China Sunsine Chemical Holdings Ltd (CH8.SI) is a leading producer of specialty chemicals. The company is the world’s largest producer of rubber accelerator with a global market share of 17% and China’s largest producer of insoluble sulfur. China Sunsine Chemical has over 700 customers and serves 65% of the world top 75 tire manufacturers, such as Bridgestone, Michelin, Goodyear, Pirelli. The products are distributed under the brand name ‘Sunsine’.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]
China Sunsine Chemical was founded in 1994 and is based in Singapore. With three production facilities in China, the company has an annual output of 152,000 tons. The company is listed on Singapore Stock Exchange since 2007. Shares can furthermore be traded in Germany. China Sunsine Chemical Holdings Ltd. is a subsidiary of Success More Group Ltd.
China Sunsine Chemical customers rely on the automobile industry. The global automotive market expanded by a robust 5.6% in 2016, with China, US, and Japan representing more than 50% of the global sales. Declines in Japan, Russia, and Brazil were more than offset by strong growth in China and Europe. It is expected that this trend will remain positive for 2017. PR Newswire estimates that the global automotive tire market will grow around 6.1% annually over the next decade.
With a workforce of around 2,084 employees, China Sunsine Chemical reported revenues of 1,483m CNY (216m USD) and a profit before tax of 211m CNY (31m USD) for the first three-quarters of 2016. An increase of 6% and 2% respectively compared to the same period a year ago. In 2015 revenues and profits were down 11% and 5% respectively on a year-on-year basis. China Sunsine Chemical had cash and equivalents of 311m CNY (45m USD) at the end of September 2016. The company shows a healthy balance sheet with a strong equity ratio of 77% and a low gearing ratio.
China Sunsine Chemical’s shares are in an uptrend since February 2016 and more than doubled in value since. The company is still moderately priced at only six times earnings, compared to 17 times in its peer industry.
China Sunsine Chemical is in many points an excellent value investment with limited downside risks. The company benefits from a growing automobile market as well as from a stable replacement market for tires. China Sunsine Chemical has a good cash flow which allows regular dividend payments and buybacks of own shares. With some tailwind from a continuously strong global automobile market, China Sunsine Chemical shares should have upside potential of another 30% this year.
AIS Rating: ★★★★★
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 Q1-3 only |
|
|---|---|---|---|---|---|---|
| EPS (CNY) | 0.19 | 0.07 | 0.16 | 0.47 | 0.45 | 0.34 |
| Change | -21% | -63% | 129% | 194% | -4% | 6% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 6 | 17 | 1 | 4 | 77% | 18% | 29% | 1.8% |
* Equity / Total Assets, ** Total Liabilities / Equity
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