Haike Chemical Share Discussion Threads

[krupatel] 27/9/2011 14:59

Interim results

Now reporting in Renminbi, HaiKe has delivered a progressive set of results for the six-months ended June 2011. Revenue increased by 71% to RMB5.4bn, while the pre-tax figure swung from a loss of RMB144m to a profit of more than RMB53m. With our forecasts unchanged, we maintain our target price of 150p and BUY recommendation.

Key points

 Revenue up strongly. Revenue rose by 71% to RMB5,441m as both selling prices and sales volumes increased during period. Gross profit rose sharply, from RMB9.6m to RMB248.3m, as the gross margin increased from 0.3% to 4.6%. Encouragingly, all three divisions - Refinery, Speciality Chemicals and Biochemicals - reported both revenue growth and an expansion in margin.

 Company swings into profit. With only a modest rise in SG&A, from RMB78.7m to RMB94.5m, the operating profit swung from a loss of RMB69.1m to a profit of RMB153.9m. A RMB26m rise in net interest costs to RMB100.6m, meant that the company achieved a pre-tax profit of RMB53.2m, compared to a loss of RMB143.7 in H1 2010. With an effective tax rate of 13.2%, this equated to a net profit of RMB46.2m versus a loss of RMB144.7m the prior year.

 Financials. During the period, the company generated RMB239.3m of cash before changes in working capital, which included a RMB278.5m investment in inventory. Ending the period with RMB347.5m of cash, net assets rose from RMB398.4m at the end of 2010 to RMB405.0m at the end H1 2011.

Outlook. Growth of the less regulated and more profitable Chemicals business should result in improved earnings and visibility for the group, provided that management can operate the Refinery business at break-even or better. We note management's cautious outlook for the Refinery business and underperformance since the period end. This division accounted for 71% of group revenue in H1. Much rests on Q4, with H2 tending to account for two-thirds of group revenue and the majority of its profit.

[old portmuthian] 27/9/2011 14:19

Results were better than I had expected (wasn't expecting too much) but the market reaction at lot worse than I had hoped. HAIKE are normally gloomy with their view of the future so not sure there was a profit warning. A nominal interim dividend would have helped to calm the market.

What is confusing is the 'non controlling interest' figure at the end of the accounts. Does this mean HAIKE only get half the profits (23M) which doesn't square with the headline profit of 43M if so do HAIKE hold all the liabilities or only a fraction. Any comments.

[napoleon 14th] 27/9/2011 12:05

The multiple currency situation is a bit disconcerting & a possible "smoke & mirrors".
My knowledge of RCG says that!
Objectively speaking, figures, plus those like eps, should be in Rmb/$/£.

The Consolidated statement for the six months to 30 June 2011 CHAIRMAN'S STATEMENT is unclear as RMB/$ comparisons are difficult to make.
We get, if I understand,
RMB for H1'11 // $ for H1'10 & = RMB // Y/E 2010 $ & = RMB
I would have liked "$ for H1'11".
Can't find it!
____

Still, increase in activity is good & high.

40p eps was taking it a bit far, but who has found eps in £p for H1'11?
If they only did 6.2p again, that 12.4p/Y & a P/E of 4.5, which is still cheap.
That, & degearing, is the key to 2011.

[napoleon 14th] 27/9/2011 11:27

We know they invested a lot (= > gearing) in the last two years, but :

"Bank loans

Bank loans increased to RMB3,057 million as at 30 June 2011 compared to RMB2,763 million as at 31 December 2010. The short-term portion of bank loans increased by RMB308 million while the long-term portion decreased by RMB14 million.
The increase in bank loans was mainly due to increased financing demand for procuring feedstock when most subsidiaries resumed production at the end of June.

Cash flow from operating activities

Cash flow from operating activities was negative at RMB89.2 million for the six months ended 30 June 2011 as compared to a negative RMB347.9 million for the same period in the previous year. This was mainly attributable to improved profit and change in working capital. "

ie.: adapting to the market & restarting refineries to make profits.
Doesn't shock me, far from it.

[salmon stuffer] 27/9/2011 09:50

a vieled profit warning?
The debt levels in this company might prove very important now.
the share price reaction is understandable - and that on a good day for the market.
np

"Outlook
l Global economy still weak and international oil market remains volatile creating some uncertainty on refinery business. The price spread between refined products and feedstock will be key to our performance
l Chemical products business continues to expand but selling prices deteriorated due to a weakening global economy
l Q3 underperformed and Q4 is traditionally a busy season for refineries and Haike's full year performance will be largely dependent on business generated in this quarter. "

[the big fella] 27/9/2011 07:47

Riv are you sure it equates to only 6.2p EPS? 46 RMB equates to 4.8 mil gbp. C38 mil shares in issue so I make it double that. I am reviewing on blackberry so v difficult looking at the results so may have this completely wrong!

[rivaldo] 27/9/2011 07:45

Good results - around 6.2p EPS in H1 alone. Outlook mixed, with Q3 having "underperformed", though HAIK are always so restrained in their language that you can't be sure that that doesn't actually mask a reasonable performance.

Much depends on the busy Q4. Not sure they'll make 40p EPS, but 20p or 30p EPS would do me fine at this share price!

With the earnings-enhancing acquisition activity recently undertaken it's possible that Q4 could be outstanding at best and reasonable at worst, assuming fuel oil prices are stable.

EDIT - rajauk, how did you get 25p EPS?! See Note 7 to the prelims.

[the oak tree] 23/9/2011 20:58

Surprised it went up slightly in this market today. Perhaps results will be out next week?? Quite incredible broker forecast of 40p EPS with shares about 62p. Even in this market you just have to hold and wait with this one.

I know there is an employee share scheme but would have expected some Board members to have been buying given that forecast. We're in the closed period so perhaps they are waiting....

[the big fella] 22/9/2011 16:16

Mind you not even 30k shares sold today. Sign of the times.

[the big fella] 22/9/2011 16:14

Shocking timing with my purchase :(. Fortunately it is the only thing I have got tempted on for ages. Let us hope for better when the results are digested.

[rivaldo] 22/9/2011 15:49

Cheers krupatel.

Er, isn't the drop in oil prices good news for HAIK?

[the big fella] 20/9/2011 14:36

Thanks for clearing that up.

[krupatel] 20/9/2011 14:08

Just spoken to HW who said results are next week.

[matt] 20/9/2011 12:33

Well all looking good for a bounce

[the big fella] 20/9/2011 11:46

Anyone had a look at the long term chart. CR keeps banging on about "bowls". If this completes the bowl at £2 then we will be trading on a historic PE of about 5 (according to Westhouse). Doesn't seem too fanciful in the least.

[the big fella] 20/9/2011 11:43

So on that basis sometime this week or latest early next week.

[matt] 20/9/2011 11:15

Yep,
Thurs 24/9/09
Mon 20/9/10

[the big fella] 20/9/2011 10:57

I haven't seen anything official as to the date of release. They were released on the 20/9 last year, so I suspect some were expecting the same this time round.

[matt] 20/9/2011 10:45

Ok, thanks krupatel, worth asking.

[krupatel] 20/9/2011 10:43

Yep was expecting to see them today, not sure what's happened

[matt] 20/9/2011 10:41

Hmmm, not seen anything or heard about results.