Haike Chemical Share Discussion Threads

[the big fella] 19/9/2011 16:33

Hmm, not been much volume of late. The wider market is still weak, and the guy who sold the 12k odd certainly got screwed my the MM's.

[krupatel] 19/9/2011 16:22

Results out tomorrow I'm told

[the big fella] 15/9/2011 14:45

Riv - I have been sitting on a fair bit of cash for some time now. Enough was enough so had a 10K punt that the results will be favourable. Westhouse seem to have a good handle on what's going on so let's hope we're right!

[rivaldo] 15/9/2011 12:37

Only today and tomorrow until results then. It really depends on one's interpretation of HAIK's "modest" profits forecast for H1. If they really have made $7m net for H1, with say $10m quarterly going forward, then we should see quite some re-rating!

I'd be happy with say $3m-$5m net for H1 as long as the outlook was positive enough.

The new refined products contract and the minority buy-out should mean that the outlook will be pretty bullish.

[napoleon 14th] 12/9/2011 12:42

What a bounce off that 70p support could be on confirmation of results...

What a market, where it's "outperform" if you just hold your price, at least....

So what happens is anyone's guess. I hope PBT annualised @ $40M...

[vatking] 12/9/2011 09:56

Interim results are probably due next Monday 19th Sept - should be movement one way or another - so place your bets now!!

My guestimate - earnings of RMB 70 Million = $7million or $0.35 EPS - anybody think different

Just to expand on that $10M profit Q1, €3M loss Q2 whilst the refinery was off line during upgrades. What we are looking for in the trading statement is continued profitability of $10M+ per Q, giving future annual EPS of $2.00 before tax

[napoleon 14th] 10/9/2011 12:32

There's plenty of good shares on silly cheap ratings.
This is probably the best of them...

[krupatel] 08/9/2011 14:01

looking good

[rivaldo] 08/9/2011 13:48

HAIK is certainly holding up well. Worth remembering that Westhouse are forecasting almost 40p EPS this year, plus a 3.05p dividend:

2011 Date Rec Pre-tax (£) EPS (p) DPS (p)
Westhouse Securities 01-08-11 BUY 22.84 39.72 3.05

[old portmuthian] 31/8/2011 19:19

And renminbi even better.

[the oak tree] 31/8/2011 18:48

Quite impressed how resilent the share price been (often a good sign). Unfortunatly there is as usual little news flow (that week of multi updates excepted!).

Oil price Ok is would seam....

[napoleon 14th] 31/8/2011 18:43

Where/when's the last leg on the august "W", taking it back to 85?
Mkt bounce should help...

[napoleon 14th] 19/8/2011 17:34

Steady as she goes while the rest go tumbling...

Support at 75...

[napoleon 14th] 15/8/2011 23:17

IMO you have to add that due to previous history you have to make a "conviction buy" here, particularly in this mkt! So many peeps sitting on their hands as well....

So it could be a choice defensive - they report in yuan nowadays - in an only mildly related market to ours, & raw material costs reduced...
Ya pays ya money & takes your choice.

P.S. I note KMR has returned from the "fire sale" 36p last week & is playing with the 50p level again.

[vatking] 15/8/2011 10:26

Thanks Rivaldo - just to put it in perspective, the USA won't really break even by 2018 and has no plans to pay off its debt and it has AA+ rating. Here we believe HAIK is profitable and will have repaid most of its debt by that date. In both cases I believe the Chinese government would unwillingly end up owning both in a case of default- (just joking). The difference is that HAIK doesn't even have to break even to be able to service its debt (interest $12M - depn $20m).

[rivaldo] 15/8/2011 09:23

Vatking, excellent post 9911 above.

With 40p EPS forecast this year, and annualised turnover of around £1 billion against a £33m m/cap, the potential for share price appreciation is very large indeed given the nature of the turnaround now implemented here.

[vatking] 14/8/2011 12:09

It doesn't inspire me with confidence having an accountant in charge - look at Fred the Shred, but maybe George is different. They have stated that they have set up a Singapore subsidiary to minimise the effect of price fluctuations in raw material prices, and the move from fuel oil to crude widens the market

Re the dividend, you have to remember that 50% of the company is held by employees who most likely used their savings to invest, or it was part of an incentive scheme. It is a great motivational factor for them to see some return on their money, also it has been instrumental in raising the share price. From my reading of the situation, they propose to pay dividends regularly.

With the tiny capitalisation, HAIKe must be a take over target, and that maybe George's role. Put a price on the company say $500 million? after paying off the debt that's $10 per share, anyhow that's mear speculation, let's wait for the interim results! Remember they did indicate they made $10M Q4 2010 and the same Q1 2011.

[zaksab] 13/8/2011 19:45

Sorry I am not trying to be a doomonger or antangonise anyone. I would just hope people appreciate the huge risks here.

[zaksab] 13/8/2011 19:43

It may have only been a million but it was barmy all the same. smacks of a company doing the wrong thing to try and support the share price.

The oak tree maybe the Chinese banks will rollover the debt but if they dont it doesnt mean the business goes to the wall (China will still have its oil - although Haike must be a tiny part of the market vs the state owned cos) it would just mean the capital structure is refabricated to try and make it sustainable.

[the oak tree] 13/8/2011 18:49

The CFO position for a company like Haike is crucial. The problem of having its sale price artifically fixed by the Government and its supply coming into the refinery at varying costs could be a killer if you don't have a very good mangement system in knowing whether your making money or not. When and what to refine and when to stop in other words. You'd expect a chemical person to be the central person in this Company but for the moment its the CFO in our case IMHO.

So who do we have and what has been the history of the position?

Well IMO this is very interesting. The old CFO was a Mr Nick Su and he resigned in Nov 2010. Note though he was just part of the management team not an Excutive Director. We then take a break and a Mr George Zeng (39) arrives as an Excutive Director in April 2011. This is the guy that needs to deliver! Its interesting the length of time it took so I suspect that perhaps Su was pushed (??). And ofcourse Haike recognising that CFO needs to be an Excutive Director position.


Profile:
Mr. George Zeng, Chief Financial Officer, aged 39
Mr. Zeng has over 17 years' experiences in accounting
and finance. Prior to joining the Company, Mr. Zeng was
the Chief Financial Officer of Hong Kong Jinshi
Holdings, a private conglomerate and Hong Kong Stock
Exchange IPO candidate. From 2006 to 2008, he was the
Qualified Accountant and Company Secretary at Eyang
Holdings Group, a publicly quoted company on the Hong
Kong Stock Exchange. From 1994 to 2001, he worked for
Arthur Andersen and ABN AMRO as an auditor and
investment analyst respectively. Mr. Zeng holds a
Master's degree in Economics, and is a fellow of
Association of Chartered Certified Accountants and
member of Hong Kong Institute of Certified Public
Accountants.

[vatking] 13/8/2011 18:36

Rubbish the divi only cost a million - they could have spent that on pr and u would have been happy

[the oak tree] 13/8/2011 18:33

The debt is high but its been there for some time and the Banks haven't called it in. Its just a hunch but I reckon the Chinese Banks won't want to take this Business down due to the area its in. China needs Oil.

[zaksab] 13/8/2011 17:57

Rivaldo I havent read the house broker's note and why on earth would i want to. i have no position on these shares. all i would hope is that investors dont look at the PE of a highly indebted company (particularly an operationally geared price taker) and conclude it is cheap.

You must consider the potential for cashflow variability (high in this case), the ability to meet interest costs, ongoing maintenance capex needs (depreciation is a guide so dont just disregard this), debt covenants, refinancing needs, potential covenants on marginal financing etc.

These risks are very siginificant. Even if the company negotiates these, shareholders will not be reaping high incremental returns on free cash flow anytime soon as this will be used to delever and thus generate returns based upon post tak interest costs. That siad, delveraging will be a good thing for sure to reduce risk and lower the cost of equity.

The fact that this company paid a dividend is very hard to fathom and has to be considered a negative in view of the deleveraging needs.