China Sunsine Chemicals Holdings

Using confidence interval is just a simple scientific way to deal with uncertainties.

You might wish to read up the book by Sam Savage to better appreciate the scientific way to handle uncertainties in input parameters.
"The Flaw of Averages"

http://flawofaverages.com/

(06-08-2014, 09:11 PM)Young Investor Wrote: The actual 2Q profit is very likely to fall within the wide range of profit (RMB 41.2m and RMB 55.4m) that Curiosparty provided. The wide range is of little help.

(06-08-2014, 09:45 PM)Curiousparty Wrote: Using confidence interval is just a simple scientific way to deal with uncertainties.

You might wish to read up the book by Sam Savage to better appreciate the scientific way to handle uncertainties in input parameters.
"The Flaw of Averages"

http://flawofaverages.com/

(06-08-2014, 09:11 PM)Young Investor Wrote: The actual 2Q profit is very likely to fall within the wide range of profit (RMB 41.2m and RMB 55.4m) that Curiosparty provided. The wide range is of little help.

The usefulness of the simulations results depends the assumptions made.

Making an assumption on gross profit margin (an increase of 1.4% point only ) without taking into account another assumption of 5% increase in selling price is just not correct.

As I said before, the two (price and gross profit margin) are linked. And this is a basic point.

Pls let us have your "linking" formula if ok.

tks.

(07-08-2014, 10:22 AM)simpleman Wrote:

(06-08-2014, 09:45 PM)Curiousparty Wrote: Using confidence interval is just a simple scientific way to deal with uncertainties.

You might wish to read up the book by Sam Savage to better appreciate the scientific way to handle uncertainties in input parameters.
"The Flaw of Averages"

http://flawofaverages.com/

(06-08-2014, 09:11 PM)Young Investor Wrote: The actual 2Q profit is very likely to fall within the wide range of profit (RMB 41.2m and RMB 55.4m) that Curiosparty provided. The wide range is of little help.

The usefulness of the simulations results depends the assumptions made.

Making an assumption on gross profit margin (an increase of 1.4% point only ) without taking into account another assumption of 5% increase in selling price is just not correct.

As I said before, the two (price and gross profit margin) are linked. And this is a basic point.

[quote='Curiousparty' pid='90800' dateline='1407378854']
Pls let us have your "linking" formula if ok.

tks.




You have stated on 30 Jul:

"I only had a simple linear relationship with lots of buffer (i.e. conservative)."

Pl share with us the relationship and the buffer.

Wonder why you are reluctant to do so.

I wish to go further on your post yesterday:

“What I did was just "forecasting of results" (via Monte Carlo Simulation) using simple and conservative assumptions (which I have already made known upfront).
And I have put in caveats as well. So, pls don't come and blame me if the actual results differ. If the actual result turns out to be very close, I would not claim credit either.
To me, this is just an academic exercise to better understand the cost structure of the company.”

 

Your projection is wide, between RMB41.2m and RMB55.4m. If the result turns out to be RMB 52m, is it very close? What if it is RMB 43m (as suggested in the Nextinsight article)?

If you refer to previous result announcement by Sunsine, you will note that:

Revenue – cost of sales = gross profit.

In other words, gross profit margin is not an independent number. It is dependent on  revenue and cost of sales. But you assume the GPM to be independent of price and vol as follows:

a. price increase of 5% to 15%. (most likely value = 10%)
b. volume increase of 15% to 25% (most likely value = 20%)
c.       GPM of 20% to 24% (most likely value = 22%)  

(07-08-2014, 03:55 PM)Young Investor Wrote: I wish to go further on your post yesterday:

“What I did was just "forecasting of results" (via Monte Carlo Simulation) using simple and conservative assumptions (which I have already made known upfront).
And I have put in caveats as well. So, pls don't come and blame me if the actual results differ. If the actual result turns out to be very close, I would not claim credit either.
To me, this is just an academic exercise to better understand the cost structure of the company.”

 

Your projection is wide, between RMB41.2m and RMB55.4m. If the result turns out to be RMB 52m, is it very close? What if it is RMB 43m (as suggested in the Nextinsight article)?

If you refer to previous result announcement by Sunsine, you will note that:

Revenue – cost of sales = gross profit.

In other words, gross profit margin is not an independent number. It is dependent on  revenue and cost of sales. But you assume the GPM to be independent of price and vol as follows:

a. price increase of 5% to 15%. (most likely value = 10%)
b. volume increase of 15% to 25% (most likely value = 20%)
c.       GPM of 20% to 24% (most likely value = 22%)  

OK, monte carlo prediction was way off. Profit was RMB 60 millions. It is also 17 m more than what nextinsight predicted. It was OK to project and the effort was commendable. Cannot just because someone predict and we hold the person to his prediction. If this were to be sustainable I am going to hold this stock for long long time to come. As it is, NTA already increased tremendously!

(07-08-2014, 10:24 PM)Bluechipfan Wrote: OK, monte carlo prediction was way off. Profit was RMB 60 millions. It is also 17 m more than what nextinsight predicted. It was OK to project and the effort was commendable. Cannot just because someone predict and we hold the person to his prediction. If this were to be sustainable I am going to hold this stock for long long time to come. As it is, NTA already increased tremendously!

Yes, sustainability is a keyword for the company future, for ASP i.e. NP and dividend payout.

I am yet to digest the report, and decode the indicators.

(not vested)

Bluechipfan

You have asked that Curiousparty should not be blamed for his poor Monte Carlo shot:

“OK, monte carlo prediction was way off. Profit was RMB 60 millions. It is also 17 m more than what nextinsight predicted. It was OK to project and the effort was commendable. Cannot just because someone predict and we hold the person to his prediction.”

  

Nobody has not blamed Curiousparty.  

I am asking what is his basis of treating selling price and gross profit margin as two separate numbers, when selling price determines gross profit margin is.

The attached article shows that if assumptions are set incorrectly, one gets garbage.    

 http://www.cbsnews.com/news/is-financial...tion-dead/

(08-08-2014, 07:31 PM)Young Investor Wrote: Bluechipfan

You have asked that Curiousparty should not be blamed for his poor Monte Carlo shot:

“OK, monte carlo prediction was way off. Profit was RMB 60 millions. It is also 17 m more than what nextinsight predicted. It was OK to project and the effort was commendable. Cannot just because someone predict and we hold the person to his prediction.”

  

Nobody has not blamed Curiousparty.  

I am asking what is his basis of treating selling price and gross profit margin as two separate numbers, when selling price determines gross profit margin is.

The attached article shows that if assumptions are set incorrectly, one gets garbage.    

 http://www.cbsnews.com/news/is-financial...tion-dead/

I suggest to close the issue. No point spending time on an out-dated topic, with the announced result. Let's refocus to more valuable topics, with our limited time and space.

Those believed the modelling result was flawed, have already presented their points, which are fair enough IMO.

Curiousparty has tried her best, I presumed. Let's give her a break.

No more post on the issue, please. I will remove all future post on the issue.

Regards
Moderator

Human tends to like to interpret and extrapolate performance in "linear terms". Can we continue to extrapolate sunsine's upside performance in a similar fashion? The high ASP might not be sustainable for next few quarters, and as such the lofty valuation as touted by analysts might not be valid. (IMHO)

http://www.nextinsight.net/index.php/sto...-discountq