China Biodiesel Share Discussion Threads

[woracle] 27/4/2009 22:49

lonhro,

Back in 2006, selling prices were 41% higher than production costs. In 2007, it was 12%, and last year it was 3%. The large portion of selling and production costs are determined by market forces and are largely beyond CBIs control. Its not given those fat margins will come back..
Also there was no corporation tax in 2006 so the 9p is flattered. It would be more realistically 6.75p with the forthcoming 15 to 33% tax shortly. Moreover, if you take the government grants as exceptions ( as they arent 100% guaranateed ), it would have been closer to underlying EPS 3p..

Of course there is potential for the margins to go back to 20%+, and demand may pick up so that they can utilise the 100K tonnes. Then it would be cheap on those parameters. But they are not given as the pricing of the products and source are beyond CBI's control. Thats why I only have a small punt here. Its not a business that CBI has any pricing power over and as last year has shown, the business model doesnt add up in years where prices go against you. So quality of earnings is poor from year to year..

Beth, just cause it was 85p at IPO doesnt mean its cheap at 5p. So I buy not based on just price but the circumstances of the business and that includes ever changing external factors. The 85p was based on assumptions who are no longer true but could have been true in 2005.. The margins this year show the business model is iffy if the numbers go against you for a few years...

So as I have said..keep an eye on those margins.. company earnings and survival is very highly geared to those volatile, unpredictable external factors.

[bethany3] 27/4/2009 20:45

woracle......so glad you did your own research. Of course the jury is still out - that's why share price is 4/5p. Currently, investment in China is not exactly the flavour of the month unlike sometime back.

When would you rather buy? At IPO at 85p or at a fraction of it like now. I, for one, did not buy CBI or HAIK at IPO as I felt they were overvalued for what they did at that particular time. But now there are more pros than cons and at 4/5p the potential just for the share price to double is huge. Again each to his/her own.

[lonrho] 27/4/2009 19:21

woracle

there is potential though as in 2006 they did approx 9p a share earnings on 2/3 last years turnover.

[woracle] 27/4/2009 17:40

Loss making for 1st 3 qtrs of 2008 because of inventory writedowns ? Bit simplistic. Good job I do DMOR and not take what u write for granted !
The demand will return, but whether they recover or not is all about demand and margins.. They have doubled capacity, NOT production yet. There is a difference..the demand wasnt there or not viable in Q3/Q4 to increase production. Gov grants have always played a part, and its nothing new. Tax rebates is new but not significant. They need more than grants/rebates to make the business model work sustainably. Last Qtr in profit on an operating basis ? Umm..no evidence of that at all. IPO at 85p ?..totally irrrelevant. Need to get demand back, and improve margins. Jury is still out..

[bethany3] 27/4/2009 16:04

woracle......sorry! What I meant was CBI had to make provisions for their excessive inventories bought at a much higher price when price of oil (poo) was very high and were loss making for the 1st 3 qtrs of 2008.

However, the tide has change somewhat with low poo, stricter control of inventories, doubling production with 2nd plant, government grants and subsidies, etc. The last qtr of 2008 CBI were in profit. Even after today's performance share price is still very low bearing in mind IPO was at 85p. DYOR!

[woracle] 27/4/2009 15:36

A year ago CBI were not making a loss..

[bethany3] 27/4/2009 13:22

About time too but still a measly share price IPO at 85p and reached 120p. A director bought at 21p a year ago when CBI were making a loss but now in profit and outlook better.

Lower raw materials and stricter control on inventory levels ( a significant reason for making a loss in the 1st 3 quarters ) plus a more matured mix of products (what ever that might mean) and with the opening of a second plant doubly production capacity resulting in a higher gross margins. Also, there are the tax advantages, grants and subsidies to help to ensure a more profitable 2009.

[lonrho] 25/4/2009 14:03

yes if haike is cheap on improved fundamentals those same macro changes should help china bio and put this on a potential return on capital employed of 20% on a p/e of well below one.

[bethany3] 24/4/2009 22:06

This stock seemed to have been forgotten by most. Could not resist the share price so topped up some again before the herd arrives. Probably go the same way as HAIK and SKR.

[lonrho] 20/4/2009 13:17

Even with todays rise the market value is only about 2 million, net tangible assets with negligible gearing is approaching 20 million. This company has the capability, as shown in the past, to make a 20% return on net assets which would be equal to 8p per share earnings. A possible ten bagger but not without risk.

[bethany3] 20/4/2009 09:52

Stocks way oversold and this rise is just the beginning and long overdue. What a coincidence? CBI and HAIK, both of which have been very dormant/neglected, put out a RNS on the same day.

HAIK also up - JV with two investment companies in the oil and gas sector. Lets hope former investors pile in again.

[lonrho] 20/4/2009 07:46

well made a profit after grants despite inventory write downs, this year should be better with no write down and a relatively stable oil price. Could make its current market cap in profit this year.

[bethany3] 15/4/2009 19:36

whoopee indeed but weird! Managed to buy at 3.4p when share price was 3.5p and so did someone else. If a director bought 90k at 21p a year ago 3.4p is good enough for me. Will see!

[mokhan2] 15/4/2009 00:36

whopee; 8% rise!!!!

[lonrho] 20/2/2009 10:52

no but in this market and in this illiquid a share as soon as anyone wants to sell a reasonable quantity market makers tank the share. This happened last november when shares dropped from 6 to 3 on what looked like one sale.

[zangdook] 20/2/2009 10:43

lonrho - any idea why the price halved on the 17th?

[lonrho] 20/2/2009 10:11

just bought 100,000 shares at 2.64. May about break even for the year after grants, tangible net assets of about 18million, capitalised about one million,negligible net debt.

[lonrho] 20/11/2008 13:16

obviously been a large sale which has not yet shown up,looking at balance sheet it does not look as though it will go bust imminently although it will make a loss until it shifts its waste oil purchases contracted at far higher than current prices. I had no trouble just picking up 100k shares at 3p so it looks like they still have plenty of shares left to shift.This is very high risk but potentially huge rewards if it can get back to its earlier margin levels.

[lqs] 20/11/2008 12:16

some weakness in the share price today.
any reason?

[the_doctor] 18/11/2008 19:53

jkershaw, the mms can (I think) open at whatever price they want. If the midpoint is too low, you can take advantage of it.

[jkershaw] 08/10/2008 17:30

Never made such a bad investment in my life in the "green" industry. I know that someone will come along, buy a small amount now and make a killing in the next two years but it wont be me and it wont be cbi, just doesnt have any favour on ami what so ever.

[jkershaw] 08/10/2008 17:28

Thats it then, Im going to have to get a job at tesco stacking shelves.

[jkershaw] 08/10/2008 17:27

bloody hell this share price is a white wash