China Sunsine Chemicals Holdings

[Bluechipfan]

Sharing this well-written analysis of China Sunsine at Nextinsight

https://nextinsight.net/story-archive-ma...ess-than-6

The company has grown without rights issue and share placement. Moreover, it has been paying dividend every year after listing, and has bought back 5.5% of its own shares.

More importantly, tyres have to be replaced regularly, and demand for rubber accelerators should be rising.

Sunsine is in a comfortable position to expand as it has ready infrastructure and cash. Its main rivals, Kemai and Yanggu Huatai, are having difficulty in raising the cash for expansions.

Touching on kemai and yanggu huatai, what happen to kemai's IPO? For yanggu, the amount they seek to raise and the amount they are allowed to raise are very far apart. What will be the implication? I understand their fcf is not exactly fantastic and they have high pe. Can sunsine gain even bigger market shares if competitors cannot keep up? With no debt currently, maybe sunsine can build up its cash pile and seek M&A opportunities. There may be small and good competitors out there worth acquiring.

[tiongkokgor]

Sharing this well-written analysis of China Sunsine at Nextinsight

https://nextinsight.net/story-archive-ma...ess-than-6

The company has grown without rights issue and share placement. Moreover, it has been paying dividend every year after listing, and has bought back 5.5% of its own shares.

More importantly, tyres have to be replaced regularly, and demand for rubber accelerators should be rising.

Sunsine is in a comfortable position to expand as it has ready infrastructure and cash. Its main rivals, Kemai and Yanggu Huatai, are having difficulty in raising the cash for expansions.

Touching on kemai and yanggu huatai, what happen to kemai's IPO? For yanggu, the amount they seek to raise and the amount they are allowed to raise are very far apart. What will be the implication? I understand their fcf is not exactly fantastic and they have high pe. Can sunsine gain even bigger market shares if competitors cannot keep up? With no debt currently, maybe sunsine can build up its cash pile and seek M&A opportunities. There may be small and good competitors out there worth acquiring.

Sunsine can grow without M&A.

When its new 30,000 tonnes of TBBS are in use, its accelerator market share will be 24%.

[Bluechipfan]

Some observation.

Price has moved up gradually before the FY16 results and stalled momentarily after the results and since then, price has surged aggressively with volume much higher than average daily volume. Has market finally giving due recognition to this fundamentally sound s-chip?

I have been reminding myself that cheap can get cheaper and conversely, valuable companies can becoming more and more expensive. With this in mind, is the current share price of Sunsine expensive? Since Sunsine has no debt, I will just look at the current earning and growth prospect. The PE, which stood slightly above 7 now which I think is not expensive comparing to peers (especially its China peers!). The company's growth strategies are well documented, i.e., to expand and to gain market shares. I have been monitoring how Sunsine performed in these 2 areas and along the way, I have been accumulating its shares and thankfully, so far so good.

The public float is not exactly that high and with higher price with higher volume, coupled with underlying strong fundamentals, the current strong price should continue it upward trajectory. In addition, none of the shares held by the management is pledge to any banks or brokerages (such pledge must be announced to public via SGXNet). Records also showed that the newly appointed group first DGM has been accumulating the shares for many years. So it seems insiders are pretty much very confident about the company going forward.

For Sunsine, Q1FY17 just ended yesterday and the result should be before dividend xd date. Normally, it should be expected that price will dip after xd but with the company growing strongly, Q1 results (though a traditionally a low quarter) could shed some light whether the growing momentum is still intact. I am cautiously optimistic this shall be the case and it is likely that I will re-invest all if not most of the upcoming dividends into the stock.

As an investor, I don't think we can all be like Warren Buffet, who would buy and buy more and hold forever if the company is good. If we own shares of a good company and are not buying more, we would probably be thinking of selling at some point to realise the profit. Personally, I think it is still way premature to contemplating selling my shares in Sunsine.

[kkayleng]

Sharing this well-written analysis of China Sunsine at Nextinsight

https://nextinsight.net/story-archive-ma...ess-than-6

The company has grown without rights issue and share placement. Moreover, it has been paying dividend every year after listing, and has bought back 5.5% of its own shares.

More importantly, tyres have to be replaced regularly, and demand for rubber accelerators should be rising.

Sunsine is in a comfortable position to expand as it has ready infrastructure and cash. Its main rivals, Kemai and Yanggu Huatai, are having difficulty in raising the cash for expansions.

Touching on kemai and yanggu huatai, what happen to kemai's IPO? For yanggu, the amount they seek to raise and the amount they are allowed to raise are very far apart. What will be the implication? I understand their fcf is not exactly fantastic and they have high pe. Can sunsine gain even bigger market shares if competitors cannot keep up? With no debt currently, maybe sunsine can build up its cash pile and seek M&A opportunities. There may be small and good competitors out there worth acquiring.

[kkayleng]

Sharing this well-written analysis of China Sunsine at Nextinsight

https://nextinsight.net/story-archive-ma...ess-than-6

The company has grown without rights issue and share placement. Moreover, it has been paying dividend every year after listing, and has bought back 5.5% of its own shares.

More importantly, tyres have to be replaced regularly, and demand for rubber accelerators should be rising.

Sunsine is in a comfortable position to expand as it has ready infrastructure and cash. Its main rivals, Kemai and Yanggu Huatai, are having difficulty in raising the cash for expansions.

Touching on kemai and yanggu huatai, what happen to kemai's IPO? For yanggu, the amount they seek to raise and the amount they are allowed to raise are very far apart. What will be the implication? I understand their fcf is not exactly fantastic and they have high pe. Can sunsine gain even bigger market shares if competitors cannot keep up? With no debt currently, maybe sunsine can build up its cash pile and seek M&A opportunities. There may be small and good competitors out there worth acquiring.

[kkayleng]

China sunsine has been moving up after the recent FY results. Much has been known about its company performance which Had been good and consistent over the  last 3 years. The dividend has remained the same with the special dividend. Past pattern sees a lowering of its price after the results are out. 
What is inching up the price lately. It's stalling my plans to buy more.

[portuser]

Bluechipfan wrote:
"Touching on kemai and yanggu huatai, what happen to kemai's IPO? For yanggu, the amount they seek to raise and the amount they are allowed to raise are very far apart. What will be the implication? I understand their fcf is not exactly fantastic and they have high pe. Can sunsine gain even bigger market shares if competitors cannot keep up? With no debt currently, maybe sunsine can build up its cash pile and seek M&A opportunities. There may be small and good competitors out there worth acquiring."


Yanggu Huatai is facing a dilemma.

In reducing the number of placement shares to comply with regulators' requirements, the issue price of the placement share has to be a third higher than the last traded at RMB 15.47 (PER of 28.54.) 

The RMB 1.175m to be raised will be used as follows:

.............................................Investment.....From share placement proceeds
(A) Reloating old factories
to an industrial park..................594.63..................585.63
(B) New production facilties
in the industrial park.................346,98..................338.98
© Working capitals.................250.00..................250.00
Total.......................................1,191.61...............1,174.61

Under (A), 32,00 tonnes of existing capacity will be shifted and another 11,800 tonnes of new capacity will be installed at the industrial park. (A) will take 31 months to complete.  

(B) will involve installation of capacity for new chemicals (20,000 tonnes of insoluble sulpher, 15,000 tonnes of MBT and 10,000 tonnes of TBBS), and take 36 months.

If (A) and (B) are carried out, Yanggu Huatai's capacity will be 88,800 tonnes.  

Sunsine's existing capacity is 162,000 tonnes. By the end of this and next year, capacity will be 172,000 tonnes and 192,000 tonnes respectively.

Demand for tyres is on the rise, according to page 2 and 3 of Goodyear annual report for 2016:

"The increasing global demand for premium, high-valueadded tires is creating what Goodyear believes is the strongest tire market in the history of our company. We are positioned to take advantage of this great opportunity for profitable growth. This segment is growing in multiples of the total industry; the market for these tires doubled between 2010 and 2015 and we expect it to double again by 2020 [see accompanying chart]. ......... The trend towards tires with large rim diameters is being driven by auto manufacturers who are demanding premium tires for virtually all types of vehicles.

With ready infrastucture and cash, Sunsine is in a sweet spot to meet new demand. 

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[font=宋体, arial]"经济导报记者了解到，阳谷华泰此前计划是通过定向增发1.2亿股，募资不超过12亿元，投向“高性能橡胶助剂生产项目”等公司主营业务，并补充流动资金。然而，其1.2亿股的发行量，已达到其原有股本的41.49%，与证监会“定增股份不超过原股本20%”的要求相悖，故不得不将定增股份缩至一半。[/font]

[font=宋体, arial]有不愿具名的券商分析人士表示，阳谷华泰尚未确认定增价格，故此次定增预案中仍将募资规模定为12亿元，但若以缩减后的股数计算，其定增价格将高出20元/股，较公司17元/股左右的现价超出近3成，很难找到机构接手，因此其募资规模后期也可能“缩水”。[/font]

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http://f.sdnews.com.cn/ssgsxx/201703/t20...206976.htm(阳谷华泰规模腰斩 共达电声终止方案 鲁股定增遇“春寒")[/size]

[gongkia]

So demand for tires is growing and this will in turn drive growth in sales of rubber accelerators.

what will be the global demand for accelerators?

Maybe faster for Sunsine to capture more market share by M&A.

[Sfsh12]

Sunsine's sustainability report, which comes as a separate document for the first time, explains the attention the company pays on environmental protection, for example:.

"Our environmental management team comprise more than 40 employees, all of whom are well-equipped with relevant environmental protection knowledge and experience. This includes five experts who are masters degree holders specialised in environmental protection and 12 degree holders who are dedicated to the Company's environmental research and provide support for our environmental protection technology. We have also established an Environmental Protection Committee which consists of the General Manager and the Environment Manager to oversee the implementation of environmental protection technology. We continuously seek to improve our environmental protection capabilities. The table below shows our expenditure on environmental protection related items. The higher expenditure in year 2015 was mainly due to an one-off installation of desulfurization and denitrification equipment at our subsidiary – Guangshun Heating

Hydrogen sulphide created during our production process is harmful to health and the environment. Our sulphur recycling facility has effectively extracted the sulphur from hydrogen sulphide for re-use in our production process, such as in the production of our thiazoles accelerator, MBT, and insoluble sulphur. To effectively manage the sulfur oxides emission at our manufacturing facilities, we are the first company to invest more than RMB 30 million on a Super Claus furnace and CS2 recovery facility. Our conversion recovery rate is consistently above 99.5%......

......... Total volume of sulphur recycled in 2016 is 12,416 tons (2015: 10,561 tons), and the recycling rate is above 99.5%. Such recycling process has helped to reduce production cost by RMB 15 million (2015: RMB 15 million)."

[Bluechipfan]

I have briefly read the AR, will read in details when have more time. However, it seems that the company has clear direction what it want to do. Apparently, capacity expansion and continue to gain and enhance market shares are clear objectives. I would think higher eps and dividend should folllow naturally if company's strategies work accordingly to plan. I am cautiously optimistic.