facebook(Stocks Discussion) SGX: China Sunshine Holdings Ltd [SGX: CH8.SI]? - Seedly
Seedly logo
Seedly logo
 

Anonymous

Asked on 10 May 2019

(Stocks Discussion) SGX: China Sunshine Holdings Ltd [SGX: CH8.SI]?

Discuss anything about China Sunshine Holdings Ltd SGX: CH8.SI share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell China Sunshine Holdings Ltd SGX: CH8.SI on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment in China Sunshine Holdings Ltd SGX: CH8.SI

0 comments

1 answer

Answer Now

Answers (1)

Business Profile

Source: StocksBNB

China Sunshine is a leading speciality rubber chemicals producer selling accelerators, anti-oxidant, vulcanizing agent. In fact, they are the largest producer of rubber accelerators in the world and the largest producer of insoluble sulphur in China. Their facilities have a total capacity of 172,000 tons per annum. Finally, they serve more than 65% of Global Top 75 tire manufacturers.

Financials

Income Statement

Source: China Sunsine Chemical Holdings Ltd Annual Report 2018

Revenue has been growing consistently since the firm's listing on the SGX. This was quite a good CAGR of 16.4% growth. Consequently, net profits have grown tremendously as well, which landed a CAGR of 21.4%. Sales volumes and net assets have also experienced good growth. Over time, the company has become more profitable as well. The biggest jump in profitability occurred in 2018, which probably resulted in a rally in share prices from that period.

Balance Sheet

Source: China Sunsine Chemical Holdings Ltd Annual Report 2018

Their balance sheet seems quite strong as well, especially when we look at their short-term liquidity. This has been helped by the very high cash balance at the company has. However, I would add that there is a chance the company is holding too much cash. Such cash does not generate many returns and could be invested in other assets to generate more returns.

Moreover, the firm holds very little liabilities as well, and in fact, does not even hold non-current liabilities. This adds to how strong their balance sheet is, as default risk is quite low.

Cashflows

The company seems to have strong cash flows, as shown by its very high cash flow from operating activities. Despite being quite a capital intensive business, the firm has generated quite a good amount of free cash flows. As a result, their dividends look pretty sustainable too, given that dividend payout ratio is low and dividends as a % of FCF is also quite low. Such high cashflows have led to the company's cash balance growing quite high.

Efficiency Ratios

Source: China Sunsine Chemical Holdings Ltd Annual Report 2018

The firm is quite efficient on their assets as well. The metrics which I have used are all very high as compared to other businesses. ROIC which raises the figure. Hence, this means that the firm is even more efficient than some of the figures might show. This is because the firm can still generate the same returns with an even lesser amount of assets.

Valuation

Given their excellent financials, the business looks quite cheap based on their P/E ratio and the other multiples. Hence, this share does look quite attractive. Beta, however, is slightly higher at 1.43, this means that the business has a higher market risk. Based on the Capital Asset Pricing Model, the value of the firm's future cash flows would thus have to be discounted at a higher.

Share Price Performance

Over the past year, the share prices have performed worse relative to the STI. The shares had a return of "-32%". This is quite a large drop Year on Year. However, their 5 year returns are quite high at 355%, while the STI had hardly moved. Currently, the firm is trading at 65% of their 52 weeks high of $1.65. This drop is mainly due to the sell-off at the end of February.

1

Gabriel Tham

Gabriel Tham

04 Dec 2019

This is so helpful 👍

Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about

Post