China Sunsine Chemicals Holdings

[Curiousparty]

If pre-tax profit turns out to be $300mil RMB, the current market price of sunsine is highly unjustified!

Shouldn't share price be doubled at least?

I agree with your analysis. The key is on the amount of increment to make a difference. FYI, the ASP of accelerator was more than 26,000 RMB in 2008.

Base on indicators, especially the asset turnover, there is no excess cap in asset utilization. I reckon the production line is the major capex for cap expansion, rather the fixed capex of lands/factories.

Don't forget the maintainance capex, which is usually high for chemical production factories.

(not vested)

During the summer Olympic in Aug 2008, industrial productions near Beijing were halted or scaled down to keep the air clean. Accelerator prices surged beyond RMB 30,000 as a result. The RMB 26,000 average price recorded in 2008 was therefore unusual.

It will be good enough if ASP recovers to where it was before the drastic price cut in 4Q 2011.

Last year, Sunsine sold 72,700 tonnes of accelerators at ASP of RMB 18,480 per tonne, to achieve a pre-tax profit of RMB 118m.

If ASP were RMB 21,150 (the 9-monh ASP before the price cut in 4Q 2011), pre-tax profit would have been a staggering RMB 312m.

The 6PPD factory is already fitted with equipment to produce 20,000 tonnes but 2013 output was several thousand tonnes only.

Installation of equipment to produce 10,000 tonnes of IS was completed by the end of 2013 at the new factory, and commercial production is scheduled to start in 2Q 2014.

Proper waste treatment facilities (tall chimney and waste water treatment works) sized for an ultimate output of 50,000 tonnes of accelerators at Weifang are costly. Many accelerator factories therefore skip proper waste treatment to hold down their production costs. Recent intervention by Government has levelled the playing field.