China Essence

[Humble]

About 2000 lots got dumped off at 9.8 cents today...bad omen...

Kindly share why is this bad omen. From your experience, are you expecting the price to go lower?

[Curiousparty]

yes, I think it might drop below its former all time low of 9 cents easily. Then it was making profit and so there was good reason for people to buy. Even CEO came in and buy.

Now it is making a huge loss and its debt issue has not been totally resolved.
And dont think CEO dares to come in and buy now given that many issues remained unresolved.
If it screws up its only harvesting season again this year, sad to say, it will be a gone case..

Perhaps CEO wants to keep cash to "bail out" company again if there is some problem with fund transfer...

About 2000 lots got dumped off at 9.8 cents today...bad omen...

Kindly share why is this bad omen. From your experience, are you expecting the price to go lower?

[Humble]

Just to share my thoughts.

There is a married deal of about 2000 lots done yesterday. This shows confidence by another investor to pick up the dumping. I hope it is one of major shareholders that pick up so that it will be reflected in the SGX announcement. Let's wait for another 3 days to confirm this. If that's the case, the price will go up from here and espescially after the much awaited Q4 report.

I am vested in this counter. Are you?

[potatolover]

I am vested. I hope it can drop more so that I can pick up more at even cheaper prices

[Humble]

I am vested. I hope it can drop more so that I can pick up more at even cheaper prices

Can you share why you are confident on this counter despite the negativity about s-chips and the impending losses due to depressed starch price? Any positive news to share? Thanks.

[Curiousparty]

The timing of purchases of raw materials (i.e. potatoes) is of the essence. We have seen that even big timer like Wilmar could make big losses if the timing of purchases is not right.

Essence's model of buying potato (starting in Aug) and producing downstream products thereafter may be inherently flawed. e.g. potato bought at super high price and downstream products' prices plummeted, which has happened last year.

What would prevent this from happening again this year? we do not know.

I am vested. I hope it can drop more so that I can pick up more at even cheaper prices

Can you share why you are confident on this counter despite the negativity about s-chips and the impending losses due to depressed starch price? Any positive news to share? Thanks.

[Humble]

[quote='Curiousparty' pid='24572' dateline='1336625011']
The timing of purchases of raw materials (i.e. potatoes) is of the essence. We have seen that even big timer like Wilmar could make big losses if the timing of purchases is not right.

Essence's model of buying potato (starting in Aug) and producing downstream products thereafter may be inherently flawed. e.g. potato bought at super high price and downstream products' prices plummeted, which has happened last year.

What would prevent this from happening again this year? we do not know.

This is the achilles heel of all processing businesses.
Are you vested?

[Underdogger]

Not if the company can adopt a cost-plus approach...

Is Essence at the mercy at both ends, i.e. farmers and its distribution channel (e.g. wholesalers and retailers)?

On one hand, it cannot contract at too low price or else farmers do not grow?

On the other hand, it has to compete with many other starch producers to sell to wholesalers?

This is the achilles heel of all processing businesses.
Are you vested?

---

Have another point to make..

When starch prices are rising, there is kind of a lag effect or stickiness in price adjustment with distributors.
The retail price of starch was already sky-rocketing but somehow the wholesale price from company to distributors was slow to catch up.

In a downward trending market like now, company might find it hard to push sales to the distribution channel without significantly lowering their prices.

[jzk]

There is no chance for better results until Q3 (10-12/2012) and Q4 (1-3/2013). As regards to the results announcement in two weeks, there is one single interesting piece of information to be expected: Have the huge receivables turned into cash or have they not? If they have AND if they don't screw up next autumn, the sky is the only limit. I sincerely hope, that both of those conditions are fulfilled. Interesting dates:
-Results presentation 5/2012.
-Next CB pay date in the end of june.
-Loan negotiations 8/2012.
-First guesses of harvest season 11/2012.
-Results presentation of Q3 (2/2013).

[Stockerman]

You are right. We need to wait until start of next year to know if company can turn around...

Along the way, we need to check to see if A/Rs are all duly collected without any delay, and company promptly pays up its CB instalment on time - Dont blame Chinese New Year and whatever reason...

If drop to 5 cents, I will grab a bit more...

There is no chance for better results until Q3 (10-12/2012) and Q4 (1-3/2013). As regards to the results announcement in two weeks, there is one single interesting piece of information to be expected: Have the huge receivables turned into cash or have they not? If they have AND if they don't screw up next autumn, the sky is the only limit. I sincerely hope, that both of those conditions are fulfilled. Interesting dates:
-Results presentation 5/2012.
-Next CB pay date in the end of june.
-Loan negotiations 8/2012.
-First guesses of harvest season 11/2012.
-Results presentation of Q3 (2/2013).