China Sunsine Chemicals Holdings

The recent inspection of China Sunsine was conducted by the Ministry of Environmental Protection. In May 2016, the Central Government took upon itself the task, making roving visits to various provinces, instead of leaving inspections entirely to environmental protection agencies of the local authorities. 

Central Government's involvement underscores the importance of arresting the deteriorating trend of industrial pollution.

Sunsine's clarification statement reveals the urgency for factories to improve their pollution monitoring systems. On 24 February 2017 the local Environmental Protection Agency gave factories barely three months (with 31 May 2017 as the deadline) for installation and operation of on-line monitoring equipment on chimneys. 

Sunsine has disclosed that "[w]hen the Inspection Team visited.....on 20 May 2017....., [the company] has already bought the Equipment and completed the construction of the auxiliary facilities for installation of the Equipment. The vendor is organizing personnel to install the Equipment to ensure that it is operational in accordance with the Circular and Notice, by 31 May 2017."

It is of interest to note that the chimney, which is tall, is intended for dispersion of hydrogen sulphide, a toxic gas, at high altitude. However, Sunsine converts 99.5% of the gas into sulpher and steam. (Page 17 of the sustainability report)   

Sorry, based on memory and do not have exact figures. Definitely less than 5% of total costs.

Buffet purchase of Sunsine's competitor will stir up interest in Sunsine?
https://www.reuters.com/article/us-lanxe...SKBN18P0RG

I refer to page 220 of Kemai's IPO prospectus.
On October 2015, Tianjin Kemai's Inner Mongolia plant was fined a total of 160,000 RMB for 4 environmental violations.
On March 2016, Tianjin Kemai's Tainjin plant was issued a stop work order by the government after a site accident which involved killed 1 worker and injured 2 others.

Sunsine clarified in its announcement that it "weaknesses identified by the Inspection Team does not amount to any breach of Environmental Protection Laws" and "No stop or suspension order was issued by the Inspection Team or the local authorities, nor was the production of Shandong Sunsine affected in any way."

Taking Kemai's violations into perspective, Sunsine weaknesses is minor and manageable.

We should take a relative approach to assessing environmental compliance as no company will be 100% compliant all the time without any shortfalls. As long as Sunsine remains ahead of its competitors in environmental compliance, they will be the last to stop production due to environmental/safety issues.

To give an analogy : If a child does not score 100/100 in a test, does that mean he has failed ? He might not get full marks, but as long as he is constantly first in class, we can be assured that should a hard test come one day, he will be the last to fail.

(30-05-2017, 09:56 AM)DCF Wrote: Buffet purchase of Sunsine's competitor will stir up interest in Sunsine?
https://www.reuters.com/article/us-lanxe...SKBN18P0RG

Strictly speaking, Buffett didnt directly pick the company. It is Berkshire Hathaway's insurance arm General Re that bought it and General Re should have its own CIO i suppose.

Residents of Shanxian County (单县) most likely have provided feedback to the Shanxian Environmental Protection Agency regarding waste water pollution matters in the County resulting in the Agency issuing a statement yesterday.

The Agency in its response mentioned that Sunsine has invested RMB 150 mil in its waste water treatment facilities and is satisfied that the waste water is properly treated.

The statement is available at: http://mp.weixin.qq.com/s/w31oxt6cxx_5PcDhH3r4Sw

Sunsine has released their response last night:


UPDATE ON RECTIFICATION ACTIONS CARRIED OUT BY SHANDONG SUNSINE
Unless otherwise defined, all capitalised terms herein shall bear the same meanings as the announcement made by the Company on 29 May 2017.
The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and together with its subsidiaries, collectively the “Group”) refers to the Company's announcement made on 29 May 2017, and wishes to update shareholders on the progress of rectification works carried out to-date by Shandong Sunsine.
The Board is pleased to inform that the on-line monitoring equipment has been installed at the chimney used in the recycling of sulphur at Shandong Sunsine, and has commenced operations as of 31 May 2017. The Group wishes to reassure all stakeholders that it takes environmental protection measures very seriously, and meeting the deadline imposed by the Heze Environmental Protection Agency is a testament to our commitment in ensuring compliance with environmental protection laws and regulations. The Group will continue to improve and strengthen its on-site management work, including taking appropriate measures to avoid exposure of harmful chemicals, stepping up staff training and increasing environmental awareness of its staff, among others.
The Board also wishes to report that all other weaknesses highlighted by the Inspection Team will be mitigated or rectified in due course. The Group has always placed environmental protection as its top priority and will continue to vigilantly monitor its operations, and implement such other environmental protection measures as may be necessary to stay competitive in the rubber chemicals industry.
BY ORDER OF THE BOARD

NRA just valued Sunsine at $1.245.

http://www.nracapital.com/sgxmas/china%2...050617.pdf

(05-06-2017, 11:14 AM)tiongkokgor Wrote: NRA just valued Sunsine at $1.245.

http://www.nracapital.com/sgxmas/china%2...050617.pdf

Thanks for sharing. Hopefully more coverage by other brokerages, as Kelvin's reputation has taken a beater after 1MDB saga. Having said that, I read the report carefully and objectively and I think the fair value cited is not unreasonable.

Just had a quick look at this Sunsine's article "Contrarian - A sunset look at China Sunsine" at:

https://vpmsingapore.wordpress.com/

Quote: "the sharing economy (Uber, AirBnB etc) will more likely taper the demand of vehicles than to increase vehicle sales."

The author's point is not completely valid. Sale of Sunsine's products does not only depend on vehicle sales.

The demand for cars by individuals will be replaced by UBER/DIDI KUAIDI related cars or driverless electric cars but one can expect the usage of the UBER/DIDI and electric cars to be much higher than individual cars leading to faster replacement of tyres. This trend certainly bodes well for the tyre and rubber chemicals industries.