China Sunsine Chemicals Holdings

[CityFarmer]

Cityfarmer

Thank you for pointing out the importance of asset turnover.

I notice from the cash flows statement that in 2013, Sunsine spent RMB 147m (with RMB 90m in 4Q alone) on PPE, against RMB 44m in 2012.

Do I need to make adjustments in calculating asset turnover, since the PPE acquired during a year was unlikely to make a contribution in the full year.

The two projects in 2013 were the new insoluble factory for RMB 100m and the DPG accelerator line for 25m. The factory will start prouction only in 2014, and the DPG produced only in the last quarter of 2014.

The total asset of the company is close to 1.3 bil yuan, and the adjustment will not make a major difference in the conclusion, IMO

[Curiousparty]

Company has renewed its share re-purchase mandate once again

[simpleman]

Will China Sunsine do well since the Government is stepping up ehforcement?

"As the China government is placing more emphasis on environmental protection, some medium- and small-sized players in the rubber chemicals industry were forced to suspend their production. Further, due to the China government’s comprehensive measures on environmental protection, a few large-sized players also suspended their production.

As such, the supply of accelerators in the market is decreasing. In order to maintain their productions to meet higher demand of tires, the tire makers placed more orders to purchase accelerators. The Group anticipates that the sales volume of accelerator products will continue to increase"


Chins Sunsine has announced that average selling price for its products in 1Q 2014 was RMB 17,881 per ton compared with RMB 17,028 in 4Q 2013.

[Curiousparty]

Hi

How is 5% increase in selling price going to impact the net profit? the share price is still languishing at low 20 cents, even since the recent spike to 30 cents...

Will China Sunsine do well since the Government is stepping up ehforcement?

"As the China government is placing more emphasis on environmental protection, some medium- and small-sized players in the rubber chemicals industry were forced to suspend their production. Further, due to the China government’s comprehensive measures on environmental protection, a few large-sized players also suspended their production.

As such, the supply of accelerators in the market is decreasing. In order to maintain their productions to meet higher demand of tires, the tire makers placed more orders to purchase accelerators. The Group anticipates that the sales volume of accelerator products will continue to increase"


Chins Sunsine has announced that average selling price for its products in 1Q 2014 was RMB 17,881 per ton compared with RMB 17,028 in 4Q 2013.

[Sfsh12]

The 5% or RMB800 increase in selling price may not mean much at first glance, but the extra revenue from the sales volume of 24,000 tonnes in 1Q2014 was around RMB19 m, and a large part of this is likely to have flowed to the bottom line.

Government actions to require producers to adopt clean processes will result in supply shortage.

[Young Investor]

The 5% or RMB800 increase in selling price may not mean much at first glance, but the extra revenue from the sales volume of 24,000 tonnes in 1Q2014 was around RMB19 m, and a large part of this is likely to have flowed to the bottom line.

Government actions to require producers to adopt clean processes will result in supply shortage.

Thank you sfsh12.

I was also unimpressed initially with the RMB 800 increase, but now realise a large part of the increase might have flowed to the bottom.
In fact the increase might have been more than RMB 800 if it took place much later than 1 Jan 2014.

[simpleman]

Aiyoh, Sunsine's borrowings has gone up to RMB 280m, from RMB 260m as at 31 Mar 2014

[CityFarmer]

Aiyoh, Sunsine's borrowings has gone up to RMB 280m, from RMB 260m as at 31 Mar 2014

As long as the pathetic free cash flow from core business, and the cash drain to "new investment" remain, the debt level will continue to increase.

(not vested)

[portuser]

As long as the pathetic free cash flow from core business, and the cash drain to "new investment" remain, the debt level will continue to increase.

(not vested)

Sunsine did well in 1Q 2014 -- RMB 52m cash flow before working capital changes, and RMB 88m operating cash flow. It spent RMB 77m on PPE, presumably on the project to provide steam to all factories in the Shaxian Chemical Industrial Zone.

Cash holdings were RMB 145m as at 31 Mar 2014, up from RMB 101m three months ago.

Rubber accelerators provide four-fifths of Sunsine’s revenue, and their ASP rebounded in 1Q 2014 to RMB 19,300, RMB 1,100 higher than the preceding quarter, after two years of being held down to gain market share.

Suspension of some accelerator factories has caused the price increase. Sunsine has stated in its 1Q 2014 results announcement that:

As the China government is placing more emphasis on environmental protection, some medium- and small-sized players in the rubber chemicals industry were forced to suspend their production. Further, due to the China government’s comprehensive measures on environmental protection, a few large-sized players also suspended their production. As such, the supply of accelerators in the market is decreasing. In order to maintain their productions to meet higher demand of tires, the tire makers placed more orders to purchase accelerators. The Group anticipates that the sales volume of accelerator products will continue to increase.

The only outstanding capex is the steam generation project. Stronger cash flows in the subsequent quarters (as business in the first quarter is weaker because of lunar new year) may be sufficient for the remaining expenditure and working capitals.

Sunsine has a RMB 20m from Construction Bank due on 24 May 2014. The new RMB 20m loan from the same bank may replace the maturing one.

If Sunsine expands accelerator capacity to fill the void created by the suspension, it will be good news.

[CityFarmer]

Sunsine did well in 1Q 2014 -- RMB 52m cash flow before working capital changes, and RMB 88m operating cash flow. It spent RMB 77m on PPE, presumably on the project to provide steam to all factories in the Shaxian Chemical Industrial Zone.

Cash holdings were RMB 145m as at 31 Mar 2014, up from RMB 101m three months ago.

The numbers are right, but let me elaborate.

OCF was 88m, while capex 77m, thus FCF was 11m. The company need to pay the bank int of 3.5m, so left 7.5m, with equity of 836m. A absolute ROE of <1%, and annualized <4%.

Rubber accelerators provide four-fifths of Sunsine’s revenue, and their ASP rebounded in 1Q 2014 to RMB 19,300, RMB 1,100 higher than the preceding quarter, after two years of being held down to gain market share.

Suspension of some accelerator factories has caused the price increase. Sunsine has stated in its 1Q 2014 results announcement that:

As the China government is placing more emphasis on environmental protection, some medium- and small-sized players in the rubber chemicals industry were forced to suspend their production. Further, due to the China government’s comprehensive measures on environmental protection, a few large-sized players also suspended their production. As such, the supply of accelerators in the market is decreasing. In order to maintain their productions to meet higher demand of tires, the tire makers placed more orders to purchase accelerators. The Group anticipates that the sales volume of accelerator products will continue to increase.

It is a good news. It shows the company process is well-managed (more environmental friendly) among its peers. Next question is how much it helps on sales? We saw only 5% increase in ASP in 1Q. May be we will see more in next few quarters.

The only outstanding capex is the steam generation project. Stronger cash flows in the subsequent quarters (as business in the first quarter is weaker because of lunar new year) may be sufficient for the remaining expenditure and working capitals.

The project is in a capital intensive business. High capex should be expected in due course, IMO.

Anyway, best wish to those vested, I might be wrong.

(not vested)