01-10-2012, 09:41 PM (This post was last modified: 01-10-2012, 09:49 PM by Stockerman.)
The company last updated on the Typhoon in 7 Sept 2012. There were reports comfirming that because of the heavy rainfall from typhoon, starch production in northeast China was affected to some extent. But somehow this did not translate into price increase of starch.
From the company FAQs at the recent AGM, the company expected that there would be a 30% reduction in the supply of potato this year. Again, it has not translated into price increase of starch.
On top of all these events, there were reports of potato blight in northwest China, causing some market panic. But yet again, this has not translated into price increase of starch.
Anyone able to offer any views on why supply contraints have not been translated in starch or potato price increase?
Have the demand for potato starch been depressed by the credit crunch at the distributors? (i.e. the distributors don't have enough working capital to buy starch from manufacturers...)
How many of Essence's distributors would become bankrupted, and how would this affect A/R collections by company? More bad debts to come?
Meanwhile, the government starts getting worried about so-called “triangular debt” where companies simply owe money each other, mostly in forms of account receivables.
surprised at the seemingly strong support at 4 cents...seems that a lot of people are willing to take a gamble...
(01-10-2012, 09:41 PM)Stockerman Wrote: The company last updated on the Typhoon in 7 Sept 2012. There were reports comfirming that because of the heavy rainfall from typhoon, starch production in northeast China was affected to some extent. But somehow this did not translate into price increase of starch.
From the company FAQs at the recent AGM, the company expected that there would be a 30% reduction in the supply of potato this year. Again, it has not translated into price increase of starch.
On top of all these events, there were reports of potato blight in northwest China, causing some market panic. But yet again, this has not translated into price increase of starch.
Anyone able to offer any views on why supply contraints have not been translated in starch or potato price increase?
Have the demand for potato starch been depressed by the credit crunch at the distributors? (i.e. the distributors don't have enough working capital to buy starch from manufacturers...)
How many of Essence's distributors would become bankrupted, and how would this affect A/R collections by company? More bad debts to come?
Meanwhile, the government starts getting worried about so-called “triangular debt” where companies simply owe money each other, mostly in forms of account receivables.
(01-10-2012, 09:41 PM)Stockerman Wrote: ... typhoon.... But somehow this did not translate into price increase of starch.
.... reduction in the supply of potato .... Again, it has not translated into price increase of starch.
... potato blight ... But yet again, this has not translated into price increase of starch.
I must say, that this is somewhat worrying. Being generally optimistic, I was first disappointed by the production tonnage guidance. Thereafter I have been counting on limited supply lifting the price level. If that was not to happen, I would have to cut my own target price even lower (significantly above current price, though).
Someone mentioned earlier, that Sanlam was supposed to be the seller of the around 5M shares traded this autumn. Is there any confirmation on that?
04-10-2012, 03:09 PM (This post was last modified: 04-10-2012, 03:17 PM by Underdogger.)
There is the view that the demand for potato starch is still pretty intact. Hence, there is no capacity issue in the industry.
Does anyone have a differing view? think there is quite clear that distributors and some end consumers are short on cash given the appearance of bad debt for first time in Essence's operating history.
If you are distributors, what would you do to best conserve your cash?
Will u wait until just before New Year period to buy starch and dispose of it at a much higher margin to consumers? But if every tom dick harry is doing the same, would distributors be killing themselves, fighting to pay the higher starch price just before festive seasons?
(04-10-2012, 02:44 PM)jzk Wrote:
(01-10-2012, 09:41 PM)Stockerman Wrote: ... typhoon.... But somehow this did not translate into price increase of starch.
.... reduction in the supply of potato .... Again, it has not translated into price increase of starch.
... potato blight ... But yet again, this has not translated into price increase of starch.
I must say, that this is somewhat worrying. Being generally optimistic, I was first disappointed by the production tonnage guidance. Thereafter I have been counting on limited supply lifting the price level. If that was not to happen, I would have to cut my own target price even lower (significantly above current price, though).
Someone mentioned earlier, that Sanlam was supposed to be the seller of the around 5M shares traded this autumn. Is there any confirmation on that?
does Salem need to declare to SGX every time it sells off Essence?
(04-10-2012, 02:44 PM)jzk Wrote:
(01-10-2012, 09:41 PM)Stockerman Wrote: ... typhoon.... But somehow this did not translate into price increase of starch.
.... reduction in the supply of potato .... Again, it has not translated into price increase of starch.
... potato blight ... But yet again, this has not translated into price increase of starch.
I must say, that this is somewhat worrying. Being generally optimistic, I was first disappointed by the production tonnage guidance. Thereafter I have been counting on limited supply lifting the price level. If that was not to happen, I would have to cut my own target price even lower (significantly above current price, though).
Someone mentioned earlier, that Sanlam was supposed to be the seller of the around 5M shares traded this autumn. Is there any confirmation on that?
04-10-2012, 09:44 PM (This post was last modified: 04-10-2012, 10:33 PM by Curiousparty.)
Balance of payments deficit for the 1st time since 1998 Asian Crisis.
Hot money flowing out of China….
Most of the people expect China to come out of its current malaise in good shape. If China fails to meet these expectations, the fallout in the market could be dramatic.
there is way too much confidence in the chinese economy and the chinese govt. The tight liquidity conditions are battering its domestic economy....
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
05-10-2012, 08:55 AM (This post was last modified: 05-10-2012, 09:10 AM by potatolover.)
many of my investor friends told me that they are waiting for all the S chips to be a few cents - Minzhong, fishery,YZJ, Cosco, etc will be back to 20 to 30 cents. They said just need to be patient.
(04-10-2012, 09:44 PM)Curiousparty Wrote: Balance of payments deficit for the 1st time since 1998 Asian Crisis.
Hot money flowing out of China….
Most of the people expect China to come out of its current malaise in good shape. If China fails to meet these expectations, the fallout in the market could be dramatic.
there is way too much confidence in the chinese economy and the chinese govt. The tight liquidity conditions are battering its domestic economy....
basically, there are currently lots of spare capacity in the manufacturing sector (not so sure about the starch industry).
it is a consumers' market - essentially consumers/distributors can shop around for the best value deal at lowest price. Manufacturers would have to pander to their demands.
10-10-2012, 09:49 AM (This post was last modified: 10-10-2012, 11:12 AM by Underdogger.)
Is Q1 results (due in abt one month's time) expected to be losses again? quite likely...
starch price hovering around 6000 to 6500 RMB was still largely below the breakeven price of 7000 to 7300 RMB per tonne.
so this is the 2nd time Sanlam is selling...
still got so much to go...if Sanlam sells 1million shares everyweek, it will take 36 weeks or 9 months to get ride of everything!!!!!!
If I am Sanlam, since so much is already lost, might as well gamble with the rest of the shares...
(12-10-2012, 12:07 AM)Underdogger Wrote: Sanlam has 36.7 million shares. It has sold off only 0.642 million or 1.75%. Still a long way to go in its selling…
Are there enough buyers in market to absorb 36million shares? After all, it is only worth $1.44mil.
Price is already so low. Why doesn’t Sanlam take a bet? It took a bet when Lee Ka Bao sold off few years ago. Why was it so eager to exit?
Did it buy China Essence after it has done its due diligence on background check and research?
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
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