if starch price does not recover and the cost structure remains essentially the same, the company will continue to make losses...
Manpower costs have continued to escalate..
plus utilization will continue to be low with lots of spare capacity.
this is a viscous cycle of deeper debts...
(04-05-2013, 11:09 AM)CityFarmer Wrote: [ -> ] (04-05-2013, 10:24 AM)Stockerman Wrote: [ -> ]SGX has this ruling where companies racking up 3 straight years of losses will be placed on watch list. Companies on the watch list face a possible delisting if they cannot restore their financial health within 24 months of being on the list...
Is the clock ticking for Essence?
A quick check reveals there is only 1 years of full year losses in FY12, and currently in 3QFY13.
Still long way to reach the status quoted... 
(not vested)
the huge A/R has not turned into cash PLUS
they screwed up this time again.
Both of these conditions have been met (in a negative way).
In ur view, how can the company break out of its current malaise?
(10-05-2012, 05:27 PM)jzk Wrote: [ -> ]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).
Ssituation seems to be getting worse in general for the manufacturing sector in China...
Extract from Edge Magazine
" Chinese factories are saddled with excess capacity because of weak demand, putting downward pressure on producer prices that in turn erodes their profits .
China's producer prices fell 2.6% in April (2013), the 14th consecutive month of y-o-y declines and sharper than the 1.9% in March.
Consumer inflation quickened to 2.4% in April from March's 2.1%, owing to higher food costs."
It suggests that Essence seems to be continually facing pressure from higher wages (due to higher CPI) while prices of their products have continue to drop...
Hard life...Anyone has a better explanation on how Essence might turn around in this situation?
Government support?
(13-05-2013, 10:15 AM)potatolover Wrote: [ -> ]Ssituation seems to be getting worse in general for the manufacturing sector in China...
Extract from Edge Magazine
" Chinese factories are saddled with excess capacity because of weak demand, putting downward pressure on producer prices that in turn erodes their profits .
China's producer prices fell 2.6% in April (2013), the 14th consecutive month of y-o-y declines and sharper than the 1.9% in March.
Consumer inflation quickened to 2.4% in April from March's 2.1%, owing to higher food costs."
It suggests that Essence seems to be continually facing pressure from higher wages (due to higher CPI) while prices of their products have continue to drop...
Hard life...Anyone has a better explanation on how Essence might turn around in this situation?
the govt has to decide at which point to give up?
cannot keep supporting zombie companies which dont make money?
(13-05-2013, 10:31 AM)happyharvest Wrote: [ -> ]Government support?
(13-05-2013, 10:15 AM)potatolover Wrote: [ -> ]Ssituation seems to be getting worse in general for the manufacturing sector in China...
Extract from Edge Magazine
" Chinese factories are saddled with excess capacity because of weak demand, putting downward pressure on producer prices that in turn erodes their profits .
China's producer prices fell 2.6% in April (2013), the 14th consecutive month of y-o-y declines and sharper than the 1.9% in March.
Consumer inflation quickened to 2.4% in April from March's 2.1%, owing to higher food costs."
It suggests that Essence seems to be continually facing pressure from higher wages (due to higher CPI) while prices of their products have continued to drop...
Hard life...Anyone has a better explanation on how Essence might turn around in this situation?
dropped to 3 cent level this morning - probably news have leaked out of yet another very poor set of results...
China paper is "remaking" its "finanicial papers"...This is another biggest koke of the centuary...
Paper industries need quite a lot of starch. if paper industries are down, will this also impact on the industrial demand for starch? (i.e. China Essence)
****************
China Paper expects a loss in the March quarter, but needs more time to reconstruct its fiscal 2012 accounts after a fire and to report its latest quarter's results, the paper manufacturer announced on Friday.
It said lower sales and prices of paper products as a result of a slower Chinese economy and depreciation of new production lines will send the company into a net loss for the quarter that ended in March 2013.
The company is also seeking from Singapore Exchange another extension of its deadline to announce its financial statements for the year ended December 2012 by Dec 31 this year; it also seeks permission to hold its 2012 annual general meeting (AGM) by April 30 next year, and to announce its first-quarter 2013 results by Dec 31, 2013.
The company had originally received an extension until June 30, 2013 to announce its 2012 results, and until Oct 31, 2013 to hold its AGM in the wake of a December 2012 fire that the company said destroyed a substantial portion of its financial records.
China Paper said it is about a third of the way through its accounts reconstruction exercise, which entails reaching out to customers and suppliers. It described the reconstruction as time-consuming and said efforts have been "hampered".
It said that many customers and suppliers have been less than entirely co-operative and prompt in their responses, creating difficulties in obtaining copies of the required documents.
The company is also relying on a new assistant financial controller, who started work only on March 1, following the departure of the previous financial controller, who left last Nov 30.
The board of China Paper will allow the company's shares to remain trading, having received assurances from the executive directors that all known material information has been announced.
Shares of China Paper, which last traded at 3.6 Singapore cents before trading was halted on May 15, resumed trading at 1:15pm on Friday and was seen changing hands at 3.5 Singapore cents at 3:30pm on Friday.
Same old bullshitting of the same reasons again..
***
The Board of Directors of China Essence Group Ltd (the “Company”, or together with its subsidiaries,
the “Group”) wishes to announce that the Group expects to register a net loss for FY2013. The Group
expects an adverse impact on profit margin for the year as the operating environment remained
challenging for the potato starch industry in People’s Republic of China (“PRC”).
In its second quarter for the financial year ending 31 March 2012 (“2Q FY2012”) results
announcement dated 8 November 2011, the Group reported that the price of potatoes fell sharply in
the second half of September 2011 due to a supply glut, causing the market price of potato starch to
follow suit. Despite a moderate increase in potato prices since 2Q FY2012, the price of potato starch
remained disproportionately low. This continued to cause a squeeze on the Group’s profit margin for
FY2013.
In addition, the severe weather in the Northeast of China has affected the Group’s potato stock. As a
result of the unexpectedly cold climate last winter season, the Group’s potato stock yielded a lesser
amount of starch. Besides, some of the potato stock was damaged by the same reason and no longer
suitable for further process, the Group sold all these damaged potato at scrap price. This has added
further pressure on the Group’s profit margin for FY2013.
The profit warning is based on a preliminary review of the unaudited financial results of the Group.
Further details of the Group’s performance will be made available when it announces its FY2013 full
year financial results on 28 May 2013 after market closes.
By Order of the Board
Zhao Libin
Executive Chairman
17 May 2013
page 11 of Edge Magazine (27 May 2013)
Dissociation seen between supply and underlying demand. Sectors most exposed to this dichotomy include chemicals, mining and base metals...
Margin pressures are seen across a number of sectors...
...
Fixed asset investments in China are tapering off. China may even let some of its state-owned enterprises go under.
Starch manufacturers are being squeezed from both ends. Increase in price of raw materials (i.e. potatoes) but price of starch has continued to stagnate. this suggests severe over-capacity in the starch industry
this is a point that company itself still does not want to admit. Why is this so?
Company continues to preach that long term fundamentals remain good....
those starch makers who also produce other food products can at least diversify some of their risks. China Essence being a pure starch maker will be hit doubly hard.
******
"Despite a moderate increase in potato prices since 2Q FY2012, the price of potato starch
remained disproportionately low. This continued to cause a squeeze on the Group’s profit margin for
FY2013."
*********
it was kind of disappointing that the company had not expected the "colder winter" and some of the potatoes had to be disposed at scrap value...
surely, there were "cold winters" in the past. Had the company not learnt from experience?
"In addition, the severe weather in the Northeast of China has affected the Group’s potato stock. As a
result of the unexpectedly cold climate last winter season, the Group’s potato stock yielded a lesser
amount of starch. Besides, some of the potato stock was damaged by the same reason and no longer
suitable for further process, the Group sold all these damaged potato at scrap price. This has added
further pressure on the Group’s profit margin for FY2013. "