Haike Chemical Share Discussion Threads

[napoleon 14th] 06/10/2011 12:50

zak - cool, man...
I'd just say that past cashflow figures will be grossly outdated by the addition of a lot of new capacity, already contracted, producing & get paid for it.
An expert would guesstimate the sales/profit ratio, but 315MRmb in feedstock is, say, a month's supply? So feedstock T/O alone is c.3500MRmb/annum for the new kit?
Didn't find production costs, but there's a variety of products here.
Raw materials - POO - will fall in a recession (which needn't be global).

What this needs is a statement for next Q PDQ, hence the leap in the dark factor,
particularly in a stonecolddeadmarket in this type of share.
Volume doesn't exist & small sells can drag an share price down for nowt much.
The chart has very low indicators.
IMO 40p-ish is a level one has to watch.

[vatking] 05/10/2011 10:42

Zak

You are certainly outspoken but unfortunately your statements demonstrate your lack of any knowledge of the refinery business or business generally.

Iwilldemonstrate this by comparing firstly the depreciation schedules of Valerowhere the usefullife of assets is:

Crudeoilprocessing10-33 years
Butaneprocessing 30 years
Pipeline10-44 years
Other 3-44 years

Compare those with Haike

Buildings 20-30 years
Machinery and Equip2-18years
Electronic Equip 5 -12 years
Motor Vehicles 8 -12years
Generally2-30 years


So that I believe HAIke are if not in line with general practice are slightly more conservative

As to a rights issue - what price? you sell short,drive the price down, and get in in under the rights price. NOBODY wants a rights issue. The option would be a private placement, which would dilute everybody's holdings.

Zak,why don't you learn how to read cash flow and financial statements? You seem to be unaware that they just constructed a new refinery at Ruilin and developed their chemicals business.

If you're going to post on this board, please make some effort to provide informed comment.

[zaksab] 03/10/2011 20:18

DOnt look at ebitda mate look at operating cash flow. Depreciation is not a free cost - you need to amintain what is an asset intensive operation. They cannot service the debt with cash flow. They are having to borrow more to pay interest on their debt. Whats worse is that the banks are deamanding more and more cash collateral on incremental borrowing.

They need to delever materially and soon. Otherwise they are insolvent. Investors looking at earnings take note. They are not real. For instance check out the depreciation policy the implied asset lives are farcical.

[napoleon 14th] 03/10/2011 15:25

You're not wrong either, zak.
The state control/manipulation is easing; they're realistically gearing their oil industry to POO at reasonable speed, no longer to internal considerations.
That will take time, but HAIK have expanded their refinery a lot to make the margins that are now possible & reasonably steady (the Chinese gov't got fed up with their state corporations' unavoidable titanic losses under their old price fixing regime). POO looks to be falling for now, but is a dangerous variable until fine tuning to POO is complete.

Specialty chem prices can also jump about, but then that's inevitable.

Bank loans (related to recent large fixed asset investment - refineries) are safe, tho' not garanteed, & if ebitda keeps progressing, repayment should be quite rapid. Not too surre about raising capital - current shareholders won't want watering down just when things seem to be coming together at last.

I agree about the divi. A facile gesture tho' well covered by ebitda.
What we don't know is what shareholders agreed in private before the decision. The majority are employees & might want something to justify holding these!

[zaksab] 02/10/2011 17:20

What I was arguing was that with the degree of leverage this company has the earnings are very very poor quality. Quality earnings have durability as a first then some growth potential (with modest incremental capital requirements) as a cherry on the cake. Haike does not have either facet. It is inherently a deeply unattractive business (a refiner selling into a price capped domestic market with much larger state backed competitors and a government vigilant about inflation and social unrest) and a patently unsustainable capital structure. The best thing this company could do, if it could manage to, would be to do a large rights issue. That would be most certainly in long-term shareholders benefit. The fact that they paid a dividend recently would worry me if I was a shareholder. If I met the FD of this company the first thing I would ask him would be if he smokes crack.

[napoleon 14th] 02/10/2011 17:03

Quite a lot has been asked along those lines, zaksab.
A/Cs are not going to get the "best presentation" prize!
Estimates are between 40p, which I'll believe when I see it,
& more normal BB calcs. of 6.8p for H1 if I got it right!
What is the £/RMB rate, anyone?

[zaksab] 30/9/2011 22:27

When people say this company is on a pe of 1 or whatever can they clarify what they interpret to be the significance of this please. I am not asking what a PE ratio is.

[napoleon 14th] 30/9/2011 17:52

Volume generally down to drought levels, so any sells have a disproportionate effect.

Worth sitting it out imo.

[the big fella] 30/9/2011 15:35

In these illiquid times anyone trying to sell lines of 50k and 35k will hammer the price.

[the oak tree] 30/9/2011 12:51

If you look at Haike share price history it has been one of huge rises and sudden falls. I suspect thats what will / is happening now. Hopefully we'll get a trading update towards the end of the year.

[the big fella] 30/9/2011 11:26

Vatking - I am afraid I can't. As posted earlier in the thread on the day the results came in I calculated EPS of double the published - the difference being the minority interest.
They are a very awkward set of accounts to get your head around, and hence why I haven't bought any more. The price has moved so far now that I will keep them and see how these play out.
Clearly no one believes the house broker either!

[vatking] 30/9/2011 11:16

Can anyone explain to me the adjustments for minority interests

RMB Millions 6 months 2011 Yr 2010

Net Income 46.0 11.99
Minority Interest -22.00 30.58

Attrib to shareholders 24.00 42.57

EPS RMB 0.618 1.11

How come the MI contributed in 2010 - there was no explanation in the accounts, and I understood that most MI had been bought out.

[drsous] 30/9/2011 10:44

i dont think we have to worry about the false accounting issue with haike;unless they falsified the years of losses?

[the oak tree] 29/9/2011 17:40

Fair bit of weakness today and wouldn't be surprised if it dips a bit more. Do think it will come back though towards the end of the year as these small shares do tend to loss interest in the middle months between results. Just hope the oil price doesn't move up too much.

[napoleon 14th] 28/9/2011 15:48

Continuing your jist, rivaldo, there's a P/E of under 1.5.
HAIK should get first prize for discreet deramping, LOL!
Here's hoping you're right as I'm sitting on these for now.
"Just another market aberation" I said hopefully...

[rivaldo] 28/9/2011 12:07

Thx for the broker update kru. Encouraging to see that the 40p EPS forecast this year has been maintained - they MUST have spoken to the company before updating. Which puts into perspective HAIK's usual caution in their RNS's.

[napoleon 14th] 28/9/2011 11:15

Old Portmuthian - 27 Sep'11 - 14:19 - 9961 - a bit like JVs in fact.
Minority interests tend to get bought out, like the two last year.
These are spec chem businesses; this is a way of expanding into that sector.

[the big fella] 27/9/2011 15:51

Thanks. WH have been pretty much on the ball, so I am more than encouraged they are not cutting their forecasts.

[krupatel] 27/9/2011 15:44

Hanson westhouse yeah

[the big fella] 27/9/2011 15:20

HW do you mean WH ie Westhouse? I see they have not changed forecasts (which are for 40p EPS for the year), which I find odd, unless they know something we don't.
It is clear from reading the thread no one else is expecting them to get anywhere near 40p - so why didn't they take an easy opportunity to cut the forecasts?
If they get anywhere near those levels this is a gift at current prices. However this is a strange market we are dealing with so WTFDIK!

[krupatel] 27/9/2011 15:10

no link, got sent it by HW

[the big fella] 27/9/2011 15:09

Can you post a link to where that came from (Westhouse?). At a conference today. Can anyone clear up what an actual GBP EPS was please as I can't get the results to load properly at present.