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China Sunsine Chemicals Holdings
16-11-2017, 02:11 PM,
Post: #891
China Sunsine Chemicals Holdings
Based on Yanggu Huatai’s latest update, they are constructing 10000 ton IS new capacity from their internal financial resource. But sunsine is still ahead of them significantly as both TBBS and IS 10000 new capacity already completed and just pending approval for production.


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16-11-2017, 02:42 PM,
Post: #892
RE: China Sunsine Chemicals Holdings
https://www.forbes.com/sites/trevornace/...3f60b84666

I was at the briefing too. Apparently the drop in sale volume was not due to lack of demand but something to do with what mentioned in the above article. Going forward, Sunsine's sale volume should reflect the actual market demand. See link below

http://mp.weixin.qq.com/s/sK4M78OLAyFZzWHVZedhTg

Before I attended the briefing, I was a bit disappointed and perplexed by the drop in sale volume. Up till the results release, I was confident that Sunsine would benefit from the clampdown of environmental harmful production. I now understand the situation and the causes. Having said that, if 4Q still surprise on the downside then I would be cautious, which I think really shouldn't be the case.

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16-11-2017, 09:03 PM,
Post: #893
RE: China Sunsine Chemicals Holdings
Tires are not capital good. They are consumable goods.

World car population is growing and replacement tires account for 70% of tire sales.

There are many casualties in the rubber chemical industries. The competitors that were mentioned in Sunsine's IPO prospectus are either out of business or had downsized.

Sunsine's current competitors are Yanggu Huatai and Tianjin Kemai. TJKM's IPO to raise funds have been rejected many times. YGHT's rights issue just got approved and its priority is to move its current facilities. It will take 3 years for each of them to add capacity.

Sunsine is in good position to increase its market share and sale volume.

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18-11-2017, 12:08 PM,
Post: #894
RE: China Sunsine Chemicals Holdings
(16-11-2017, 02:11 PM)kyle Wrote: Based on Yanggu Huatai’s latest update, they are constructing 10000 ton IS new capacity from their internal financial resource. But sunsine is still ahead of them significantly as both TBBS and IS 10000 new capacity already completed and just pending approval for production.


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hopefully, the new production line will be online by end of this year.

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20-11-2017, 09:32 AM,
Post: #895
RE: China Sunsine Chemicals Holdings
(18-11-2017, 12:08 PM)laowangnextdoor Wrote:
(16-11-2017, 02:11 PM)kyle Wrote: Based on Yanggu Huatai’s latest update, they are constructing 10000 ton IS new capacity from their internal financial resource. But sunsine is still ahead of them significantly as both TBBS and IS 10000 new capacity already completed and just pending approval for production.


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hopefully, the new production line will be online by end of this year.

Sunsine's annual profit in the last 3 years (2014 to 2016) is around RMB 200 mil.

Before this period, annual profit around RMB 100 mil.

With the enforcement of environment protection, the new normal annual profit should be around RMB 300 mil. This is without the new production lines of TBBS and IS.

The capital expenditures for the new TBBS line is low and the selling price of TBBS is very high. I am expecting profit and cash flow (zero gearing) to increase at a faster rate.

For FY2017, contributions from the new lines will be added bonus.

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20-11-2017, 03:21 PM,
Post: #896
RE: China Sunsine Chemicals Holdings
(20-11-2017, 09:32 AM)tiongkokgor Wrote:
(18-11-2017, 12:08 PM)laowangnextdoor Wrote:
(16-11-2017, 02:11 PM)kyle Wrote: Based on Yanggu Huatai’s latest update, they are constructing 10000 ton IS new capacity from their internal financial resource. But sunsine is still ahead of them significantly as both TBBS and IS 10000 new capacity already completed and just pending approval for production.


Sent from my iPhone using Tapatalk

hopefully, the new production line will be online by end of this year.

Sunsine's annual profit in the last 3 years (2014 to 2016) is around RMB 200 mil.

Before this period, annual profit around RMB 100 mil.

With the enforcement of environment protection, the new normal annual profit should be around RMB 300 mil. This is without the new production lines of TBBS and IS.

The capital expenditures for the new TBBS line is low and the selling price of TBBS is very high. I am expecting profit and cash flow (zero gearing) to increase at a faster rate.

For FY2017, contributions from the new lines will be added bonus.
3Q profit is below market expectation even though it has registered a 7% increase in net profit. I have forecast close to or even a net profit of rmb 100m. No wonder there was sell off after the results released. 

4Q profit should pick up and surpass last year's level. To hit full year profit of 300m, 4Q's net profit must be at least 91m, I think it is not easy but it should be no problem achieving full year's net profit of at least 280m.

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20-11-2017, 04:23 PM,
Post: #897
RE: China Sunsine Chemicals Holdings
I feel 91mill RMB in 4th qtr is achievable. 

Production vol should be higher now due to an unlikely stop work order from central gov this qtr, coupled with the possibility of passing some price increases to their end customers. These should drive rev increase and better margins.

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21-11-2017, 02:34 PM,
Post: #898
RE: China Sunsine Chemicals Holdings
From Maybank KE....

21/11/2017, 3 hours ago
Maybank KE Retail Research 

Maybank KE issued an unrated note on specialty rubber chemical producer, China Sunsine Chemical (CSSC), citing its position as an eco-compliant market leader in rubber additives for global tyre makers. 

The group is one of the biggest producers of essential rubber additives, rubber accelerators (18% global market share) and insoluble sulphur (top in China), supplying to top tier tyre makers, such as Bridgestone, Yokohama and Michelin.

Despite a temporary industry-wide production shutdown in 3Q17, the quarter's results were in line, bringing 9M17 earnings to Rmb209.3m (+35%) or 75% of the street's full-year forecast. This was supported by higher average selling prices (+25.1%) and steady sales volumes (+0.4%).

Amidst China's recent emphasis on pollution controls, CSSC's eco-compliant facilities have enjoyed greater market share and pricing power, as authorities take enforcement action against competitors which failed to meet regulatory standards. 

Accordingly, sales volume of rubber accelerators grew at an average rate of 11.6% p.a. from 108,973 tons in FY14 to 135,791 tons in FY16. 

As bulk of the top 75 tyre makers in the world account for more than 80% of its revenue, demand from tyre manufacturers have an outsized impact on CSSC's prospects. 

At present, the group is enjoying tailwind from China's growing vehicle population (2016: +12.8% to 194m), continued expansion in tyre manufacturing (2017e: +4.6% to 438m), as well as subsequent replacement demand.

On valuations, the house highlighted that CSSC appears deeply undervalued at 8x FY17e P/E, against industry peers' average at 17x and tyre makers at 13.5x. This becomes even more undemanding on an ex-cash basis at 6.5x for a company which has been profitable since listing, with average earnings growth of 12.6% p.a. over the past 10 years. 

Potential upside catalysts include production capacity expansion, extension of its dividend policy beyond FY18, and further accreditation of its insoluble sulphur and anti-oxidants by global tyre makers. 

The street has 2 Buy ratings, with an average TP of $1.39 on the counter. CSSC is a constituent of the Market Insight Growth portfolio.

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