China Biodiesel Share Discussion Threads

[qipincha] 22/3/2010 07:46

many news last week regarding feedstock price, there might be regulation of feedstock later on, which will be good for biodiesel companies.

[qipincha] 19/3/2010 15:45

ok, woracle, it makes sense now

and it's nice to see up tick again

[woracle] 19/3/2010 13:14

qipincha..B1, B2 is chemical products which is not gov controlled. B3 is used in diesel for fuel which is regulated. CBI produced 95% B1&B2 according to latest reports. I probably confused you using a mix of roman numerals..

[qipincha] 19/3/2010 12:07

ok, then how about B1 B2 and B3? if they can only produced from diesel or related products, the price change of diesel will of course affect them. I think what their point is, China government has cap on diesel price, but not B1-B3 products, therefore, producing these products will bring them higher margin. but again, the margin is significantly influenced by feedstock price.

[woracle] 19/3/2010 07:40

Not true, they are still at 95% B1/BII according to latest updates. They moved away from diesel over last 2 years as its pricing is state controlled. B1/BII are not bound by that so margins can potentially be higher. They could switch back to B3 but it cannot be done in a flash and certainly have made no indications that they have so far. My point is diesel price is pretty much irrelevant at the moment, apart from affecting its transportation costs.. its B1/B2 that is.But where do you get THAT pricing from ?

[qipincha] 19/3/2010 07:21

woracle
I think that's when the diesel price was low, they produce these products to increase profit margin.

[woracle] 17/3/2010 19:35

CBI don't currently produce much diesel fuel ( B3 ). As of interims, it was 97% B1 & B2 used in chemical manufacturing.

[qipincha] 17/3/2010 16:09

thanks tim, I think cbi's time will come soon.

[qipincha] 17/3/2010 16:08

the petrol price in China will increase again end of this week.(200RMB/l)

[taurusthebear] 16/3/2010 23:55

2-3x in next 15 months, I said. There is potential for much more after that time, of course, but WCC will never 10-bag in a 12-month period again. That was my point. If you want big gains, you really have to be in pretty close to the bottom, and that is the point where there is uncertainty and risk, and plenty of doubters. I saw that when WCC was 60p and there was no reason for it to be 60p.

I think China operates a free-market economy to the extent that, although it will subsidise companies in fledgling industries, it is not prepared to flog a dead horse if there proves to be no viable market in the longer term. That is where the key to CBI's success lies, IMO, not just in government support and false markets. :0)

[tim00] 16/3/2010 18:56

Yes, they're very different of course, but have somethings in common. I don't agree that being Chinese is irrelevant. At some point, demand for CBI's products will outstrip supply, just as is happening now with cement due to the Chinese govt's stimulus package. That day will come sooner should the govt promote biofuels via setting minimum thresholds for use of biodiesel etc. I'm confident that CBI's day will come, I just don't know how long the wait will be. As you say TTB, no reason why CBI shouldn't perform like WCC when it was sub-£1, once demand outstrips supply and pricing power recovers. Finally, I'm not sure WCC's best days are behind it (though the rate of growth in the share price will be a little slower I accept), in the sense that the share price might exceed your 2-3x projection.

[taurusthebear] 16/3/2010 18:20

WCC is a completely different company to CBI. Someone had to say it! I don't think the fact that they are both Chinese has anything to do with it. WCC is de-listing from the UK in May so it remains to be seen what the HK price will do, but suffice it to say that the biggest gains in WCC have come in the last 15 months, the rest is "merely" a doubling or tripling in the next 15.

CBI have as much potential upside as WCC had a year ago IF they can get their feedstock prices sorted (i.e. lower) and margins up. There is no evidence of that as yet, but if and when it does materialise, I expect the shares to be trading at a lot more than 10p. :0)

[jkershaw] 15/3/2010 15:34

Will the feedstock demand be as competitive though for 2010. How many start ups went to the wall during the recession? I know of several UK companies. Its good news for the survivors. They will grow and become the dominant force pushing out the weaker players. There is also a large number of crop plantation programmes that will start coming on line such as non food competitive jatrophe, so feedstock production will exponentially increase. Gives greater choice and by laws of supply/demand = lower prices

[woracle] 14/3/2010 19:22

Yes, back end of 2008, start 2009, world was on its knees. Accordingly vege oil prices collapsed leading to production costs falling 41%, same as the fall in selling price. However, I have noticed that when feedstock has gone up in the good times, selling price simply have not gone up as much. This was the case at in the first 3 Qtrs of 2008. I fear this is happening again from Oct 2009 onwards. The start of world economic recovery then saw a significant rise in all oil prices but as yet not the chemicals market it seems. The recent trading statements seem to suggest that. Although its waste feedstock, the market for is obviously as competitive as the fresh stuff and will trend with it which makes sense. I noticed they want to secure feedstock cheaper from Philipines. Of course it adds to shipping costs which have recovered from start of 2009 and heading higher too. But where there is a arbitrage type situation like that, I guarantee it wont last long, and similar refineries will be looking to get supplies there too sharpish.

[tim00] 14/3/2010 18:03

WCC of course have enormous margins which look likely to persist. My basic point remains however that CBI made profits of 2.2p per share last year, so are on a historical p/e of less than 5, but remain completely overlooked. No doubt it is for the reasons you give. (Incidentally, the foodstuffs they use are waste products of course, though the company has acknowledged there is competition to buy them, so prices can inflate as you say. Note too that you're talking about a period in early 2009 when the global economy was on its knees.)

[woracle] 14/3/2010 17:53

Also of course WCC main source material is abundant limestone. I think their own nearby quarries so that cost is pretty fixed going foreward. CBIs source is based on a foodstuff commodity in more demand than even the resultant chemicals it converts from. I fear B1 and B2 has many alternative sources too, not just from within China. Cement has to be regional due to logistics. What worries me is that despite the crash in vege oil prices at the start of last year to almost half what they are today, they still couldn't improve margins noticeably.

[tim00] 14/3/2010 17:40

fair points, you might be right, we'll have to await further guidance when the 2009 results are announced. However, I find it hard to believe that such rapid expansion of the Chinese economy won't result in some price inflation, including for CBI's chemicals. And the VAT rebates etc do give CBI greater price competitiveness compared with non-biofuel producers.

[woracle] 14/3/2010 17:25

Becareful... source material prices which trends with vege oil markets like palm and soya up 20-25%% since Q4 and due to go higher this year. Unless selling prices of B1 and B2 chemical are up similarly, expect margins to be equally dire this year. Problem is CBI have no pricing power in their end products and long term raw costs are rising faster than end product at the moment. Until that changes the business model relies on grants just to survive. If u wanna compare CBI with anyone, its with chemical refinaries like Haike..comparing to WCC which has a degree of regional pricing power and superb visibilty due to long term government infrastructure plans is gonna lead to disappointment.

[tim00] 14/3/2010 08:06

A quick comparison with WCC. WCC is expanding rapidly and might make eps of £2 in 2011. That would imply a forward p/e of 3. Other cement manufacturers are trading on p/e ratios of around 15, so it's a no-brainer that WCC's share price will rise sharply in the next year. So what about CBI? The outlook is more uncertain, especially after the unexpected profit warning for 2009 H2 (which in the event was possibly unwarranted). However, cautious assumptions (imo) might see eps of 5p in 2010. So the current p/e is about 2. I accept that demand for cement is more certain than for CBI's products, which can be substituted. But given the rapid expansion of the Chinese economy, reflected in a substantial recovery in trading for CBI in late 2009, CBI is a sleeper that one day will wake up! And one area where CBI has an advantage over WCC is it already has plenty of spare capacity to accommodate extra sales, so no need for lots of capital spending. It also has minimal debt. So it can afford high dividend payments imminently. Once they do that, the share price will recover, that is certain.

[qipincha] 12/3/2010 12:08

this is a good news:


China's oil demand increase 'astonishing', says IEA
oil worker
Oil is trading at more than $82 a barrel

China's demand for oil jumped by an "astonishing" 28% in January compared with the same month a year earlier, the International Energy Agency (IEA) says.

The body added that demand for oil in 2010 would be underpinned by rising demand from emerging markets, with half of all growth coming from Asia.

But the IEA predicted demand in developed countries would fall by 0.3%.

The IEA has increased its global oil demand forecast for 2010 by 1.8% to 86.6 million barrels a day.

Oil prices are currently at their highest point for two months, with US light, sweet crude above $82 a barrel and Brent crude more than $80 a barrel.

The IEA said the high price level was due to "heightening of geopolitical tensions affecting some producing countries", but that this had been balanced by "ample physical oil supplies".

Crude oil production by countries in the oil producers' cartel Opec rose to a 14-month high of 29.2 million barrels a day in February.

During February, Iraq pumped an extra 115,000 barrels a day.

Opec is due to meet on 17 March and the IEA expects it will maintain its current production targets.

[jailbird] 12/3/2010 09:49

thanks timoo.

looks like the director bought the shares of the only major shareholder..

.abt 10M in free float or with smaller holders.

[tim00] 11/3/2010 18:18

profits quite a bit higher than last year: 0.24 RMB per share against 0.09 RMB in 2008. Main thing is that Q4 2009 saw a sharp recovery in sales and profits, which hopefully will have continued into this year. Full results and trading update next month.

[jailbird] 11/3/2010 09:52

chaps,

can u clarify the figuresd here, from the latest update and comparing with last year.

revenues abt the same, and profits a little more then last year..just.

But debt is down by abt £900k to 16m RMB(approx £1M)

so margins hve impacted this , otherwise revenues are the same, helped by the expansion.

[tim00] 10/3/2010 18:39

renminbi appreciation obviously good for CBI's value expressed in sterling.