Dongyue Group (189)

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#1
After the long suspension, a spectacular year is looming.

The recent positive profit alert reports a net profit increase of approx. 130% in the first 5 months.
http://www.hkexnews.hk/listedco/listcone...612905.pdf

Assuming the increase is maintained in June, that would equal an 6 months EPS of approx. 0.39 HKD with a share price of currently 3.45 HKD.

One of the reasons:

"China's refrigerants are booming in the first half of 2017. 
...
[font=font-size:12pt;]Besides the low supply in domestic markets, also the worldwide HFC capacity is facing a reduced volume, which drives the price for refrigerants up. Furthermore, strengthened environmental protection measurements in China are causing huge pressure on manufacturers, leading to increasing costs and limited production.[/font]  

After all, the environmental pressure has forced production of Chinese HFC down by about 20% currently. As especially small and medium-sized manufacturers are not able to invest in cleaner production, larger manufacturers can use the reduced supply of refrigerants to quote higher prices for their products. "
http://www.cnchemicals.com/Press/89548-C...02017.html

With the rising demand (especially for air conditioners) and the sharply reduced supply, this doesn't seem to change quickly... 
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#1
After the long suspension, a spectacular year is looming.

The recent positive profit alert reports a net profit increase of approx. 130% in the first 5 months.
http://www.hkexnews.hk/listedco/listcone...612905.pdf

Assuming the increase is maintained in June, that would equal an 6 months EPS of approx. 0.39 HKD with a share price of currently 3.45 HKD.

One of the reasons:

"China's refrigerants are booming in the first half of 2017. 
...
[font=font-size:12pt;]Besides the low supply in domestic markets, also the worldwide HFC capacity is facing a reduced volume, which drives the price for refrigerants up. Furthermore, strengthened environmental protection measurements in China are causing huge pressure on manufacturers, leading to increasing costs and limited production.[/font]  

After all, the environmental pressure has forced production of Chinese HFC down by about 20% currently. As especially small and medium-sized manufacturers are not able to invest in cleaner production, larger manufacturers can use the reduced supply of refrigerants to quote higher prices for their products. "
http://www.cnchemicals.com/Press/89548-C...02017.html

With the rising demand (especially for air conditioners) and the sharply reduced supply, this doesn't seem to change quickly... 
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#2
I haven't found any daily charts of Chinese refrigeration chemicals prices, only one for US R22 futures:
https://www.tradingview.com/chart/R22!/

However, there is a chart for China Hydrofluoric acid prices:
http://www.sunsirs.com/uk/prodetail-123.html

Next link details the use of hydrofluoric (HF) acid globally.
"Fluorocarbons accounted for 63% of hydrofluoric acid consumption in 2014. The refrigerant and air conditioning gases markets account for almost half of the total fluorocarbon consumption globally."
https://www.ihs.com/products/fluorspar-a...dbook.html

Hence, I would think that HF chart correlates with the demand of Dongyue's business.
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#2
I haven't found any daily charts of Chinese refrigeration chemicals prices, only one for US R22 futures:
https://www.tradingview.com/chart/R22!/

However, there is a chart for China Hydrofluoric acid prices:
http://www.sunsirs.com/uk/prodetail-123.html

Next link details the use of hydrofluoric (HF) acid globally.
"Fluorocarbons accounted for 63% of hydrofluoric acid consumption in 2014. The refrigerant and air conditioning gases markets account for almost half of the total fluorocarbon consumption globally."
https://www.ihs.com/products/fluorspar-a...dbook.html

Hence, I would think that HF chart correlates with the demand of Dongyue's business.
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#3
A new project for their property development business
http://www.hkexnews.hk/listedco/listcone...281062.pdf

and a new partner
http://www.hkexnews.hk/listedco/listcone...281030.pdf
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#3
A new project for their property development business
http://www.hkexnews.hk/listedco/listcone...281062.pdf

and a new partner
http://www.hkexnews.hk/listedco/listcone...281030.pdf
Reply
#4
More information about price increases of some products (from May 14)

CHINA: Huge increases in the price of a vital component in the production of HFCs could place further pressure on global refrigerant gas prices.

The price of fluorspar, a mineral from which HFC component hydrofluoric acid is produced, has hit a four-year high in the home of the world’s largest producer, China.

Fluorspar prices have risen by nearly 40% since February, leading to increases in China of around 60% in the price of R22 and R134a, a 130% increase in the price HFC component R125, and a massive 160% rise in the cost of R32.

The increases are blamed on new environmental constraints in China on both fluorspar mining and in the production of hydrofluoric acid. Since the end of 2016 China’s environmental law enforcement efforts have been significantly strengthened. As a result, the production of products like hydrofluoric acid, a highly corrosive chemical, has come under new environmental protection and safety requirements.

http://www.coolingpost.com/world-news/fl...rigerants/
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#4
More information about price increases of some products (from May 14)

CHINA: Huge increases in the price of a vital component in the production of HFCs could place further pressure on global refrigerant gas prices.

The price of fluorspar, a mineral from which HFC component hydrofluoric acid is produced, has hit a four-year high in the home of the world’s largest producer, China.

Fluorspar prices have risen by nearly 40% since February, leading to increases in China of around 60% in the price of R22 and R134a, a 130% increase in the price HFC component R125, and a massive 160% rise in the cost of R32.

The increases are blamed on new environmental constraints in China on both fluorspar mining and in the production of hydrofluoric acid. Since the end of 2016 China’s environmental law enforcement efforts have been significantly strengthened. As a result, the production of products like hydrofluoric acid, a highly corrosive chemical, has come under new environmental protection and safety requirements.

http://www.coolingpost.com/world-news/fl...rigerants/
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#5
Dongyue has done well in recent weeks, though - I have to admit - not exactly for the reason I thought.

Profit in 3 main segments (Fluoropolymer, Organic silicone and Dichloromethane, PVC and Liquid Alkali)
increased even more than Refrigerants.

Overall profit increased sharply as expected after the profit alert and despite property development profits declined sharply. The the 'old' development project is now almost entirely sold and the 'new' project just acquired recently.

Now hydrofluoric acid retreated by 34% in the last 3 months (hydrochloric acid as well). And I don't know what that means.
http://www.sunsirs.com/uk/prodetail-123.html

Could it mean demand for products, such as Fluoropolymer and Refrigerants is declining as well, or is this the best of all worlds, with a widening gap between cost of input and output products?

I still could not find price charts of Dongyue's many output products, except PVC. And that is up 24% in 3 months. But that is only one of many products.
http://www.sunsirs.com/uk/prodetail-107.html
Reply
#5
Dongyue has done well in recent weeks, though - I have to admit - not exactly for the reason I thought.

Profit in 3 main segments (Fluoropolymer, Organic silicone and Dichloromethane, PVC and Liquid Alkali)
increased even more than Refrigerants.

Overall profit increased sharply as expected after the profit alert and despite property development profits declined sharply. The the 'old' development project is now almost entirely sold and the 'new' project just acquired recently.

Now hydrofluoric acid retreated by 34% in the last 3 months (hydrochloric acid as well). And I don't know what that means.
http://www.sunsirs.com/uk/prodetail-123.html

Could it mean demand for products, such as Fluoropolymer and Refrigerants is declining as well, or is this the best of all worlds, with a widening gap between cost of input and output products?

I still could not find price charts of Dongyue's many output products, except PVC. And that is up 24% in 3 months. But that is only one of many products.
http://www.sunsirs.com/uk/prodetail-107.html
Reply
#6
Over 50% increase in the price of HF during the last 2 1/2 weeks.

Whatever that means ... Share price also going up ...

http://www.sunsirs.com/uk/prodetail-123.html
Reply
#6
Over 50% increase in the price of HF during the last 2 1/2 weeks.

Whatever that means ... Share price also going up ...

http://www.sunsirs.com/uk/prodetail-123.html
Reply
#7
Webb extends stocks blacklist
http://www.thestandard.com.hk/section-ne...1376&sid=2
https://webb-site.com/articles/cmbccspt.asp

Sadly, another company with (if true) great fundamentals on the black list.

I'll regard 'connected transactions' as a major red flag for future investments.
Reply
#7
Webb extends stocks blacklist
http://www.thestandard.com.hk/section-ne...1376&sid=2
https://webb-site.com/articles/cmbccspt.asp

Sadly, another company with (if true) great fundamentals on the black list.

I'll regard 'connected transactions' as a major red flag for future investments.
Reply
#8
Hey bmann025, thanks for your posting. I saw Dongyue Group earlier too, but it was hard to analyse. Out of competency.

I draw the similarity to China Sunsine, it reported great results last quarter however the share price continued to slip. I was wondering if we should look at cyclical stocks differently? Do you feel that the cycle is starting to turn or has reached somewhere to the peak? It'd have huge implication on the valuations we pay.

It is similar to Lonking and Sinotruk.
Full-time Investor and Blogger at https://kelvestor.com/

Follow me on Instagram: https://www.instagram.com/kelvestor/
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#8
Hey bmann025, thanks for your posting. I saw Dongyue Group earlier too, but it was hard to analyse. Out of competency.

I draw the similarity to China Sunsine, it reported great results last quarter however the share price continued to slip. I was wondering if we should look at cyclical stocks differently? Do you feel that the cycle is starting to turn or has reached somewhere to the peak? It'd have huge implication on the valuations we pay.

It is similar to Lonking and Sinotruk.
Full-time Investor and Blogger at https://kelvestor.com/

Follow me on Instagram: https://www.instagram.com/kelvestor/
Reply
#9
(29-10-2018, 09:14 AM)kelvesy Wrote: Hey bmann025, thanks for your posting. I saw Dongyue Group earlier too, but it was hard to analyse. Out of competency.

I draw the similarity to China Sunsine, it reported great results last quarter however the share price continued to slip. I was wondering if we should look at cyclical stocks differently? Do you feel that the cycle is starting to turn or has reached somewhere to the peak? It'd have huge implication on the valuations we pay.

It is similar to Lonking and Sinotruk.

Fundamentals look great, PE 3 (TTM), at book value, dividend yield over 7%. I think the cycle has more legs, as markets are growing, dirty competition was shut down, new capacity (probably) state regulated and the company shifting to new products.

Of course that doesn't protect in a 90s Asia style crisis, if we are heading that direction.

However with the black listing, the company is looked at from a different perspective:

1. are numbers real?
2. does the board work in the best interest of all shareholders?
3. what is going on in these connected transactions?


In the sector, I was invested in 2341, 746 and 3983 but out now. Don't trust that sector any more. Just look at 2341's idle cash moutain and still they placed new shares last year ...
Reply
#9
(29-10-2018, 09:14 AM)kelvesy Wrote: Hey bmann025, thanks for your posting. I saw Dongyue Group earlier too, but it was hard to analyse. Out of competency.

I draw the similarity to China Sunsine, it reported great results last quarter however the share price continued to slip. I was wondering if we should look at cyclical stocks differently? Do you feel that the cycle is starting to turn or has reached somewhere to the peak? It'd have huge implication on the valuations we pay.

It is similar to Lonking and Sinotruk.

Fundamentals look great, PE 3 (TTM), at book value, dividend yield over 7%. I think the cycle has more legs, as markets are growing, dirty competition was shut down, new capacity (probably) state regulated and the company shifting to new products.

Of course that doesn't protect in a 90s Asia style crisis, if we are heading that direction.

However with the black listing, the company is looked at from a different perspective:

1. are numbers real?
2. does the board work in the best interest of all shareholders?
3. what is going on in these connected transactions?


In the sector, I was invested in 2341, 746 and 3983 but out now. Don't trust that sector any more. Just look at 2341's idle cash moutain and still they placed new shares last year ...
Reply
#10
Personally don't think its a bad company, however the risk associated with the company is high at the moment.

Having a history of a scandal in 2016 with cash going missing to begin with is never good. The fortunate thing however is that they initiated a law suit which might indicate that its not just money gone missing but could be stolen etc.

1)Moving on 'are the numbers real?' I guess the spin-off will most likely distinguish things better and if things are fake there is a good chance the spin-off will not carry out

2) Does the board work in best interest of all shareholders? The dividend payout in FY 16, 17 is about 30-40%. If there is something not in interest it could be the lack of share buyback or management buying. In terms of driving profit i would say they have tried to recover from the bad times in 2014 even though some plaudits is attributed to a good industry outlook

3) 'What is going on in these connected transactions?' That's a very good question. Dongyue/macrolink/ New Silkroad Culturaltainment Ltd was not in the 'friday diagram by webb' however it was flagged out as 55% of CMBC's pro forma NTA was exposed to a single person in the form of the owner Mr Fu which most would agree its really high exposure to an individual. Dongyue then subscribes 1 billion dollars worth in an equity investment and assets management arm of CMBC. But as of End 2017 there has not been impairment yet which is so far so good but we never know what happens if CMBC does burst. (the exposure would be about 48 cents nav)

As for the industry, after looking at China companies that operate in different segments of dongyue group business, i would say their 3Q is strong especially with the spin off announcement shedding some light on its Organic Silicone business in 2 months of 3Q.

4Q and beyond however will need more research etc.

Only 746 bears some similarity to Dongyue group. 2341 does scent related chemicals while 3983 does chemical fertilizers.

Most of its similarity companies are listed in china instead.
Reply
#10
Personally don't think its a bad company, however the risk associated with the company is high at the moment.

Having a history of a scandal in 2016 with cash going missing to begin with is never good. The fortunate thing however is that they initiated a law suit which might indicate that its not just money gone missing but could be stolen etc.

1)Moving on 'are the numbers real?' I guess the spin-off will most likely distinguish things better and if things are fake there is a good chance the spin-off will not carry out

2) Does the board work in best interest of all shareholders? The dividend payout in FY 16, 17 is about 30-40%. If there is something not in interest it could be the lack of share buyback or management buying. In terms of driving profit i would say they have tried to recover from the bad times in 2014 even though some plaudits is attributed to a good industry outlook

3) 'What is going on in these connected transactions?' That's a very good question. Dongyue/macrolink/ New Silkroad Culturaltainment Ltd was not in the 'friday diagram by webb' however it was flagged out as 55% of CMBC's pro forma NTA was exposed to a single person in the form of the owner Mr Fu which most would agree its really high exposure to an individual. Dongyue then subscribes 1 billion dollars worth in an equity investment and assets management arm of CMBC. But as of End 2017 there has not been impairment yet which is so far so good but we never know what happens if CMBC does burst. (the exposure would be about 48 cents nav)

As for the industry, after looking at China companies that operate in different segments of dongyue group business, i would say their 3Q is strong especially with the spin off announcement shedding some light on its Organic Silicone business in 2 months of 3Q.

4Q and beyond however will need more research etc.

Only 746 bears some similarity to Dongyue group. 2341 does scent related chemicals while 3983 does chemical fertilizers.

Most of its similarity companies are listed in china instead.
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