarter, compared to $2.3 million and 37.9% of revenues in the quarter ended June 30, 2007. Revenue from the vehicle conversion kits business and non-standard pressure container business was approximately $2.7 million and $1.7 million respectively in the quarter ended June 30, 2008. The Company's retail CNG filling station operations generated $542,000 in revenue in the quarter.

Overall gross margin was 38.4% in the quarter, compared to 51.9% in the quarter ended June 30, 2007. Overall margin decreased because gross margin for the CNG station facilities and construction segment was 39.0% in the quarter ended June 30, 2008, compared to 71.0% in the quarter ended June 30, 2007. Such decline was mainly due to the increasing internal demands for technical consulting services from Sinoenergy's CNG filling station business, which has decreased the Company's focus on providing higher margin technical consulting services to third parties in the quarter ended June 30, 2008. Gross margin in the conversion kit business and retail CNG filling station operation was 33.0% and 38% respectively, and gross margin for the non-standard pressure container business was 46.0% in the quarter ended June 30, 2008.

During the quarter ended June 30, 2008, the Company earned $1.3 million in rental income, net of amortized land-use rights, from leasing its facility located in the center of the city of Qingdao. Sinoenergy also recorded a $1.7 million gain on the sale of investment due to the disposition of GPI. Both sources of income are classified under other income in the Company's condensed consolidated financial statement of operations. The Company did not earn any rental income or have an investment gain a year earlier.

Net revenue was $26.7 million in the nine months ended June 30, 2007, up 133.9% from $11.4 million in the nine months ended June 30, 2007. Gross profit was $11.6 million, 43.2% gross margin, up 94.5% from $5.9 million, 52.0% gross margin, in the nine months ended June 30, 2007. Operating income was $8.1 million, 30.1% operating margin, up 122.1% from $3.6 million, 31.7% operating margin, in the nine months ended June 30, 2007. Net income was $9.2 million, or $0.54 per diluted share, up 169.0% from $3.4 million, or $0.26 per diluted share, in the nine months ended June 30, 2007.

As of June 30, 2008, cash was $17.0 million, up from $3.3 million as of September 30, 2007. The Company had working capital of $11.1 million. Total liabilities, including short term bank loans and other short term credit instruments, were $74.6 million. Stockholders' equity totaled $51.0 million as of June 30, 2008, compared to $32.7 million as of September 30, 2007. Net cash used in operating activities was $ -$4.4 million in the nine months ended June 30, 2008.

In July, the Company completed a 1-for-2 reverse split of its Common Stock. Sinoenergy's application to list its common stock on The Nasdaq Capital Market was approved and the Company's stock began trading on The Nasdaq Capital Market under the ticker symbol "SNEN." Prior to listing on The Nasdaq Capital Market, the Company's common stock was traded through the OTC Bulletin Board.

In August, the Company announced its plans to open an additional 20 retail CNG filling stations in the city of Wuhan by the end of calendar year 2008. Sinoenergy currently operates 8 retail CNG filling stations in the city of Wuhan. The Company plans to have a total of 28 retail CNG filling stations operating in the city of Wuhan by the end of calendar year 2008. The Company also plans to start the construction of another 10 new retail CNG filling stations by the end of 2008 which should be completed and begin operations in 2009.

In August, the Company announced that it has signed a share exchange agreement with China New Energy Development Investment Co., Ltd to exchange ownership between the two party's jointly established companies, Hubei Gather Energy Co., Ltd (Hubei Gather) located in Wuhan City and Anhui Gather Energy Co., Ltd (Anhui Gather) located in Wuhu City. Sinoenergy will transfer 25% of its ownership of Anhui Gather to China New Energy, and China New Energy will transfer 25% of its ownership of Wuhan Gather to Sinoenergy. Sinoenergy will have 80% ownership of Hubei Gather which will enhance the Company's control over Hubei Gather and further guarantee the CNG supply to the Company's rapidly growing network of CNG filling stations in Wuhan city.

"We feel confident that our CNG station equipment business, conversion kits business, and non-standard pressure container businesses will continue their robust growth in the fourth quarter of our 2008 fiscal year. Our working capital, together with cash flow generated from our operations, provides us with the funds necessary to continue developing our retail CNG filling station business," said Mr. Huang. "By opening four new CNG filling stations in July, Sinoenergy now has a total of eleven retail CNG filling stations in operation. Based on solid support from local government, we expect to accelerate our CNG filling station development in Wuhan city in the rest of calendar year 2008."

The Company will host a conference call at 10:00 a.m. Eastern Time on Friday, August 15, 2008 to discuss results for the quarter ended June 30, 2008. To participate in this live conference call, please dial 888-419-5570 five to ten minutes prior to the scheduled conference call time. International callers should dial 617-896-9871. The conference Passcode is 498 347 61. For those who are unable to participate in the conference call at the time of the call, a replay will be available for fourteen days starting on Friday, August 15, at 12:00 p.m. Eastern Time. To access the replay, please dial 888-286-8010. International callers should dial 617-801-6888. The replay Passcode is 498 347 61.

Sinoenergy is a manufacturer of compressed natural gas (CNG) vehicle and gas station equipment as well as a designer, developer and operator of retail CNG stations in China. In addition to its CNG related products, the Company also manufactures a wide variety of pressure containers for use in different industries, including the design and manufacture of various types of pressure containers in the petroleum and chemical industries, the metallurgy and electricity generation industries and the food and brewery industries.

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statements reflect our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

	Three Months Ended				Nine Months Ended
	June 30				June 30,
	2008		2007		2008		2007
NET REVENUE	$	10,204	$	6,181	$	26,745	$	11,436
COST OF REVENUE		-6,283		-2,972		-15,190		-5,494
GROSS PROFIT		3,921		3,209		11,555		5,942

OPERATING EXPENSES
Selling expenses		246		65		540		143
General and administrative expenses		988		928		2,963		2,175
TOTAL OPERATING EXPENSES		1,234		993		3,503		2,318

INCOME FROM OPERATIONS		2,687		2,216		8,052		3,624

OTHER INCOME (EXPENSE)
Rental income, net of land right
amortization of $60 and $118		1,318		--		2,503
Gain on sale of investment		1,737		--		1,737
Earning (loss) from non-consolidated
affiliates		-6				97
Other, net		-297		--		-150		35
Interest expense, net of capitalized
interest of $542 and $1,334 in 2008		-217		-123		-1,497		-241
Estimated liquidated damages payable
under registration rights agreement		-513		--		-653
OTHER INCOME (EXPENSE), NET		2,022		-123		2,037		-206

INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST		4,709		2,093		10,089		3,418
Provision (benefit) for income taxes		-677		-44		-722		65
INCOME BEFORE MINORITY INTEREST		4,032		2,049		9,367		3,483
Minority interest		-16		-103		-189		-71
NET INCOME	$	4,016	$	1,946	$	9,178	$	3,412

Other comprehensive income
Foreign currency translation
adjustments		1,422		177		5,155		374
COMPREHENSIVE INCOME	$	5,438	$	2,123	$	14,333	$	3,786
Net Income Per Common Share
Basic	$	0.26	$	0.14	$	0.58	$	0.34
Diluted	$	0.24	$	0.13	$	0.54	$	0.26

Weighted Average Common Shares
Outstanding
Basic		15,709		13,890		15,709		9,981
Diluted		19,619		14,579		16,950		13,261

Sinoenergy Corporation and Subsidiaries
Consolidated Balance Sheet
(In thousands of US Dollars)

	June 30, 2008		September 30,2007
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	17,021	$	3,322
Restricted cash				1,225
Accounts receivable, net		19,920		5,827
Other receivables		11,939		501
Due from related parties		42		3,754
Note subscription receivable
(received October 2007)				29,840
Deposits and prepayments		4,394		2,795
Deferred expenses		169		58
Inventories		5,436		2,901
TOTAL CURRENT ASSETS		58,921		50,223

LONG TERM ASSETS
Long-term investments		3,187		1,592
Property, plant and equipment, net		24,995		8,388
Intangible assets, net		30,882		18,531
Other long-term assets		7,759		9,603
Goodwill		1,351		729
TOTAL ASSETS	$	127,095	$	89,066

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank loan	$	11,663	$	14,843
Accounts payable		5,847		3,166
Notes payable				799
Other payables		7,710		1,502
Payable to investors in subsidiary		14,590		3,679
Due to related parties		2,193
Accrued expenses		423		395
Accrued interest payable		1,341
Advances from customers		2,722		1,035
Estimated liquidated damages payable
under registration rights agreement		653
Income taxes payable		690		119
TOTAL CURRENT LIABILITIES		47,832		25,538

LONG-TERM LIABILITIES
12% senior notes, net of discount of
$321 at June 30, 2008 and $378 at
September 30, 2007 3% senior		15,679		15,622
convertible notes, net of
discount of $3,324 at June 30, 2008
and $177 at September 30, 2007		11,053		13,823
TOTAL LIABILITIES		74,564		54,983

Minority interest		1,552		1,363
Commitments

STOCKHOLDERS' EQUITY
Common stock -- par value $0.001 per
share; Authorized -- 50,000,000
shares; issued and outstanding --
15,709,033 shares at June 30, 2008
and September 30, 2007		16		16
Additional paid-in capital		25,941		22,015
Capital surplus		20		20
Statutory surplus reserve fund		1,140		1,140
Retained earnings		17,394		8,217
Accumulated other comprehensive
income		6,467		1,312
Total stockholders' equity		50,979		32,720
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY	$	127,095	$	89,066

Sinoenergy Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In thousands US dollars)

	Nine Months Ended June 30
	2008		2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		9,178		3,412
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on sale of investment		-1,737
Warrants issued for services		64		67
Stock options granted		310		345
Amortization of note discount		270
Non-cash portion of interest expense		1,719
Earnings from non-consolidated
affiliates		-97
Minority interest		189		72
Depreciation		492		348
Amortization of intangible assets		1,538		197
Provision for (recovery of) doubtful
accounts		-1		83
Changes in operating assets and
liabilities:

(Increase) decrease in --
Accounts receivable	-13,954	-1,094
Other receivables, deposits and
prepayments	-9,574	-1,418
Inventories	-2,535	-395

Increase (decrease) in --
Accounts payable	1,882	848
Accrued expenses	28	55
Deferred expenses		-13
Advances from customers	1,687	2,277
Other payables	4,915	-538
Estimated liquidated damages
payable under registration
rights agreement	653
Income taxes payable	571	28
Net cash provided by (used in)
operating activities	-4,402	4,274

CASH FLOWS FROM INVESTING ACTIVITES
Payable to investors in subsidiary	14,590
Purchase of property, plant and
equipment	-15,255	-5,468
Purchase of land use right	-13,889	-6,718
Purchase of minority interest in
subsidiaries	-1,595	-2,684
Net proceeds related to investment
activities	1,210
Net cash used in investing activities	-14,939	-14,870

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from note
subscription receivable	29,840
Proceeds from bank loan		1,342
Cash received from exercise of
warrants		11,725
Payments on bank loan	-3,180
Net cash provided by financing
activities	26,660	13,067

Effect on cash of changes in exchange
rate	5,155	206

Net increase (decrease) in cash	12,474	2,674
Cash at beginning of period	4,547	2,218
Cash at end of period	17,021	4,892

Supplemental disclosure of cash flow
information
Interest paid	1,322	242
Income taxes paid	172	-858