China Sunsine Chemical Holdings (QES) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 9% YoY to RMB3,490.4m and net profit fell 42% to RMB372.4m as lower ASP offset record sales volume.

• Sales volume rose 11% YoY to a record 206,996 tonnes, supported by demand, flexible pricing and expanded capacity.

Financial highlights

• FY2023 gross profit fell 31% to RMB798.9m, gross margin contracted 7.5 points to 22.9%, PBT fell 38% to RMB453.2m and EPS declined 42% to RMB38.67 cents.

• 2H23 revenue was RMB1,761.3m, gross profit RMB386.9m and net profit RMB177.8m, down 2%, 18% and 17% YoY, respectively.

• Other income was RMB72.4m, including RMB36.0m interest income, RMB8.5m government grants and RMB19.0m scrap-material sales.

Outlook and guidance

• FY2024 orders improved; robust auto demand and relatively high tyre-maker utilisation support management's expectation of higher sales volume.

• Competition is expected to remain intense, but management is confident in profitability over the next 12 months, citing the balance sheet, market position and operating strengths.

• Strategy focuses on sales-production equilibrium, customer fulfilment, market-share growth, production efficiency, cost control and cash-flow management.