hi
should we include the entire value of asset to compute asset turnover?
Or should we just use the PPE (Property, Plant, Equipment) component?
tks.
(11-02-2014, 11:06 AM)CityFarmer Wrote: [ -> ] (11-02-2014, 10:16 AM)Young Investor Wrote: [ -> ]It looks like that the company is capital intensive. The company will need to keep on investing in new line to expand their business. Will capital be a problem to the company?
I wouldn't tag the company business as capital intensive. The asset turnover is around 1.2-1.3, which means that every $ of asset, generates $1.2-1.3 of revenue.
It is definitely not a capex-light business too, which easily can fetch more than $3 revenue per dollar of asset.
In other words, we shall take note on capex, thus FCF is a good indicator, instead of net profit alone.
(not vested)
Curios party
Your concern that Sunsine may be affected by central govt crackdown on polluters may be unnecessary.
If the govt is going after Sunsine, would it designate the company to be the sole steam supplier in the Shanxian Chemical Zone?
I also believe that Sunsine has effective pollution measures in place else it would not be able to serve the top global tyre manufacturers.
But this did not seem to reflect in current sunsine market price..
it has dropped back to its "normal level", after the spike to 30 cents...
(12-02-2014, 11:39 AM)simpleman Wrote: [ -> ]Curios party
Your concern that Sunsine may be affected by central govt crackdown on polluters may be unnecessary.
If the govt is going after Sunsine, would it designate the company to be the sole steam supplier in the Shanxian Chemical Zone?
I also believe that Sunsine has effective pollution measures in place else it would not be able to serve the top global tyre manufacturers.
(13-02-2014, 07:17 PM)Curiousparty Wrote: [ -> ]But this did not seem to reflect in current sunsine market price..
it has dropped back to its "normal level", after the spike to 30 cents...
(12-02-2014, 11:39 AM)simpleman Wrote: [ -> ]Curios party
Your concern that Sunsine may be affected by central govt crackdown on polluters may be unnecessary.
If the govt is going after Sunsine, would it designate the company to be the sole steam supplier in the Shanxian Chemical Zone?
I also believe that Sunsine has effective pollution measures in place else it would not be able to serve the top global tyre manufacturers.
Curiosparty
I guess you are suggesting that the weakness in share price must be due to China Sunsine facing some difficulties, including Govt wanting to come down hard on the company.
There are many reasons for share price to weaken.
Surely the govt must have assessed Sunsine before appointing the company to be the sole steam provider in the chemical industrial zone.
Good results but still dropped 6.25% this morning.... this is the biggest problem with S chips....
The company end-year result was announced yesterday. I took a glimpse on the report. Here are my view.
- GPM increased by 1% y-o-y, to 18.2%, but still far from the "optimum" of 25%, IMO
- NPM increased to 4.5%, which is still very low as manufacturing company. A double-digit is optimum, IMO
- Positive FCF this year, after 4 past years of negative FCF. FCF was about RMB 17 mil, which is hardly enough to pay the RMB 22 mil dividend. Tapping on reserve to pay dividend will continue.
- No visibility of the charges on the recent diversification. May be pending for the finalization of formality. Current loan is RMB 230 mil, which will likely to increase upon the charges, IMO.
- Overall Average Selling Price (ASP) stayed around RMB 17K/Ton, upon pressure from the market overcapacity. That is a good sign, as no further dropping of the ASP, and market share continue to grow.
- Expansion plan continue, which means capex will continue.
Feel free to comment if any mistake
(not vested)
In a nutshell, base on FY13 report, the company invested $1 ,and able to generate a revenue of $1.3, and net profit of 5.9 cents (4.5% net profit margin), so the unleveraged return on on investment was 5.9%.
The company has borrowed for its expansion. Cost of capital is more than 6% (slightly above benchmark rate of 6%).
The company is running a losing business, even revenue growth was 20% on average in the last 3 years.
Will the company turnaround? Unless it gains pricing power, and ASP increases...
(not vested)
Based on similar line of thinking, New Toyo invested $1 and only got back $1.04 worth of revenue . This is super inefficient ?