China Sunsine Chemicals Holdings

[Curiousparty]

Tks Portuser.

But the ratio of (cash + near cash)/borrowing has been deteriorating over time, from 1.27 to 1.04 now.

Sunsine’s borrowings have been matched by cash and near-cash:

……………………………………………………….RMB m
………………………..31 Dec 2012……….31 Dec 2013………31 Mar 2014
Borrowings……………….200…………………..230…………………..260
Cash………………………….105…………………..108…………………..147
Near cash……………….…149…'……………...158.…….…….……..123
Cash + Near-cash.…..254……………………266……………………270

(Near cash consists of bank-issued notes from customers. The notes can be presented to the issuing banks for cash or used to pay bills.)

Staying liquid has enabled the company to pay its bills promptly to enjoy better payment terms -- its trade payables turnover in 2013 was as low as 14 days, and below 20 days in the previous four years.

[portuser]

But the ratio of (cash + near cash)/borrowing has been deteriorating over time, from 1.27 to 1.04 now.

Sunsine’s borrowings have been matched by cash and near-cash:

……………………………………………………….RMB m
………………………..31 Dec 2012……….31 Dec 2013………31 Mar 2014
Borrowings……………….200…………………..230…………………..260
Cash………………………….105…………………..108…………………..147
Near cash……………….…149…'……………...158.…….…….……..123
Cash + Near-cash.…..254……………………266……………………270

(Near cash consists of bank-issued notes from customers. The notes can be presented to the issuing banks for cash or used to pay bills.)

Staying liquid has enabled the company to pay its bills promptly to enjoy better payment terms -- its trade payables turnover in 2013 was as low as 14 days, and below 20 days in the previous four years.

The declining ratio (from 1.27 to 1.04) may not suggest higher risk.

If the ratio of 1.27 is not optimal in the first place, a decline from that level may be a move towards a more efficient capital structure.

Sunsine had all the while resorted to short-term loans. The 3-year loan of RMB 50m taken recently is to be welcomed.

After IPO in 2007, Sunsine has not issued any new shares. On the contrary, it bought back 26m of its own shares. Dividend is also a regular feature.

IPO money, bank loans and internally-generated cash have been deployed for gradual capacity build-up and working capitals to support rising sales.

With its huge production capacity, Sunsine is benefiting from the soaring rubber accelerator prices. The 2,000-tonne MBT capacity and 24,000-tonne rubber accelerator capacity in 2006 have now grown to 45,000-tonne and 75,000-tonne respectively.

[budgetier]

I still need cost and volume for each product to work out the probable profit.

tks.

Can someone provide the following:-
a. minimum
b. maximum
c. most likely value

for the Cost, Selling Price and Volume for each of the product sold by sunsine?

I can do some monte carlo simulation and post the results. tks.

How much lower, based on calculations and necessary assumptions?

You have requested information on the minimum, maximum and most likely values pertaining to the Cost, Selling Price and Volume for each of the products sold by Sunsine, to help you run some monte carlo simulations and post the results. Are the simulations for Profit?

You have also stated that there is “flaw of average” in Portuser’s post. The only average in Portuser’s post is the average increase of three MBT-based accelerators. Is there flaw in taking the simple average when the weighted average cannot be determined?

(The following table is quoted from Portuser’s post dated 16 Jul)

.....................ASP in 1Q14….…Price on 30 June 14 …Increase TBBS………………. 22,500……..………25,214.…….…………….. .2,714
CBS………………..19,100..............22,650…….…..............3,550
MBTS………………16,300………..…...22,222….….….............5,922 Average…………..19,300..............23,362…….………….…….4,062

(Simple average is used instead of weighted average because capacity of individual accelerator is not available.)

Thank you for your offer to project Sunshine's probable profit.

Sunsine provides only the sales volume, revenues and capacity of accelerators, insoluble sulphur and antioxidants. The costs of producing individual categories are not disclosed.

Revenues, costs and capacity for each type of accelerators are also not disclosed.

All we have in the accounts is the overall gross profit.

The overheads are also not broken down according to product categories

Are you going to run your simulations by varying each and every variables?

Looking forward to some trial results as I have some Sunshine shares.

Hi. Did you manage to derive some results from the monte carlo simulations? It would be interesting to see how the results compare with the projected profit of RMB43m for 2Q in the 3rd July article by the NextInsight Team. Thanks.

[Curiousparty]

Sorry for the delay.

Here is my simulation results.

net profit after tax for Q2-2014 will be from $41.2 mil to 55.4 mil ( 95% confidence interval - see page 2 of attached file)
in short, we are possibly looking at 100% to 170% increase.

The key assumptions I used to derive these sets of projections are:-
a. price increase of 5% to 15%. (most likely value = 10%)
b. volume increase of 15% to 25% (most likely value = 20%)
c. GPM of 20% to 24% (most likely value = 22%)

For the less important assumptions, I have adhered to last FY set of figures (i.e. Q2-2013 set of results)
For example, I assumed 3.5% of revenue for selling & distribution cost, etc.

The big caveat I want to put here is that I have not factored in other costs such as construction of steam facilities, hotel, etc, which I suspect the management might load upfront given the huge profit this quarter.

[CityFarmer]

We can expect a good half year result. The next question is will it sustain?

(not vested)

POSITIVE PROFIT ALERT

The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and
together with its subsidiaries collectively, the “Group”) wishes to inform shareholders and potential
investors of the Company that based on the preliminary assessment of the information currently available to
the Board, including the unaudited financial statements for the half year ended 30 June 2014 (“1HY2014”),
the Group is expected to report a substantial increase in consolidated net profit, compared to the
corresponding period from 1 January 2013 to 30 June 2013.
http://infopub.sgx.com/FileOpen/CS_Posit...eID=307183

[Curiousparty]

Market has largely factored that in.

If easy and big profit can be made short term, this can attract a lot of short term players into the scene...

We can expect a good half year result. The next question is will it sustain?

(not vested)

POSITIVE PROFIT ALERT

The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and
together with its subsidiaries collectively, the “Group”) wishes to inform shareholders and potential
investors of the Company that based on the preliminary assessment of the information currently available to
the Board, including the unaudited financial statements for the half year ended 30 June 2014 (“1HY2014”),
the Group is expected to report a substantial increase in consolidated net profit, compared to the
corresponding period from 1 January 2013 to 30 June 2013.
http://infopub.sgx.com/FileOpen/CS_Posit...eID=307183

[simpleman]

Positive profit alert from China Sunsine:

"The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and together with its subsidiaries collectively, the “Group”) wishes to inform shareholders and potential
investors of the Company that based on the preliminary assessment of the information currently available to the Board, including the unaudited financial statements for the half year ended 30 June 2014 (“1HY2014”), the Group is expected to report a substantial increase in consolidated net profit, compared to the corresponding period from 1 January 2013 to 30 June 2013.

The expected profit growth is mainly due to the increase in both average selling price and sales volume of the Group’s products. As disclosed in our results announcement for the financial period ended 31 March 2014 released on 28 April 2014, the China government has been placing more emphasis on environmental protection, and some players in the rubber chemical industry which failed to meet the relevant environmental regulations were forced to suspend their productions. This had resulted in the short supply in the market and accordingly, the Group was able to sell more products and increase its selling prices."

Sunsine made RMB 32m in the 1st half of 2013. Are we expecting at least RMB 64m this year?
What is the extent of increase for company to issue a positive profit alert?

[Curiousparty]

As explained above in the Monte Carlo simulation, we are probably looking at 100% to 170% increase over FY13-Q2.

Positive profit alert from China Sunsine:

"The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and together with its subsidiaries collectively, the “Group”) wishes to inform shareholders and potential
investors of the Company that based on the preliminary assessment of the information currently available to the Board, including the unaudited financial statements for the half year ended 30 June 2014 (“1HY2014”), the Group is expected to report a substantial increase in consolidated net profit, compared to the corresponding period from 1 January 2013 to 30 June 2013.

The expected profit growth is mainly due to the increase in both average selling price and sales volume of the Group’s products. As disclosed in our results announcement for the financial period ended 31 March 2014 released on 28 April 2014, the China government has been placing more emphasis on environmental protection, and some players in the rubber chemical industry which failed to meet the relevant environmental regulations were forced to suspend their productions. This had resulted in the short supply in the market and accordingly, the Group was able to sell more products and increase its selling prices."

Sunsine made RMB 32m in the 1st half of 2013. Are we expecting at least RMB 64m this year?
What is the extent of increase for company to issue a positive profit alert?

[Young Investor]

Market has largely factored that in.

 

If easy and big profit can be made short term, this can attract a lot of short term players into the scene...

 

We can expect a good half year result. The next question is will it sustain?

 

(not vested)

 

POSITIVE PROFIT ALERT

 

The Board of Directors (the “Board”) of China Sunsine Chemical Holdings Ltd. (the “Company”, and

together with its subsidiaries collectively, the “Group”) wishes to inform shareholders and potential

investors of the Company that based on the preliminary assessment of the information currently available to

the Board, including the unaudited financial statements for the half year ended 30 June 2014 (“1HY2014”),

the Group is expected to report a substantial increase in consolidated net profit, compared to the

corresponding period from 1 January 2013 to 30 June 2013.

http://infopub.sgx.com/FileOpen/CS_Posit...eID=307183

 

 

The current accelerator shortage is the result of some factories not paying attention to pollution control.

In his post #260 dated 7 Jul 2014, Sfsh outlined what Sunsine had done to protect the environment. The company’s 2013 annual report states that RMB 32m and RMB 23.5m were spent on environment protection in 2013 and 2012 respectively.

Before assessing the likelihood of factories under suspension resuming production, we need to ask why they did not do enough in the first place. Was money or technology the issue?

For new entrants, what will be the cost on environmental protection they have to incur?

 

 

 

[simpleman]

[quote='Curiousparty' pid='90011' dateline='1406616643']
Sorry for the delay.

Here is my simulation results.

net profit after tax for Q2-2014 will be from $41.2 mil to 55.4 mil ( 95% confidence interval - see page 2 of attached file)
in short, we are possibly looking at 100% to 170% increase.

The key assumptions I used to derive these sets of projections are:-
a. price increase of 5% to 15%. (most likely value = 10%)
b. volume increase of 15% to 25% (most likely value = 20%)
c. GPM of 20% to 24% (most likely value = 22%)

For the less important assumptions, I have adhered to last FY set of figures (i.e. Q2-2013 set of results)
For example, I assumed 3.5% of revenue for selling & distribution cost, etc.

The big caveat I want to put here is that I have not factored in other costs such as construction of steam facilities, hotel, etc, which I suspect the management might load upfront given the huge profit this quarter.


You have stated that if easy and big profit can be made short term (by Sunsine) , this can attract a lot of short term players into the scene...
As production of accelerators now requires pollution control infrastructure, why will short term players try their luck?

Another point.
Are the % increases that you assumed from 2Q 2013?

"The key assumptions I used to derive these sets of projections are:-
a. price increase of 5% to 15%. (most likely value = 10%)
b. volume increase of 15% to 25% (most likely value = 20%)
c. GPM of 20% to 24% (most likely value = 22%)"

GPM in 2Q 2013 was 18.6%. If price increase in 2Q 2014 is 5% at the minimum, GPM should be more than 23.6%.
Why then is 20% the assumed minimum? The price increase and GPM change are connnected, but this is not the case in your assumptions.
Thank you.