The company ... is expected to report a substantial increase in consolidated net profit, compared to the corresponding period from 1 April 2017 to 30 June 2017.
The expected profit growth is mainly due to the increase in both average selling price (“ASP”) and sales volume of the Group’s products.
.... the Chinese government has been placing more emphasis on environmental protection, and more frequent environmental protection inspections were conducted.
Some players in the rubber chemicals industry which failed to meet the relevant environmental regulations were forced to suspend their productions. This had resulted in the short supply in the market. As such, the Group was able to sell more products at a high ASP in 2Q2018.
Company's profit alert for 3Q18 says "expected profit growth is mainly due to the increase in both average selling price (“ASP”) and sales volume of the Group’s products."
The growth comparison is on a year-on-year basis.
What was 3Q17 profit? About RMB77.6 million.
I reckon beating that figure is a given,as the profit for 2Q18 was about RMB240 million. It's a trend thing.
What to look out for is how strong the 3Q18 number is and guidance for 4Q18. So far, the story is intact, and the stock has been oversold to 94 cents.
The PE is only 3-4X with a dividend yield of 4-5% (assumes 20% payout for FY18).
