China Biodiesel Share Discussion Threads

[qipincha] 20/10/2009 12:42

hi tim, nice to see u around. cbi is really cheap at the moment
however, people will realise its value soon
it will become a hot topic in China in the following years

there is another news,regarding cbi setting their office in philippines to acquire cheap feedstock

[tim00] 20/10/2009 12:30

Good find! Should be positive I think, as it will encourage demand for biodiesel. As a preferred supplier, CBI might also pick up acquisition opportunities. CBI still amazingly cheap.

[qipincha] 20/10/2009 12:26

China to promote biodiesel use



CE Today reports that China would promote the use of biodiesel, and as early as next year some cities will be picked up for experimental promotion, said a senior academic recently. Min Enze, of the Chinese Academy of Sciences said at a lecture that the State Energy Administration is making concrete plans for the promotion. Zhang Yongguang, director of the fuel products & additives office, Chinese Academy of Sciences, said the country has selected four state-owned enterprises for the production of biodiesel.

[qipincha] 15/10/2009 22:17

compare cbi with cwp, what a difference!!!
they both green energy
cbi is much better in terms of balance sheet
but cwp share price is ten times more than cbi

[qipincha] 15/10/2009 22:08

not new, but some useful info:


5. Does the Company have any idea of procuring enough raw materials for the new plants? How will the Company cope with the price rising of raw materials?
During the past few years, the Company has settled many channels for procurement of material, including China and South Asian countries. Depending on the advanced techniques, the Company is able to choose from a broad range of low cost oils as material. Also, CBI has been exploiting the international market for more choice of feedstock.

Despite the price of feedstock is rising, the Company has lowered the production cost by achieving technological breakthroughs, for example, to increase oil conversion and to reduce energy consumption. At the same time, the range of raw materials has been broadened. We can also use many kinds of vegetable acid oils, which are much cheaper than the virgin oils.

6. Are you worried about the sales in the future because of the quickly increased capacity?
The demand on biodiesel is increasing at the surprising speed. In China the demand for fuel is depending on the international market by around 50%. Market supply does not satisfy the huge demand. During the past few years, we have settled good networks for sales. Furthermore, the Company's new department for international trade has come into existence, which has been working hard to promote sales outside China. Exports connection has been achieved to Europe and Asia countries.

7. Between 2006 and 2009, many biodiesel factories in European countries did not earn profit substantially because of the price rising of raw material. They lived on the governmental subsidies. Why could CBI keep earning profit continuously?
The reason why CBI earned a lot and is still confident for further quick development is based on the following aspects, which are also the traits that CBI is different from European biodiesel factories.

1) The demand for fossil diesel is far beyond the supply, which results in great demand for biodiesel as well. Compared to the international market, there is still space for price of Chinese biodiesel to rise.
2) The resource of UCO in China is very abundant, and furthermore, the collecting expense (labour) is quite low. Therefore, raw material is relatively cheap.
3) The proprietary techniques enable CBI to minimize the wastage of production and energy consumption. Moreover, the cost of labour and land is also low. All the above results in low production cost.
4) CBI has successfully worked out a series of products, not only as biodiesel sold in gas stations but also as materials for some chemical factories, which makes the Company more active in dealing with the price fluctuation of biodiesel.
5) Financial and overhead expenses have been well controlled due to the high efficient management.
6) Governmental grants accounted for only a small part of profit. The more important is that, in recent years, the whole industry will still get a very good environment for development under the Chinese support policy.

11. For 2006 and 2007, why did Mr. Ye, who holds more than 72.47% of shares of the Company, decide to waive the entitlement of dividend?
Mr. Ye is not only a responsible but also a push-and-go person. It is a very generous decision and it is also a symptom that represents the confidence of Mr. Ye have in the company's future operation. He believes that the benefit from the stock market will be much more from him in the future, because the waived money is just what the company needs for further development.

[qipincha] 15/10/2009 21:38

tim,
u r right, total share of 12,196,235 on market, indeed, limited

was 9,410,000 2006,

[qipincha] 15/10/2009 21:21

just notice that on CBI website, they have updated their strategy:
they will open the second plant in Xiamen with 50,000ton per year in 2010
it indicates the company is confident of finding enough feedstock for current production line, definitely a positive sign

[tim00] 15/10/2009 13:36

The Chairman owns so much of the company because when they listed it, presumably either there was no need for the company to raise more funds/sell more of itself, or there was no demand for additional shares. I would guess the former. You often find major shareholding directors of other companies in this situation agreeing to place some of their shares with institutions in order to meet demand (you'll never get an institution buying shares in CBI at the moment because not enough are in free float and the share price would rocket as they accumulated even tiny amounts of stock). It also increases the number of shares available to be traded which increases the likelihood of other institutions taking an interest in the company in future. If the company wants to be taken seriously, at some point the Chairman will have to release some of his shares onto the market. But he won't do so until the share price recovers to around the IPO price imo.

[qipincha] 13/10/2009 12:29

any idea of the price change today?

[qipincha] 13/10/2009 10:37

I thought the company would like to hold the share :)
there was a RNS regarding purchasing share for company staff early on this year, but no idea how much share they bought for their staff, what do u think about this?
Mr Ye is holding more than 50% of company share, what's that for? to prevent a possible take over?
imo, holding share firmly reduce a chance of dilution, which is good for me, too.

[tim00] 12/10/2009 20:43

In time the Chairman needs to improve liquidity in the shares by selling some of his holding onto the market and into the hands of institutions. I'm sure they realise this. First though they need a couple of years of steady growth and resumption of dividends. I saw an article recently that said biofuels production in China was under 3 million tons annually, meaning CBI is probably one of the main players at the moment. This gives CBI tremendous potential to expand over the next 5-10 years, given the Chinese authorities' support for bio-type companies. Definitely a share to tuck away in the bottom drawer and await China's emergence as the second largest economy in the world. PS: nothing wrong with a UK listing: the market will wake up to CBI in time.

[qipincha] 12/10/2009 19:19

Madmonkflin,

I think one thing is cbi do not have much RNS apart from annual report, half year report and interim. Also, not much share available in market is another issue. This can be a good thing for us as the share price can easily go up.

[madmonkflin] 11/10/2009 23:35

would be better if they get a listing in hong kong as at least the chinese will appreciate this company a lot more than anybody in uk.

[qipincha] 09/10/2009 18:15

i think the problem with cbi at the moment is only a few people know the great potential of this co. once the annual result release, we shall see share price fly

[qipincha] 09/10/2009 15:17

that's excellent!

[tim00] 09/10/2009 12:53

They should easily be able to repay their outstanding debt in H2, and have surplus cash of maybe 10 million RMB, ie around £1 million. With 45 million shares in circulation, they could afford a final divi of maybe 1.5p?

[qipincha] 09/10/2009 12:41

any idea of the portion of dividend?

[qipincha] 09/10/2009 12:39

tim,
based on the 4-5p earning model for 2009,
the share price I calculated will be: 71p - 81p

[qipincha] 09/10/2009 12:11

trading level is low and share firmly hold

[tim00] 09/10/2009 11:58

not sure, I would imagine the rebates are more regular, say quarterly? But it doesn't really matter in terms of the profit figures - which are on an accruals basis: ie they don't need to have received the rebate in order for them to "book" it.

[qipincha] 09/10/2009 08:03

thanks tim
I will hold it until it reach 50p, at least

how does the VAT rebate works?
do they have to claim it back at the end of financial year?

[tim00] 09/10/2009 06:15

My figures haven't changed, qipincha, I had already modelled the VAT rebate and a declining government grant. As Forest Owlet has said, the key to the magnitude of profits in H2 will be the level of output, since the level of government support (and hence profit) is now closely linked to production. As you know, some of us think 30k tons is realistic, Forest Owlet is more cautious. I do think though that given we have such a tiny market share (meaning we can grow sales without upsetting competitors), and a considerable cost advantage over competitors given the level of subsidy we get, plus the company's marketing campaign to attract new customers, 30k is not too ambitious.

[qipincha] 08/10/2009 22:51

1000 posts!

great effort tim. DO you have the new model based on the VAT refund policy?

[qipincha] 08/10/2009 22:32

hi tim,

this time, I will stick to my calculation.
share price = NAV /number of share + EPS * PE

regarding my calculation,
NAV lay down the foundation of a company in stock market. How much the company worth, that's the basic question. however, the EPS that used in my calculation reflect the business power of the company and also it related to the dividend that share holders may gain. therefore, it is not a double count. the PE value here, is purely an impact factor, reflect the market sentiment on this share.
PE is not a constant value, it should be something close to a tangent function. When company make money, PE is high, when it make small profit, PE is low. And when company losing money, PE should be negative.

There are many other factors that should be considered when estimate share price For example the prospect of the biodesiel industry. Biodesiel, green energy, should have more and more market in the future. In 2009, there are many many oil companies went bust, it is risky to invest in oil company these days as the exploitation is more difficult and cost is higher. And one day,the oil will dry out on our planet.

Xiamen is on the south west coast of China, and Longyan is only hundred mile away from Xiamen. CBI has the great advantage to ship their product to oversea countries, therefore, minimise the impact of the price control in mainland china.

[tim00] 08/10/2009 15:51

Incidentally, her email came across as quite upbeat, referring to growing production. I think we have a long-term winner here!