In views of election coming closer Crude oil will be stable, no one want to see Dow Jone collapse ahead of election And the president want to protect the country from importing goods, build a wall :)
For YiStock, your article is indeed very detailed and in-depth with so much technical information that I am hardly able to comprehend. Your conclusion on core earning at around RM20-25 millions for Q3 2016 should be realistic. Thank you very much. What about possible losses on disposal of old plant and machinery?
chankp7010, tguan machinery are old and i believe has fully depreciated in value. Therefore, any such disposal should end up with gain. Good example is like Q2 2016
As pertaining to your forecast and explanation with thanks to YiStock , the estimated cored earnings for Q3 could maintained at 20 to 25 millions profits despite with the fluctuations in resins that could be absorbed . So could you roughly account for tguan current valuation eps and its TP standing precisely ? Thnks bro !
michael, i strongly believe following Mr Kcchongnz valuation is the most reliable one. Personally, so far, i choose to hold to believe the management TP of 1 billion market cap.
YiStock, actually it is not entirely true that resin price moves in tandem with natural gas. In fact, we can produce polyethylene resin from both crude oil and natural gas: 1. Oil > naphtha > ethylene > polyethylene (LDPE, LLDPE & HDPE) 2. Gas > ethane > ethylene > polyethylene (LDPE, LLDPE & HDPE)
Not to mention the non-conventional way of producing resin i.e. Coal to Olefin technology in China.
Ethylene plays a major role in supporting polyethylene price now. Production cost to convert ethylene to polyethylene is about usd300/mt. But the market spread now is only about usd150/mt.
if not wrong, Q1 average LLDPE price CFR SEA was about USD1100/mt. Q2 average about USD1200/mt. Q3 average about USD1150/mt. FYI, LLDPE is used to produce stretch film.
chl1989, resin price never move in tandem with natural gas. It is influence by the natural gas movement. Not sure why you think they move in tandem.
in general, resin is a product from natural gas. Currently there is an supply glut in resin and this supply glut is expected to last for quite a long time in view of many new facility is going on line.
Posted by chl1989 > Oct 12, 2016 12:50 AM | Report Abuse
YiStock, actually it is not entirely true that resin price moves in tandem with natural gas. In fact, we can produce polyethylene resin from both crude oil and natural gas: 1. Oil > naphtha > ethylene > polyethylene (LDPE, LLDPE & HDPE) 2. Gas > ethane > ethylene > polyethylene (LDPE, LLDPE & HDPE)
Not to mention the non-conventional way of producing resin i.e. Coal to Olefin technology in China.
When there is a supply glut, the spread will be squeezed. This is common in all commodity i believe.
Posted by chl1989 > Oct 12, 2016 12:53 AM | Report Abuse
Ethylene plays a major role in supporting polyethylene price now. Production cost to convert ethylene to polyethylene is about usd300/mt. But the market spread now is only about usd150/mt.
I think your price is the beginning value and end value of Q1 to Q2, not average figures. I'm not sure.
Yeah, LLDPE is for stretch film. And the data i used is based on most comment butene based LLDPE.
Posted by chl1989 > Oct 12, 2016 12:56 AM | Report Abuse
if not wrong, Q1 average LLDPE price CFR SEA was about USD1100/mt. Q2 average about USD1200/mt. Q3 average about USD1150/mt. FYI, LLDPE is used to produce stretch film.
For YiStock, your article is too detailed with so much technical information. Thanks for your effort. Just not really understand that the chart of resin cost with share price. Do you mean that Q3's profit margin will be squeezed ?
Above chart is not resin price, it is the "change" of resin price. i.e. up or down.
Point 1 and Point A represented Q2 2016, the gross profit margin has already been squeezed in Q2. That's why the gross profit drop in Q2 2016 even though the revenue registered was higher Q-to-Q and Y-O-Y.
For Q3 2016, i personally anticipated an "expansion" of gross profit margin back to normal or higher as cost past through usually delayed 1 quarter.
The similar has happened in year 2004 quarter 4 if not mistaken.
Posted by riskabsorber > Oct 12, 2016 11:46 AM | Report Abuse
For YiStock, your article is too detailed with so much technical information. Thanks for your effort. Just not really understand that the chart of resin cost with share price. Do you mean that Q3's profit margin will be squeezed ?
Please do not follow me. I'm extra patient with the companies i invested in.
Above is just my own forecast. It may or may not be true. I'm more fancy to the business itself then the share price up and down. And i'm pretty sure i only know the biz, the most, 10% only.
So, i'm considered high risk taker.
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Posted by Flintstones > 2016-10-11 13:36 | Report Abuse
Wah, the article ended with a cool quote. Thumbs up!