China Sunsine Chemicals Holdings

[portuser]

NRA expects Sunsine to have RMB 926m in cash by the end of year 2021, after RMB 1,000m in capex as well as RMB 369m in dividends between 2017 and 2021.

Future dividend payout much higher than the 20% set for 2017 and 2018 therefore cannot be ruled out.

NRA itself was conservative in projections. It forecasts RMB 256m being Sunsine 2017 profit. But with the strong profit in the first half (RMB 57m in 1Q and RMB 75m in 2Q), profit for the whole of 2017 will not be less than 271m unless Sunsine under-performs in the second half.

Sunsine has been consistent in achieving high return on equity (ROE) -- 2016 profit of RMB 222m was 17.5% on average equity of RMB 1,268m.

For the 12-month period ended 30 June 2017, Sunsine's ROE was 19.7%, based on the trailing profit of RMB 271m, and average equity of RMB 1,385m.

ROE would have been higher if Sunsine does not keep so much cash that brings paltry interest income. For example, 2016 ROE would be 21.5% (instead of 17.5%) if cash were excluded. 

It would appear that between financial security and efficient capital structure, Sunsine management has opted the former. I do not mind this. It is prudent management that has brought Sunsine to its present comfortable financial position.

[Bluechipfan]

NRA expects Sunsine to have RMB 926m in cash by the end of year 2021, after RMB 1,000m in capex as well as RMB 369m in dividends between 2017 and 2021.

Future dividend payout much higher than the 20% set for 2017 and 2018 therefore cannot be ruled out.

NRA itself was conservative in projections. It forecasts RMB 256m being Sunsine 2017 profit. But with the strong profit in the first half (RMB 57m in 1Q and RMB 75m in 2Q), profit for the whole of 2017 will not be less than 271m unless Sunsine under-performs in the second half.

Sunsine has been consistent in achieving high return on equity (ROE) -- 2016 profit of RMB 222m was 17.5% on average equity of RMB 1,268m.

For the 12-month period ended 30 June 2017, Sunsine's ROE was 19.7%, based on the trailing profit of RMB 271m, and average equity of RMB 1,385m.

ROE would have been higher if Sunsine does not keep so much cash that brings paltry interest income. For example, 2016 ROE would be 21.5% (instead of 17.5%) if cash were excluded. 

It would appear that between financial security and efficient capital structure, Sunsine management has opted the former. I do not mind this. It is prudent management that has brought Sunsine to its present comfortable financial position.

I agree with your analysis especially on full FY17's net profit and the last paragraph. On the former, 3Q being the traditionally strong net profit quarter, we could even see rmb100m net profit in upcoming 3Q results. I know you are being cautious and conservative so i will say it. On the latter, it also show that the management didn't play accounting trick, if they want high ROE, they can simply give high dividend and keep less cash. That way, figure look good and shareholders happy but like you said, I also like their prudent approach in managing company's finance.

[piaopiao]

I don't think RMB100 mil in coming 3Q is achievable. My focus is not on strong quarterly profit growth.

And I am keeping my Sunsine shares because:
1) it is the world largest rubber accelerator producer
2) this is a recession proof business because tyres will continue to be replaced during recession
3) it has demonstrated its strong cash generation ability (and currently zero debt)
4) profitable every year since listing
5) low PE now but PE will go up when institutional fund managers start buying Sunsine shares
6) aim to be the largest insoluble sulphur producer in China

[Bluechipfan]

I don't think RMB100 mil in coming 3Q is achievable. My focus is not on strong quarterly profit growth.

And I am keeping my Sunsine shares because:
1) it is the world largest rubber accelerator producer
2) this is a recession proof business because tyres will continue to be replaced during recession
3) it has demonstrated its strong cash generation ability (and currently zero debt)
4) profitable every year since listing
5) low PE now but PE will go up when institutional fund managers start buying Sunsine shares
6) aim to be the largest insoluble sulphur producer in China

Q1 and Q2 yoy registered 70% and 52% growth respectively. Q3 yoy if grow by just 38% the net profit will be 100m based on last year's net profit of 72.8m. So I think it is achievable. TTM net profit is currently at 271m and if Q3 indeed hit 100m, I won't even bother with Q4 figure anymore and I will just hold my shares tight tightly.

Generally agree with your 6 points but people may give up car in time of recession but there again, not all vehicles will disappear even in recession. For your last point, Sunsine is already the biggest Insoluble sulphur producer in PRC with capacity of 20000 tons. World leader is 200000 tons if I am not wrong.

[weijian]

Hi all,
The independent directors of CSE reached out to me late last week for a discussion on earlier posting on the forum. I had a 1hr tele-conference with 3 IDs (Benny Lim, Paul Tan and Koh Choon Kong). It was a relatively cordial meeting for them to clarify and understand the intent of my posting and for me to review their concerns. As a conclusion of the meeting, I have modified the earlier posting as below for clarity and the spirit of the posting has not changed:

- As it wasn’t clear to some forumers, I have categorically stated down the intent that I am not making any linkages between any of the companies to Sunsine.
- Modified my "worded" opinion on Benny Lim which may be construed as “insensitive” on a personal basis.

All the subsequent postings dependent on the original posting have also been modified accordingly to reflect the above changes. During the meeting, I have also given an unsolicited personal apology to Benny as I realize my posting can be construed as “insensitive” on a personal basis to him.

[brattzz]

no lawyer letters i hope?

[HitandRun]

Hi all,
The independent directors of CSC reached out to me late last week for a discussion on earlier posting on the forum. I had a 1hr tele-conference with 3 IDs (Benny Lim, Paul Tan and Koh Choon Kong). It was a relatively cordial meeting for them to clarify and understand the intent of my posting and for me to review their concerns. As a conclusion of the meeting, I have modified the earlier posting as below for clarity and the spirit of the posting has not changed:

- As it wasn’t clear to some forumers, I have categorically stated down the intent that I am not making any linkages between any of the companies to Sunsine.
- Modified my "worded" opinion on Benny Lim which may be construed as “insensitive” on a personal basis.

All the subsequent postings dependent on the original posting have also been modified accordingly to reflect the above changes. During the meeting, I have also given an unsolicited personal apology to Benny as I realize my posting can be construed as “insensitive” on a personal basis to him.

Did you take the opportunity to invite some valuebuddies to their analyst briefing? 

If companies like to engage with small shareholders, we really should encourage them.

[FA+TA]

Hi all,
The independent directors of CSE reached out to me late last week for a discussion on earlier posting on the forum.
- Modified my "worded" opinion on Benny Lim which may be construed as “insensitive” on a personal basis.

CSE or CSC?

[YMPL]

It is either valuebuddies.com, or weijian is significant enough for the time of 3 IDs. Good job for weijian and valuebuddies.com.

We should be proud of been part of valuebuddies.com.

[Bluechipfan]

It is either valuebuddies.com, or weijian is significant enough for the time of 3 IDs. Good job for weijian and valuebuddies.com.

We should be proud of been part of valuebuddies.com.

It is not weijian and/or valuebuddies.com. It is Sunsine or rather, the quality of its management. They can choose to turn a blind eye or they can choose to correct misconception. They chose the latter and I am glad they did. We judge others by their action and we judge ourselves by our intention. I am sure the 3 IDs are very busy people and I applaud them for finding time to engage weijian to clear the air.