Sunsine's past record of collecting nearly every bit of revenue was broken in 4Q 14 and 1Q 15 when trade receivables impairments of RMB 4.7m and RMB 8m were made respectively as some clients were hit by US actions against Chinese tyre imports.
A third of the bad debts has since been recovered, RMB 0.9m in 2Q, followed by another RMb 3.2m in 3Q this year.
Will we see NP of rmb 50 millions for last q? That will bring FY15's NP to rmb 200 millions. However, I would be conservative and say rmb 40 millions is fine and if that is realised, FY15's EPS will be sgd 9 cents and DPS of 1.5 cents is quite achievable. For now i will just stay the course.
Is there any more update on how the 6PPD product is doing from management? The last few quarters' announcement does not contain any info.
(15-11-2015, 02:50 PM)touzi Wrote: [ -> ]Is there any more update on how the 6PPD product is doing from management? The last few quarters' announcement does not contain any info.
The aggregate sales volume (tonne) of anti-oxidants (TMQ, 5PPD and 6PPD) has been on an uptrend:
.......................2014........2015
1Q..................4,002.......4,220
2Q..................5,347.......5,904
3Q..................5,409.......6,115
4Q..................5,145.........???
Yearly total....19,903.....16,240 (9 months)
Sunsine's recent quarterly results announcements attributed the rise to increased marketing efforts.
But output is still way below the overall capacity of 45,000 tonnes per annum.
Utilisation was 44% in 2014. It may edge up to around 50% this year on stronger 4Q output.
Low utilisation has to do with the doubling of 6PPD capacity late last year, resulting in the current level of 30,000 tonnes. .
In the chemical industry, capacity addition is a risky undertaking.
While unit capital cost is lower for larger addition, cost arising from unused capacity can be ruinous if new demand does not materialise in time.
After the recent mishap in Tianjin, approvals of new chemical facilities are getting more stringent. Sunsine's 6PPD expansion may not be a bad move in hindsight. Incremental 6PPD sale will entail substantial profit as overheads have already be borne by lower output.
(17-11-2015, 07:05 AM)portuser Wrote: [ -> ]After the recent mishap in Tianjin, approvals of new chemical facilities are getting more stringent. Sunsine's 6PPD expansion may not be a bad move in hindsight. Incremental 6PPD sale will entail substantial profit as overheads have already be borne by lower output.
Thanks. Problem is we do not have 6PPD sales number. Given the low utilization you mentioned, maybe 6PPD sales is not too good.
(17-11-2015, 03:44 PM)touzi Wrote: [ -> ] (17-11-2015, 07:05 AM)portuser Wrote: [ -> ]After the recent mishap in Tianjin, approvals of new chemical facilities are getting more stringent. Sunsine's 6PPD expansion may not be a bad move in hindsight. Incremental 6PPD sale will entail substantial profit as overheads have already be borne by lower output.
Thanks. Problem is we do not have 6PPD sales number. Given the low utilization you mentioned, maybe 6PPD sales is not too good.
6PPD sales should be very much lower than 30,000 tonnes.
Had the 15,000-tonne capacity not been added in late 2014, utilisation would be quite respectable -- 66% in 2014.
It takes many years for a newly-introduced product to gain acceptance, as the following time series show:
.........Anti-oxidants (tonnes)
2008...............185
2009............1,361
2010............2,971
2011............2,061
2012............5,183
2013..........12,281
2014..........19,903
2015
(9 months)..16,240....(14,758 in 9 months of 2014)
Insoluble went through a similar growth path:
2008...............464
2009............3,468
2010............4,413
2011............7,873
2012..........10,724
2013..........11,948
2014..........12,102
2015
(9 months)..11,113....(9,176 in 9 months of 2014)
http://infopub.sgx.com/FileOpen/Acquisit...eID=380022
Just saw this...why is a company whose principal business is the production of rubber chemicals want to venture into the tourism/hospitality sector??
Zero synergies whatsoever and where would they get the expertise and experience to run the villa?? Hmm...
Was eyeing this counter but will be removing it from my watch list after this announcement.
Sunsine is very focus on their main Chemical business, the recent dip in the leisure facility provider one of the rare one. It is a pheripherial business that arise because of their big presence in the local county, and has been in the talk for a long time. They had been pushing back for a good price. So it may not be a bad thing to buy a cheap property.
The other side business they got in is Steam and electricity supply. China has a lot of small companies that operate small boilers to get steam for their manufacturing operation. If all these boilers are centralised into a few big ones, the pollution is greatly reduce and much more easily managed. They have completed the phase 1 construction of this centralised boilers, produce steam for their own use, and ready to supply to the smaller factories in the same industry park. See the link for the same sort of project that Sunpower announced recently.
http://sunpower.listedcompany.com/newsro...FZWH.1.pdf
So in time to come, the local government will mandate the shut down of all smaller boilers and steam sales should give additional revenue to Sunsine, without much increase in capex and expense. Hope it comes soon.
Full year results coming soon. Expect to see more reduction in debt level and increase in NAV with more retained earnings. Revenue should be on par with FY14 as company's strategy is to continue gaining market share. This would mean compromise slightly on margin and overall net profit should be lower than FY14.
The company is also expected to announce higher target of revenue for FY16 despite challenging environment. With debt level down and cash level up, the company is in a good position going forward. One thing to look out for is how efficient the company is in collecting debts. I am sure they have no problem with international top clients but same cannot be said of their domestic customers, especially those small and unestablished one. The approach of having some customers' debts guaranteed by banks should also address concern of trade receivables. There should be reduction in capex too and all in all, if the company has no issue with collecting trade receivables, I foresee the dividend rate of 1 cent be maintained and maybe the SD of .5 cent as well.