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Valuations up, China Sunsine no longer ponders delisting

Monday, May 1, 2017 - 05:50

Singapore

WITH its shares at a historic high, S-chip China Sunsine is no longer thinking about delisting from the Singapore Exchange (SGX), said chief executive officer Liu Jing Fu.

China Sunsine, which was listed in Singapore almost 10 years ago, last considered leaving between 2010 and 2013, when earnings were weighed down by research and development (R&D) expenses for an anti-oxidant product and valuations stayed subdued. But in 2014, 2015 and 2016, net profit at China Sunsine, a speciality rubber chemicals manufacturer which supplies major tyre makers like Bridgestone and Hangzhou Zhongce, recovered to around or over 200 million yuan (S$40.5 million) a year, while earnings multiples rose. The company paid off all its bank borrowings in 2016.

"Our biggest challenge is still ourselves. With the rapid development of the company, we have to raise the quality of our staff," Mr Liu, talking in Mandarin, told The Business Times.

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Mr Liu was speaking after the annual general meeting and first quarter results briefing of China Sunsine.

China Sunsine makes rubber accelerators, which are chemicals used to speed up the vulcanisation or curing process of rubber. It also makes insoluble sulphur and anti-oxidants used in the curing process.

Net profit for the first three months ended March 31, 2017, which is typically its weakest quarter, rose 70 per cent to 57.2 million yuan from 33.6 million yuan a year ago.

Revenue was up 29 per cent to 574.6 million yuan from 445.1 million yuan a year ago, driven by increases in sales volumes and average selling prices. Tyre prices rose as rubber prices went up, leading to increased demand for chemicals from China tyre makers, the company said.

It said it was also able to take some market share from competitors affected by stringent environmental protection standards imposed by authorities.

Gross profit margin inched up to 24.4 per cent compared to 24.2 per cent a year ago, but was lower than 27.2 per cent a quarter ago due to more lower-margin anti-oxidants sold.

Over 33,000 tonnes of chemicals were sold in the quarter, 10 per cent more compared to over 30,000 tonnes a year ago and down slightly from over 34,000 tonnes a quarter ago.

Total annual production capacity this year of its three main segments of accelerators, insoluble sulphur and anti-oxidants is expected to rise to 172,000 tonnes at end-2017, from 152,000 tonnes in 2014 to 2016.

China Sunsine has been investing to expand its capacity in making TBBS rubber accelerators, with commercial production of a Phase I 10,000-tonne line expected to begin in the second half of the year.

These accelerators are in demand due to an increase in popularity of radial tyres in China, chief financial officer Tong Yiping said.

Asked about the likelihood of overcapacity in this segment, he said TBBS accelerators are harder to make, discouraging competitors.

The company last traded at S$0.80, double its initial public offering price of S$0.39. Net asset value at end-March was S$0.62.

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