China Sunsine Chemicals Holdings

The latest Sunsine’s announcement on outstanding loans reported an aggregate of RMB 368.9m as at 23 Sep 2014, comprising RMB 20m maturing 10 Oct 14 and RMB 20m maturing on 24 Oct 14.

The two loans have matured and have not been replaced, as there have been no announcements on new loans. Outstanding loans should now be RMB 328.9m.

In its initiation report on Sunsine, Amfraser estimates RMB 70m to be 3Q 14 profit (3Q 13 profit being RMB 27m, and 2Q 14 profit being RMB 60m).

If the actual turns out to be close to the estimate, cash flow should be very strong and Sunsine may pay off two loans (RMB 38.9m aggregate) on maturity in Dec.

The company production capacity growth is accelerated, from 115.5 K tons, to 152 K tons as disclosed by the announcement below

http://infopub.sgx.com/FileOpen/CS_Busin...eID=321680

The company production capacity has been expanded by 10-15 K tons annually in the last 5 years, but this year, the expansion is more than 36 K tons.

It seems the management is very optimistic on the sale growth.

(not vested)

(29-10-2014, 03:13 PM)portuser Wrote: The latest Sunsine’s announcement on outstanding loans reported an aggregate of RMB 368.9m as at 23 Sep 2014, comprising RMB 20m maturing 10 Oct 14 and RMB 20m maturing on 24 Oct 14.

The two loans have matured and have not been replaced, as there have been no announcements on new loans. Outstanding loans should now be RMB 328.9m.

In its initiation report on Sunsine, Amfraser estimates RMB 70m to be 3Q 14 profit (3Q 13 profit being RMB 27m, and 2Q 14 profit being RMB 60m).

If the actual turns out to be close to the estimate, cash flow should be very strong and Sunsine may pay off two loans (RMB 38.9m aggregate) on maturity in Dec.

I don't mind the company pay off some of the loans instead of paying out special dividend. Just pay the normal dividend for now and I am satisfy. The money borrowed is necessary as company, among others, need to construct the heating plant. Once the capex slow down and reduced, there will be higher profit and until then pay more dividend is not too late. I know the company has some cash in hand and the gearing is not high but the lesser the outstanding loan the better.

(03-11-2014, 09:06 PM)CityFarmer Wrote: The company production capacity growth is accelerated, from 115.5 K tons, to 152 K tons as disclosed by the announcement below

http://infopub.sgx.com/FileOpen/CS_Busin...eID=321680

The company production capacity has been expanded by 10-15 K tons annually in the last 5 years, but this year, the expansion is more than 36 K tons.

It seems the management is very optimistic on the sale growth.

(not vested)

Reduced production cost coupled with more orders received, it could only bode well for the company's earnings. In addition, the Chinese government is getting tougher with anyone that flout the environment rules. New laws will be in placed and enforced by the turn of the year. I am keeping a close eyes on Sunsine especially the next dividend and debt level.

Earlier, it was disconcerting to see Sunsine taking new loans successively, sending outstanding borrowings, in 10 months, from RMB 230m (as at 31 Dec 2013) to RMB 369m (as at 23 Sep 14).

We now know, from the two recent business updates, that higher borrowings paid, partly, the aggregate RMB 234m for three completed projects, namely steam/electricity plant (RMB 150m), 15,000-tonne 6PPD capacity (RMB 80m) and 4,000-tonne MBTS capacity (RMB 3.5m).

Current borrowings should be RMB 329m as two loans amounting to RMB 40m maturing last month were paid off without replacements.

Sunsine has stated that the 4,000-tonne MBTS project at the Weifang base was completed with a mere RMB 3.5m.

Before constructing the Weifang base, Sunsine announced in 2010 (?) that the base, ultimately housing 50,000 tonnes of accelerator capacity, would start off with only 10,000 tonnes with subsequent capacity addition dependent on demand. The initial RMB 100m capital cost back then covered infrastructure that would benefit future new capacities.

MBTS now sells for more than RMB 20,000/tonne. Revenue from 4,000 tonnes will be RMB 80m. Net margin of the RMB 80m should be higher than Sunsine’s 2Q overall net margin of 11%, as fixed costs will not be incurred for the incremental production. Even at 11%, net profit arising from selling the 4,000 tonnes of MBTS will be RMB 8.8m, more than twice the RMB 3.5m capital cost.

Weifang base now has an accelerator capacity of 24,000 tonnes. There is room for another 26,000 tonnes. If incremental capital cost continues to stay low, payoff will be big.

The same goes for the 8,000-tonne DCBS capacity under construction to be completed before year end. As Sunsine has shared, the company ceased producing DCBS earlier because the conventional process adopted then was pollutive. It is reintroducing this product after acquiring cleaner process.

DCBS therefore can fetch good price now. Even if it is just RMB 20,000/tonne, the RMB 9m capital cost is dwarfed by an estimated RMB 17.6m profit (based on 11% net margin of RMB 160m revenue).

More importantly, Sunsine’s share of global accelerator output will be close to 20%, from 17% before the addition of the 12,000 tonnes.

RMB 3.5mil for 4,000 tonne MBTS capacity and RMB 80mil for 15,000 tonne 6PPD capacity.

Is one of the costs wrong?

(04-11-2014, 03:35 PM)piaopiao Wrote: RMB 3.5mil for 4,000 tonne MBTS capacity and RMB 80mil for 15,000 tonne 6PPD capacity.

Is one of the costs wrong?

I also thought the costs were wrong. Checked with IR and they confirmed they are correct.
Just wondering why the 6PPD took so long.

My friend checked with IR too. IR said if the numbers in the announcement are wrong, they would have issued a corrigendum by now.

(05-11-2014, 07:11 AM)Newman Wrote:

(04-11-2014, 03:35 PM)piaopiao Wrote: RMB 3.5mil for 4,000 tonne MBTS capacity and RMB 80mil for 15,000 tonne 6PPD capacity.

Is one of the costs wrong?

I also thought the costs were wrong. Checked with IR and they confirmed they are correct.
Just wondering why the 6PPD took so long.

6PPD, a high-grade anti-oxidant, slows aging of tyres caused by heat and ambient ozone. The efficacy of Sunsine’s 6PPD is known only after prolonged exposure of prototype tyres.

Sunsine’s aggregate sales vol (in tonnes) of 6PPD, 5PPD (an intermediate-grade antioxidant) and TMQ (a low-grade antioxidant) has been rising:

2Q 13….….2,900
3Q 13……..3,489
4Q 13……..3,820
1Q 14……..4,002
2Q 14………5,347

2Q 14 quarterly sales vol of 5,347 represented an annualised utilisation rate of 71% on the combined capacity of 30,000 tonnes, of which 15,000 tonnes are 6PPD.

3Q 14 6PPD sales vol should be higher to prompt Sunsine to add another 15,000 tonnes.

Sunsine Executive Chairman has said as much in the business updated dated 3 Nov:

“We have already received more accreditation for our 6PPD from most of our major customers, and more orders are coming in. This product has great potential and we expect that it will contribute positively to the Group’s performance.”

Am seeking readers' views on Sunsine's share price, looking forward.

The share price opened at 21cts at the start of the year and has reached 51.5cts as at the time of this posting today. Sunsine has obviously done well for the share price to increase by 145% between then and now. The Company's recent announcements on its financial and growth data/forecasts are bright. Looking forward, can we expect further increase in the share price? Or, should we be looking at the current price as if it has already taken into account the potential growth?

Thank you.