I have just compiled a research report on SP Chemicals (S17.SG), which is listed on SGX. I hope the report will provide good value and information to those who are looking for good-valued companies. You may obtain it by clicking here.
Any comments and feedback to the report is greatly appreciated. Please contact me for any queries on any items on the report, I will be glad to answer them.
Happy Holidays fellow readers!
Wednesday, December 26, 2007
SP Chemicals (S17.SG) Research Report
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8 comments:
will report you for the template used....
Hi anonymous, my objective is to share my research work, which is focusing on the contents. If there are any problems with the format and layout of the report, I will amend the layout.
hi
current price is now at low of 0.92 which is much lower than your 1.01 in the report. that means is a good 70% discount.
wonder how far down will it go further ?
what's your take?
Hi Shuaka,
If you are looking at a long-term horizon, anything which is lower than a dollar is actually a good buy.
My take is that it might even move lower due to not good results for the upcoming Q4 reporting.
It will be really fantastic if I can predict how low it can get though.
Cheers!
Hi. Can you explain the basis of the forecast capex for 2008 and 2009? I assume you are treating it as the completion of all of their phase 3 projects by that time?
SP Chem is highly leveraged. Although they generate a good amount of cash, I have reservations over the twin whammy of debt repayments and continued expansion (such as the proposed Viet plant). it also seems that they have been taking short loans to cover their cash flow requirements in the last FY. Another thing that is worrying is the continued fall in profitability of aniline, which still takes around 50% of their net rev, but contributes only around 30% to their earnings (i am typing from memory, so pardon any errors) With the continued margin squeeze from high oil prices, i dont see any relief in their aniline production
Having said that, it is an outstanding growth company with good management. Have been vested for a while. It is just that they are currently a less compelling case for investment than 1/2 a year ago, even though the price is now much lower
hi anonymous, good to know that you are looking through my forecasted figures, you must have been investing for quite some time.
Anyway, I have incorporated all the capex of PP5 into FY07. So moving forward, the capex from FY08 only consists of operational capex. Based on FY06 figures, operational capex is 17.4 rmb mil, so with PP5, I approx it to be 25 rmb mil for now.
I agree that SP Chem is highly leveraged, but so far it is generating positive operational cashflow and its interest cover ratio is more than 5 times. I will be monitoring its figures closely and will highlight immediately if I foresee any cashflow problems.
SP Chem produced both aniline and caustic soda as both of these products' prices are inversely affected, so as to hedge against the pricing risks. So with low margins for aniline, caustic soda margins will be improved. And yes, with the high oil prices in view, their margins will continue to be compromised.
I do agree with you that this company might pale in comparison to other firms at this moment and there are better choices in the market. Nonetheless, I am sharing this as a viable long-term investment and I really appreciate your good comments.
Hi
Thanks for taking the effort to give your insights. Really appreciate it. At 0.77, SP is getting a bit compelling :)
Keep up the good work in your reports, its rare to find such comprehensive and objective analysis these days
Hi anonymous, it is my pleasure to research into companies and I hope all my readers can benefit from it. Will try to churn out reports sooner after cny. Anyway, sp chemicals is a slow mover, so patience is required if you intend to stay vested. Cheers!
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