Sinoenergy Corporation Announces Fourth Quarter and 2008 Fiscal Year End Results

BEIJING, Dec. 24 /PRNewswire-Asia-FirstCall/ — Sinoenergy Corporation
(Nasdaq: SNEN) (“Sinoenergy” or the “Company”), developer and operator of
retail Compressed Natural Gas (CNG) filling stations in the People’s Republic
of China, and a manufacturer of CNG transport truck trailers, CNG filling
station equipment and CNG conversion kits for automobiles, today announced its
financial results for the fourth quarter and year ended September 30, 2008.

    Fiscal 2008 Highlights
    -- Net Sales increased 120.7% to $40.94 million for the period
    -- Gross Profit increased 61.1% to $15.35 million, reflecting a Gross
       Margin of 37.5%
    -- Net Income increased 237.6 %to $16.06 million
    -- Basic Earnings Per Share of common stock increased from $0.28 to $1.02
       and Diluted Earnings Per Share increased from $0.27 to $0.98

    Fourth Quarter 2008 Highlights (un-audited)
    -- Fourth quarter Net Sales increased 99.5% from the September quarter of
       2007 to a record $14.20 million
    -- Fourth quarter Gross Profit increased 5.8% from the September quarter
       of 2007 to $3.80 million
    -- Fourth quarter Net Income increased 411.4% from the September quarter
       of 2007 to $6.88 million, or $0.44 per share basic and $0.36 per share
       diluted

    Significant Issues Highlights
    -- Received a $17.87 million strategic investment from a group of PRC
       investors into Sinoenergy's subsidiary Qingdao Sinogas General
       Machinery ("Qingdao Sinogas")
    -- Approved to trade on the NASDAQ Capital Market
    -- Opened 16 CNG retail filling stations spread across 9 locations in
       Wuhan, Ping Ding Shan and Xuancheng

Commenting on the results, Mr. Bo Huang, CEO of Sinoenergy, said: “We are
pleased to report another successful year for Sinoenergy in which we
implemented our strategic plan for growth and diversification while generating
positive financial results. Our CNG stations began generating revenue in the
first quarter of this fiscal year and the CNG sales are ramping up to around
120,000 cubic meters per day for a total of 16 stations in operation as of
September 30, 2008. Our sales in CNG transport equipment and conversion kits
segments reached record highs as we benefited from increased demand from
domestic natural gas transport companies and vehicle conversions to natural
gas. In particular, our truck trailer business has been receiving a steady
stream of orders.

In July of 2008, Sinoenergy successfully began trading on Nasdaq Capital
Market, which raised our corporate profile and marked a significant milestone
in our ongoing efforts to expand our presence in the investment community and
commitment to enhancing shareholders value. In the process we hope we have
made valuable contribution, however small, in focusing attention on the
importance of CNG as an alternative source of energy in China.”

Fourth Quarter 2008 Results

For the fourth quarter ending September 30, 2008, the net sales increased
by 99.5% to $14.20 million, up from $7.08 million in the comparable quarter in
2007. Almost 50% of the increase in cash flow was from the CNG retail sales
and the balance of the increase was from the sales of CNG equipment.

Gross profit for the fourth quarter of 2008 increased 5.8% from the
comparable quarter of 2007 to $3.80 million.

Operating expenses in the fourth quarter of 2008 were $2.27 million, an
increase of 16.4% from $1.95 million in the September quarter of 2007.

Operating income for the fourth quarter was $1.53 million, a decrease of
6.9% from $1.64 million in the September quarter of 2007.

Net income was $6.88 million in the quarter ending September 30, 2008, as
compared with net income of $1.35 million for the same period in 2007,
including $5.63 million other income from the sale of 24.95% equity of
subsidiary Qingdao Sinogas.

2008 Full-Year Results

Net sales for the full year ending September 30, 2008 were approximately
$40.94 million, a 120.7% increase from net revenue of approximately $18.55
million for the 12 months that ended on September 30, 2007. This increase
resulted primarily from the increased business of our CNG equipment
manufacturing segment which was $19.14 million, an increase of 103.2% year
over year. Additionally, retail sales of CNG generated revenue of $3.25
million.

Gross profit for this period was $15.35 million, an increase of 61.1% from
$9.53million in the 12 months that ended September 30, 2007.

The overall gross margin of 37.5% for this period was lower than that from
the same period in 2007 which was 49%. The decrease in gross margin for the
full year ending September 30, 2008 was the result of decrease in orders for
processing customers’ materials in our customized pressure containers business
segment and a reduction of higher margined CNG station technical consulting
services in CNG station facility and construction business segment as we shift
our strength in this segment to the development and construction of our own
CNG filling stations.

Operating expenses were approximately $5.77 million for the full year
ending September 30, 2008, an increase of $1.50 million, or 35.4%, from the 12
months that ended September 30, 2007.

Operating income was $9.58 million, up 81.8% from $5.27 million in the 12
months ending September 30, 2007. For the CNG sales, there was $499,000
operating loss due to one-time amortization on expenses incurred prior to
stations operation and accrued expenses on financing.

Net income was $16.06 million for the 12 months ended September 30, 2008
compared to net income of $4.76 million in the same period in 2007. The net
income included gain of $5.63 million from the sale of 24.95% equity of
subsidiary Qingdao Sinogas to a group of PRC strategic investors.

Financial Condition

As of September 30, 2008, cash totaled $9.39 million compared to $4.55
million as of September 30, 2007. Working capital as of September 30, 2008 was
$35 million. Current liabilities were $28.71 million, and long term
liabilities were $34 million. Stockholders’ equity totaled $55.23 million,
compared to $32.72 million as of September 30, 2007.

Outlook

As of September 30, 2008, Sinoenergy has a total of 16 standard stations
over 9 locations opened and operating, in which 11 are located in Wuhan, 2 are
located in Ping Ding Shan and 3 are located in Xuancheng. 3 Additional
stations are in the commissioning process currently in Wuhan and should begin
operations shortly. By the end of 2009, 24 new standard filling stations will
be opened, of which 22 will be located in Wuhan and 2 will be located in Ping
Ding Shan. A total of 43 standard filling stations are projected to be opened
by the end of 2009.

Significant Events

On January 28, 2008, Sinoenergy signed a purchase agreement to acquire
Qingdao Shan Yang Tai Chemistry Resources Development Co., Ltd. (“QSYT”) for
$5.33 million for its only asset: A 1.1 million square foot plot of land with
an unfinished 35,067 square foot plant on it.

On March 31, 2008, Sinogas, a majority-owned subsidiary of Sinoenergy,
leased out its facility in the center of Qingdao City for RMB 40 million per
year with a 3-year term starting from January 2008 and moved its current
operations to a facility acquired by Sinoenergy through its purchase of
Qingdao Jingrun General Machinery Company (“Jingrun”).

On June 6, 2008, Sinoenergy engaged Ernst & Young (China) Advisory Limited,
Beijing Office (“EY Beijing”) to assist the company to comply with
Sarbanes-Oxley Act Section 404 requirements. The engagement lasts through the
end of October 2009.

On July 30, 2008, Qingdao Sinogas, a majority-owned subsidiary of
Sinoenergy, received 2 significant orders from 2 natural gas transport
companies for a total of 80 CNG transport truck trailers.

On August 12, 2008, Sinoenergy signed a share exchange agreement with
China New Energy Development Co. Ltd. to exchange part of the ownership
between the two parties’ jointly established companies, Hubei Gather Energy
Co., Ltd (“Hubei Gather”) and Anhui Gather Energy Co., Ltd (“Anhui Gather”).
According to the share exchange agreement, Sinoenergy will transfer 25% of its
ownership of Anhui Gather to China New Energy. In return, China New Energy
will transfer 25% of its ownership of Wuhan Gather to Sinoenergy. Following
the transaction completed by the end of August 2008 on non-cash basis,
Sinoenergy now holds 80% and 20% ownership in Hubei Gather and Anhui Gather
respectively.

About Sinoenergy

Sinoenergy is a developer and operator of retail CNG stations as well as a
manufacturer of compressed natural gas (CNG) transport truck trailers, CNG
station equipment, and natural gas fuel conversion kits for automobiles in
China. In addition to its CNG related products and services, the Company
designs and manufactures a wide variety of customized pressure containers for
use in the petroleum and chemical industries.

Forward-Looking Statements

Statements in this press release include “forward-looking statements.”
Forward-looking statements include, but are not limited to, statements that
express our intentions, beliefs, expectations, strategies, predictions or any
other statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Undue reliance should not be placed 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.
Therefore, actual outcomes and results may, and are likely to, differ
materially from what is expressed or forecasted in the forward-looking
statements due to numerous factors, including those described above and those
risks discussed from time to time in this press release, including the risks
described under “Risk Factors,” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our report on Form 10-KSB
for the period ended September 30, 2008 and in other filings we make with the
SEC. In addition, such statements could be affected by risks and uncertainties
related to the ability to conduct business in the PRC, product demand,
including the both the supply and demand for CNG, the ability of our CNG
suppliers to provide us with natural gas in the quantities that we may require,
our ability to develop, construct and operate a CNG station business, our
ability to raise any financing which we may require for our operations,
competition, government regulations and requirements, pricing and development
difficulties, including the effect of price controls on our business, our
ability to make acquisitions and successfully integrate those acquisitions
with our business, as well as general industry and market conditions and
growth rates, and general economic conditions. Any forward-looking statements
speak only as of the date on which they are made, and we do not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this press release. 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.

                          -FINANCIAL TABLES FOLLOW-



                   Sinoenergy Corporation and Subsidiaries
                          Consolidated Balance Sheets
                          (In thousands of US dollars)

                                12 Months Ended            9 Months Ended
                             September 30, 2008        September 30, 2007

    ASSETS
    CURRENT ASSETS
    Cash                                  $8,871                    $3,322
    Restricted cash                          523                     1,225
    Accounts
     receivable, net                      22,008                     5,996
    Other receivable,
     net                                  16,983                     4,086
    Note subscription
     receivable                               --                    29,840
    Deposits and
     prepayments                           7,918                     2,795
    Inventories                            7,303                     2,901
    Deferred expenses                         91                        58
    TOTAL CURRENT
     ASSETS                               63,697                    50,223

    Long-term
     investments                           1,568                     1,592
    Property, plant
     and equipment,
     net                                  30,298                     8,388
    Intangible assets                     27,591                    18,531
    Due from related
     party                                   383                        --
    Other long term
     asset                                 6,891                     9,599
    Goodwill                               1,906                       729
    Deferred tax asset                        13                         4
    TOTAL NON-CURRENT
     ASSETS                               68,650                    38,843

    TOTAL ASSETS                        $132,347                   $89,066

    CURRENT
     LIABILITIES
    Short-term bank
     loan                                $11,953                   $14,843
    Notes payable                          1,633                       799
    Accounts payable                       5,894                     3,166
    Advances from
     customers                             2,409                     1,035
    Additional
     interest payable
     under convertible
     note indenture                          420                        --
    Income taxes
     payable                                 633                       119
    Other payables                         5,341                     5,181
    Accrued expenses                         335                       395
    Deferred income                           95                        --
    TOTAL CURRENT
     LIABILITIES                          28,713                    25,538

    Long-term notes
     payable                              29,251                    29,445
    Long-term loans                        3,667                        --
    Deferred tax
     liabilities                           1,095                        --
    TOTAL LIABILITIES                     62,726                    54,983

    Minority interests                    14,394                     1,363
    Commitments

    SHAREHOLDERS'
     EQUITY
    Common stock- par
     value $0.001 per
     share; Authorized
     - 50,000,000
     shares; Issued
     and outstanding-
     15,942,336 shares
     at September 30,
     2008 and
     15,709,033 at
     September 30,
     2007                                     16                        16
    Additional paid-in
     capital                              30,396                    23,175
    Retained earnings                     19,953                     8,217
    Accumulated other
     comprehensive
     income                                4,862                     1,312

    TOTAL
     SHAREHOLDERS'
     EQUITY                               55,227                    32,720

    TOTAL LIABILITIES
     AND SHAREHOLDERS'
     EQUITY                             $132,347                   $89,066




     Sinoenergy Corporation and Subsidiaries Consolidated Statements of
                                  Operations
                         (in thousands of US dollars)


                                          12 months Ended   3 Months Ended
                                             September 30     September 30
                                            2007     2008    2007     2008

    NET SALES                             18,552   40,940   7,116   14,195
    COST OF SALES                         (9,021) (25,589) (3,527) (10,399)
    GROSS PROFIT                           9,531   15,351   3,589    3,796

    OPERATING EXPENSES
    Selling expenses                         272      881     129      341
    General and administrative expenses    3,994    4,889   1,819    1,926

    TOTAL OPERATING EXPENSES               4,266    5,770   1,948    2,267

    INCOME FROM OPERATIONS                 5,265    9,581   1,641    1,529

    OTHER INCOME(EXPENSES)
    Rental income, net of land right
     amortization of $176                     --    3,836      --    1,333
    Gain on sale of equity of subsidiary      --    7,367      --    5,630
    Interest income                           13      126      13      126
    Interest expenses                       (371)  (1,783)   (130)    (286)
    Other expenses, net                       34     (260)     (1)    (207)
    Estimated additional interest payable
     under convertible note indenture         --      (420)    --      233
    OTHER EXPENSES, NET                     (324)   8,866    (118)   6,829

    INCOME BEFORE INCOME TAXES             4,941   18,447   1,523    8,358

    Less: income taxes                        79    1,309     144      587
    Minority interest                        106    1,082      34      893

    NET INCOME                             4,756   16,056   1,345    6,878

    Other comprehensive income
    Foreign currency translation
     adjustments                             931    3,550     767   (1,605)
    COMPREHENSIVE INCOME                   5,687   19,606   2,112    5,273



    For further information, please contact:

    Sinoenergy Corporation
     Mr. Shiao Ming Sheng, CFO
     Tel:   +86-10-8492-8149
     Email: sheng@sinoenergycorporation.com
     Web:  http://www.sinoenergycorporation.com

    CCG Elite Investor Relations Inc.
     Mr. Crocker Coulson, President
     Tel:   +1-646-213-1915 (New York)
     Email: crocker.coulson@ccgir.com
     Web:  http://www.ccgelite.com

[Via http://www.prnewswire.com]

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