China Biodiesel Share Discussion Threads

[qipincha] 21/9/2009 13:45

I think the share is extremely under- valued
a lot of company is negative equity and hugely in dept....
CBI will do well in future.
as the interim is a report of the first six month until June,2009
the second half will much better

[aim11] 21/9/2009 11:29

nope, that's just me making up a multiple that people will think about...i think 10x is too high but 2x too low. i could be wrong but i think the mkt is a lot more simplistic and doesn't look ahead very far for earnings in these companies.

[qipincha] 21/9/2009 10:44

hi aim,

do you know how do they define the ratio, where this 5x from?

[taurusthebear] 21/9/2009 10:24

Looks okay to me, these figures were never going to be the whole story. Just join the dots and it's apparent that H2 is likely to be quite a bit better, putting this on a likely current-year PE of 2-3. :0)

[mikeja] 21/9/2009 10:08

On the face of it q the figs dont look that wonderful compared to H1 2008.
MM spread is a bit offputting as always otherwise wld be buying more

[qipincha] 21/9/2009 09:53

could not understand why price fall,
will buy in if it falling more

[qipincha] 21/9/2009 09:12

hi guys,
do you have any comments on the shipping cost?

[mikeja] 21/9/2009 08:44

Tim,your estimate for H2 production is above mine and so far H2 oil prices,on which CBI selling price is based are more than 40% up over H1,I have taken only a 27% rise in prices.The VAT rebate may be more than I have suggested.

[tim00] 21/9/2009 08:23

Yes, that's obviously a factor. I'm just saying that while your approach to estimating profit is fine, on the VAT rebate at least it is at one end (namely the best possible outcome) of a spectrum of outcomes.

[qipincha] 21/9/2009 08:22

interesting morning!

[mikeja] 21/9/2009 08:19

CBI presumably competes against oil refineries who dont get the VAT rebate,the customer will choose the cheapest anyway.

[tim00] 21/9/2009 08:13

Mike, customers know that CBI products are VAT free. The fact that it's a tax is pretty irrelevant, it's equivalent to a cut in feedstock costs to CBI (VAT being a cost like any other). You'd accept presumably that if feedstock prices fell, customers might expect price cuts from CBI to reflect that? Anyway, your figures give me confidence that my initial guess was too pessimistic.

[mikeja] 21/9/2009 08:08

Dont follow that,Tim.Can't see any reason for sharing VAT rebates with customers.Obviously market conditions are variable,thay is why I adopted the very conservative estimate for trading profits.If gross margins remain around 1000 RMB pt that would suggest 30m RMB less expenses of say 13m RMB.Leaving 17m rather than 10m.

[tim00] 21/9/2009 07:56

Thanks Mikeja for your numbers, that's very encouraging. However, you should bear in mind that you can't just lump the VAT rebates mechanically into profit, as an accountant would. Market conditions might mean that the proceeds are shared with customers through lower margin and prices.

[tim00] 21/9/2009 07:50

Output was roughly 5000 tons in Q1 and 10000 tones in Q2. My projection for 2009 H2 is about 30k-35k tons, or at least double that in H1. Sustained growth in 2010 would see very strong profitability as we approach full capacity utilisation.

[qipincha] 21/9/2009 07:49

excellent!
you are all early birds!

[mikeja] 21/9/2009 07:47

All the profit must have been made in Q2.Indeed it is quite probable that Q1 produced a loss.H2 production will probably be about 30k tns.Prices will be higher so the VAT rebate will be substantially higher.30k tns at a price of 5000RMB would give a VAT rebate of 15m RMB.Assuming samefor other gov help and H2 total for gov wld be 23m RMB.trading profit is more difficult to assess but on the most conservative estimate should be well north of 10m RMB.Taking 33m RMB gives H2 eps of over 6p a share.I stick to my forecasts,indeed would probably increase them.

[aim11] 21/9/2009 07:37

was interesting i thought that it seems like q1 was still very difficult and output only really started to bounce back in q2. despite this the numbers were pretty good and they generated free cash.

[tim00] 21/9/2009 07:33

Yes, very good cash generation. It will be interesting to see what happens to the sp, though as a long-term investor I'm not that bothered about short-term price performance.

[aim11] 21/9/2009 07:30

good cash generation in the period, free cash flow positive and decent reduction in net debt

[tim00] 21/9/2009 07:17

NAV per share is 37p.

[tim00] 21/9/2009 07:13

I make it 1.2p per share profit, which I'm happy with. 2009 H1 was the nadir of the global recession, the deepest since the 1930s, so to make a good profit in this period is a creditable performance. Guidance for recent trading is strong, so maybe 4p per share for 2009 as a whole. Mikeja I think is being a touch optimistic. Incidentally, it does look like trading on Friday was due to a leak. Will Directors now buy more?

[jailbird] 19/9/2009 23:26

and the breakout section

[protean] 19/9/2009 13:40

Gets a mention here in the Strong Upward Momentum section