China Sunsine Chemicals Holdings

[CityFarmer]

The suggestions that there is skulduggery may not be valid.
The accounting entry errors relating to inter-company transactions in 2011 resulted in China Sunsine under-reporting its report for that year by RMB 10.96 m. There was no attempt to dress up the accounts.

Base on my limited accounting knowledge, i still hold-on to my view that this is a decent company with a trust-able management, at least up to last financial report

[Stockerman]

Under-reporting of income does not make a company look any "cleaner", if its intention is to privatize its on the CHEAP!!!!!

Well, they can do anything they want to buy out a good company on the cheap.

The suggestions that there is skulduggery may not be valid.
The accounting entry errors relating to inter-company transactions in 2011 resulted in China Sunsine under-reporting its report for that year by RMB 10.96 m. There was no attempt to dress up the accounts.

Base on my limited accounting knowledge, i still hold-on to my view that this is a decent company with a trust-able management, at least up to last financial report

[portuser]

I have just corrected the typo error in my post, replacing "report" by "profit".
I have no training in accounting and do not know whether errors can happen during consolidations. The detailed explanation provided by the company seems believable.

[CityFarmer]

The company final year report is announced

http://info.sgx.com/webcoranncatth.nsf/V...1003E243A/$file/CS_4Q2012PressRelease.pdf?openelement

Summary:
- Record sales volume at 81,371 tons
- FY2012 net profit of RMB32 million with lower GPM at 17.2%
- Proposes a final tax exempt dividend of SGD 1 cent per ordinary share

It seems that the issue remains the same, the cost (expense) is the main culprit, which pull down the GPM and NPM.

GPM reduced by -8%, by both factors of falling of ASP and rising cost of raw material. Rising cost of raw material is out of control of the company, but continuous falling of ASP definitely showed the poor pricing power of the company, at least in the last few quarters. Increasing market share by lowering margin is definitely not a mean for adding shareholders value.

NPM reduces from 8% to 2%, due to following factors, which seems logical due to recent expansion of production capacity
- higher depreciation expense
- higher R&D expenses
- higher social insurance
- higher operating expense with increases in capacity

IMO, the main issue is rapid expansion of production capacity with a slow-down in market demand, leads to over-capacity of the company. It seems the company is selling as much as it can by lowering ASP.

With cash reserve of RMB 105 million, the company should be able to hold till the market pick-up again. Dividend payout is the same as last year, which should be a good news to shareholders.

(not vested)

[portuser]

Manufacture of rubber accelerators generates hydrogen sulphide, a.lethal gas. When the air is still, dispersion is slow.
China Sunsine burns hydrogen sulphide under controlled condition, generating steam and molten sulphur in turn. Steam is used to dry accelerators and molten sulphur is reused to make accelerators.
Some factories may have to close down for causing air pollution as Government tightens enforcement.
The management is known for its prudence. There is no sign of the company reeling from the 10,000-tonne expansion in 2012; and it is now adding another 5,000 tonnes this year.
The poor margin was partly caused by low output of 6PPD which is being accredited by tyre manufacturers. The company is bearing the full cost of the 15,000-tonne plant.

[potatolover]

How long does a typical accreditation take? tks.

Manufacture of rubber accelerators generates hydrogen sulphide, a.lethal gas. When the air is still, dispersion is slow.
China Sunsine burns hydrogen sulphide under controlled condition, generating steam and molten sulphur in turn. Steam is used to dry accelerators and molten sulphur is reused to make accelerators.
Some factories may have to close down for causing air pollution as Government tightens enforcement.
The management is known for its prudence. There is no sign of the company reeling from the 10,000-tonne expansion in 2012; and it is now adding another 5,000 tonnes this year.
The poor margin was partly caused by low output of 6PPD which is being accredited by tyre manufacturers. The company is bearing the full cost of the 15,000-tonne plant.

[Underdogger]

Almost every small cap has climbed by leaps and bounds but not China Sunsine...

Is there any risk from over- expansion?

[Stockerman]

Will the excess capacity be soaked up by demand soon? And how soon?
How soon will the company benefit from the sunken cost of investment ahead of demand?
Only time will tell...


*************
Net profit decreased significantly by 68% to RMB 32.0 million from RMB 99.4 million in
FY 2011 mainly due to the 7.8pts drop in GPM as well as increase in operating costs such as
the following:
• RMB 35.6 million of additional depreciation as the various common facilities at
Shanxian and Weifang completed in FY2011 and FY2012;
• RMB 8.6 million of additional accruals of social insurance;
• RMB 13.5 million of additional R&D expenses of which RMB 9.3 million related to
the trial production of 6PPD; and
• Additional operating expenses as the Group increased its production scale in
Shanxian and Weifang plants in FY2012.

[Stockerman]

More bad news coming along?

More than 800 lots waiting to dump at 23.5 cents...

[Stockerman]

Hi City Farmer

What makes u think that this company is still decent?
have u interacted with the chairman before?
tks.

The suggestions that there is skulduggery may not be valid.
The accounting entry errors relating to inter-company transactions in 2011 resulted in China Sunsine under-reporting its report for that year by RMB 10.96 m. There was no attempt to dress up the accounts.

Base on my limited accounting knowledge, i still hold-on to my view that this is a decent company with a trust-able management, at least up to last financial report