China Sunsine Chemicals Holdings

(29-01-2018, 10:37 AM)kkayleng Wrote: Bloomberg) -- Phillip Securities initiated coverage of
China Sunsine Chemical Holdings Ltd. with a recommendation of
buy.
Phillip Secs predicted China Sunsine Chemical Holdings will
trade at S$1.60 within a year, implying a 43 percent increase
from the last regular trade. The new target is 11 percent above
the consensus average of S$1.44 and is at the high end of
forecasts ranging from S$1.25 to S$1.60. China Sunsine Chemical
Holdings had 3 buy recommendations, 0 holds and 0 sells
previously.
Analysts raised their consensus one-year target price for
the stock by 4 percent in the past three months. Forecasts range
from S$1.25 to S$1.60.

Phillip report attached.

https://www.theedgesingapore.com/portfol...ought-more

A very well article written by The Edge.

Sunsine is definitely in a much stronger position to capture more market share than their competitors who are having difficulties to raise funds.

CIMB and Phillip forecasted FY17 net profit of rmb 291m and 344m respectively. I don't know how Phillip based their forecast on. 9-month is 209m and to bump up to 344m then 4Q17's net profit must be extremely high, which I think unlikely to achieve. However, perhaps Phillip know much more than I do so we shall see. I will take 291m-310m for FY17 nonetheless.

Nextinsight took the average of the net income estimated by the 2 brokerages, that is RMB 317 mil.

https://www.nextinsight.net/story-archiv...in-2-weeks

Net income of RMB 291 mil for FY2017 is already a very good result. Their past results are:

Net income (RMB mil)
2012 32.0
2013 76.7
2014 220.2
2015 195.2
2016 221.7

The growth of the global automobile market may be slowing. But Sunsine will capture a bigger % of the growth in rubber chemicals because its competitors, Shandong Yanggu Huatai and Tianjin Kemai, are having difficulties finding money to expand and fill the demand supply gap in China arising from the enforcement by the various authorities against highly pollutive factories.

There is a direct relationship between the price of aniline (raw material of rubber accelerators) and the price of rubber accelerators.

http://info.echemi.com/en-price/10241.html

Profit guidance by Sunsine.

http://infopub.sgx.com/Apps?A=COW_CorpAn...25558ca96e

How much is the increase in net profit between 4Q2016 and 4Q2017?

What is the % increase for the full year results of 2017?

With the positive profit guidance, should I 'resurrect' my forecast of rmb 300m FY17's net profit? With 9M17 standing at 209m, and 4Q16's net profit being 66m, 4Q yoy must see increase of at least 39% to hit 91m thus achieving full year net profit of 300m. Now this seems possible and we may see eps of at least sgd 13 cents and dividend of at least 2.6 cents (including.5 interim dividend) if things progress smoothly.

(13-02-2018, 05:51 PM)Bluechipfan Wrote: With the positive profit guidance, should I 'resurrect' my forecast of rmb 300m FY17's net profit? With 9M17 standing at 209m, and 4Q16's net profit being 66m, 4Q yoy must see increase of at least 39% to hit 91m thus achieving full year net profit of 300m. Now this seems possible and we may see eps of at least sgd 13 cents and dividend of at least 2.6 cents (including.5 interim dividend) if things progress smoothly.

Bluechipfan

Do you think 39% increase is substantial to warrant a positive profit guidance?

(14-02-2018, 10:37 AM)Young Investor Wrote:

(13-02-2018, 05:51 PM)Bluechipfan Wrote: With the positive profit guidance, should I 'resurrect' my forecast of rmb 300m FY17's net profit? With 9M17 standing at 209m, and 4Q16's net profit being 66m, 4Q yoy must see increase of at least 39% to hit 91m thus achieving full year net profit of 300m. Now this seems possible and we may see eps of at least sgd 13 cents and dividend of at least 2.6 cents (including.5 interim dividend) if things progress smoothly.

Bluechipfan

Do you think 39% increase is substantiated to warrant a positive profit guidance?

I don't know. This kind of announcement is arbitrary in nature. I recall someone somewhere ever 'back testing' to see how substantial the increases were after such announcements but results inconclusive. I sure hope it is 139% but taking Phillip securities' forecast as guidance, maybe we can expect full year net profit of rmb 344m?

(14-02-2018, 01:48 PM)Bluechipfan Wrote:

(14-02-2018, 10:37 AM)Young Investor Wrote:

(13-02-2018, 05:51 PM)Bluechipfan Wrote: With the positive profit guidance, should I 'resurrect' my forecast of rmb 300m FY17's net profit? With 9M17 standing at 209m, and 4Q16's net profit being 66m, 4Q yoy must see increase of at least 39% to hit 91m thus achieving full year net profit of 300m. Now this seems possible and we may see eps of at least sgd 13 cents and dividend of at least 2.6 cents (including.5 interim dividend) if things progress smoothly.

Bluechipfan

Do you think 39% increase is substantiated to warrant a positive profit guidance?

I don't know. This kind of announcement is arbitrary in nature. I recall someone somewhere ever 'back testing' to see how substantial the increases were after such announcements but results inconclusive. I sure hope it is 139% but taking Phillip securities' forecast as guidance, maybe we can expect full year net profit of rmb 344m?

I realised it is not difficult to check back so I did. Sunsine last positive profit alert was for 1Q15, which registered net profit growth of 108%. The increases were even more spectacular for those alerts issued in 2014, which were all close to 200% and even surpassed 200% on an occasion. Given the low base in 2013, perhaps the last alert is the better gauge and I think we should see net profit of at least rmb 300m for FY17.