(14-07-2014, 04:04 PM)CityFarmer Wrote: [ -> ]There are merits on the company, thus worth a close monitoring, but the company has been suffering with oversupply in its market, thus the downward pressure on selling price since FY2011.
Will the overcapacity be solved by the recent tightening of anti-pollution measures? Well, it might help, but non-sustainable, IMO.
Well, I might be wrong.
(not vested, but monitoring)
MBT is the feedstock for making three major rubber accelerators (TBBS, CBS and MBTS). Lax enforcement in the past led to many MBT factories being set up.
The sharp rise in MBT price, from RMB 13,700 per tonne to RMB 17,500, suggests tight supply following closure of some MBT factories which failed on environmental counts.
Before recent strict enforcement, Sunsine dealt with over-capacity in the rubber accelerator industry by slashing product prices in Dec 2011 to gain market share. Profit plunged to RMB 32m in 2012 (from RMB 99m the year before) as a consequence, but recovered to RMB 77m in 2013 as sales volume grew.
This strategy should see 2014 profit rising further even without government’s intervention.
Government’s action has reduced supply and levelled the playing field.
New investors have to comply with stringent pollution control requirements and incur the necessary costs. Over the years, Sunsine has accumulated experience in this area. In 2013, it cut down tap water usage and reduced waste water discharge, according to annual report 2013.
The graph in the Nextinsight 3 Jul article shows that prices of MBT-based products sold by a Shangdon-based factory spiked in June, peaked around the last day of the month:
………………ASP in 1Q 2014……….ASP in 2Q 14...…….Price on 30 June 14
TBBS…………..22,500………………….…24,000……….……………25,214
CBS…...........19,100…………………….21,000……………….…..22,650
MBTS...…….…16,300……..……………..19,800………..………...22,222
Prices have hardly changed after 30 June.
