A laggard - but the analysts seem to like it to some degree. U can read their reports at Sunsine\'s website
www.chinasunsine.com/index.php?option=co...view&id=38&Itemid=63
Company used to have a CFO who was very on the ball, and would make presentations whenever and whereever he could to analysts, fund mgrs, retail investors, remisiers..... Pity that despite the effort, the stock is not hot. Business is well-run, I hear, and growing because of capacity expansion. Not so soon, cos AmFraser has only 1% EPS growth for 2010. It\'s not a sexy business making chemicals that are part of the manufacturing of tyres. Any other views?
China Sunsine still cannot break out of its constraints to make a much better profit. 2Q net profit of 20.5 million was boosted by absence of RMB 9.3 million R&D expense for a trial in the same period last yr.
The company has been expanding its accelerator capacity, from 56,500 tonnes in 2010 to 66,500 tonnes in 2012. Another 4,000 tonnes will be added this year for a total of 70,5000 tonnes. In 2007, capacity was 39,000 tonnes only.
The expansion has not strained the balance sheet. Its net borrowing is RMB 60m because of good cash flow.
More importantly, utilisation remains high despite added capacity.
The company has been aggressive in pricing to gain market share. In 2Q 2013, average selling price was RMB18,500 per tonne, down from RMB18,900 and RMB 21,300 in the corresponding periods in 2012 and 2011 respectively.
Comparison of pre-tax profit may be more relevant -- current year's 2Q's RMB32.5m was much higher than last year's RMB19.3m.
If accelerator price stabilises and rebounds, profit should rise quite significantly.
Things would have been much better if not for slow accreditation of 6PPD by foreign tyre manufacturers. Sunsine is bearing the fixed cost of the 6PPD infrastructure now. If 6PPD passes the tests, a good portion of additional revenue will flow directly to the bottom line.
Lastly, the decision to quadruple insoluble sulphur output, after improving the yield of its 10,000-tonne factory, is significant as China is a net importer of this product.
Business Times, 9 Aug 2013 -- SPECIALTY chemical producer China Sunsine reported a net profit of 20.5 million yuan (S$4.2 million) for its second quarter ended June 30, up 83 per cent from 11.2 million yuan for the same period a year ago.
In the previous period, however, the company was hit by 9.3 million yuan of research and development expenses relating to a failed trial production of a chemical. Otherwise, net profit growth would be flat.
At an investors' briefing on Tuesday, chief financial officer Dave Yak said that gross profit margins in the third quarter are likely to go down because the price of aniline, a raw material used in production, is going up.
He added that the company is pursuing a low-margin, high-volume strategy. "It's something inevitable," he told the group of around 15 investors that had gathered at the Urban Fairways indoor golf club and bar at Tanjong Pagar's Capital Tower.
"If you want high margins and low volumes, your innovation must be very good. In our industry, we don't see how innovation can play a part. If we don't expand our volume, and our competitors expand, we could be gone."
Gross profit margins slid from a high of 26.5 per cent in the first three months of 2011 to 14.6 per cent in Q1 2013, and then rose to 18.6 per cent in Q2.
Mr Yak said margins will fall in Q3, "but won't go below 14.6 (per cent)".
"Our margin is down, we don't deny that, but we're still making money. For this year, we're still confident that we'll be positive," he said.
Mr Yak was giving his last investors' briefing after almost four years with the company. His successor, Tong Yi Ping, 35, takes over in October. "My departure doesn't mean anything," Mr Yak told investors, saying there was no "hanky-panky" involved.
China Sunsine closed on Wednesday at 19.6 Singapore cents, down 0.4 cent or 2 per cent.
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