China Sunsine Chemical Holdings (QES) H1 2024 earnings summary

Executive summary

• 1H24 revenue rose 1% YoY to RMB1,749.1m as 6% higher sales volume offset a 4% decline in ASP; gross profit rose 5% to RMB433.6m.

• PBT increased 14% to RMB268.1m, while net profit fell 3% to RMB188.8m as income tax expense rose 91% to RMB79.3m.

• Sales volume reached a first-half record of 105,464 tonnes; international volume grew 20% while domestic volume declined 2%.

Financial highlights

• Gross margin increased to 24.8% from 23.8%; PBT growth reflected higher gross profit and lower administrative expenses.

• Selling and distribution expenses rose 4% to RMB52.6m on higher freight and port charges; administrative expenses fell 10% to RMB95.2m.

• Other income was RMB33.5m, mainly interest income; net other gains of RMB18.7m mainly reflected USD appreciation against RMB.

• Basic and diluted EPS was RMB19.71 cents versus RMB20.17 cents; NAV per share was RMB416.22 cents at 30 June 2024.

• Revenue fell 1% versus 2H23 as lower volume offset higher ASP; gross profit rose 12% versus 2H23.

Outlook and guidance

• Management expects profitability to remain sound over the next 12 months, pursuing sales-production equilibrium, customer focus and higher sales volume.

• Phase II of the 30,000-tonne-per-year insoluble sulphur project is undergoing machinery installation, with completion expected by end-2024.

• Phase I of the continuous high-quality MBT project has 20,000-tonne-per-year capacity and remains in trial run; trial completion is expected in 3Q24 and commercial production in 4Q24.