China Sunsine Chemicals Holdings

[Bluechipfan]

CF ok points taken and thank you for sharing. Sunsine has increased dividend payout in tandem with increased profit. The increase was not quantum leap which is understandable as company was still expanding and there was capex consideration. Now the company is net cash even with the latest expansion plan due for completion next year. I don't think Sunsine cut price for the purpose of achieving high utilisation rate. If that's the case they won't be plan for a new factory. The company anticipate higher demand and thus the new plant, which was originally planned few years back but  put off due to poor economy conditions then. As investors we can only rely on our assessment so your sharing is appreciated as it allow for a comprehensive and informed decision. Having said that, I would have to disagree with your negative views and I think I will continue to vest. I am not sure you are already inclined to hold negative view for whatever reason. After all, it is well documented you are not vested and out of the blue, you started this round of 'debate' when you could simply remain not vested when this thread is quiet and calm for few months already. It is not as if someone is blowing the trumpet how good this company is and thereby, you deem fit to post a message of caution, which I would understand perfectly. Anyhow, I do take note of some points raised and would pay attention to my investment in this company. After all, nobody should care more about my money other than myself.

It is perfectly OK, for anyone to ignore my assessment. As you said, you should take care of your money, not me 

I have tracked it for years, with an optimistic mind. Doubts were self-raised, and quest started (For old buddies, might know, I used to Q&A myself like a psycho ). It has reached a point, a thesis was drafted. I am not here to tell you what is wrong and right in a investment decision, but to share and validate the thesis along the way with logic and facts. Hopefully I learn. Best of all, all of us here learn. Isn't it what this forum meant for? The forum, isn't meant to blow trumpet for whatever reason(s) it might be. The forum is dead, without quality sharing from our VBs.

Why company invested, and ended up in an over-cap market? Isn't it commonly happening now? Shipping, coal and steel production, shipbuilding etc, are having similar issue now. Are the management teams not smart enough? IMO, it is a complex problem. Firstly, investment takes years, and in large capex. Next, demand forecast might be too optimistic, or might be caught surprise by slower China growth.  Last and not least, supply might be built-up unexpectedly faster, with high liquidity after the last crisis in 2008. What do you think on the logic? 

Yes lucrative business will attract new entrants as everyone want to have a share of the cake. Does the entry of new players automatically mean existing players will lose out? To certain extend yes as new players will undercut the profit margin of the existing players. In circumstances like this, how the existing players going to fend off the competition? No straight and simple answers but there will be a big different if the existing player is the market leader, as in the case of sunsine. The way I see it, sunsine's management is well aware of the competition and they are up to the challenge. I don't think it is necessary to elaborate my observation here but suffice to say as long as they don't rest on their laurels they should be able to generate FCF q after q. I do aware of the fact that some market leaders eventually lose out to new entrants such as Nokia to iPhone and Yahoo to Google. But there are also plenty examples of market leaders continue to stand strong such as Coke and McDonald's despite fierce competition by new entrants. In sunsine's case, not only they managed to sort of 'self fund' its expansion (no cash call whatsoever since IPO), they did it with yearly dividend payout to shareholders without fail as well. In addition, the company has growth steadily in size since IPO and to ignore this track record just because the company may face stiff competition seems to be overly risk averse. I would think the key is not whether there will be competition (bounce to have) but how the company deal with the competition.