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Re: Li Heng

PostPosted: Thu Oct 16, 2008 9:36 pm
by winston
Not vested.

Li Heng sees nylon industry sales falling 10%
* Says customers asking for lower prices, extended credit
* Sees nylon industry sales down 10% this fiscal yr

SINGAPORE - Singapore-listed nylon firm Li Heng Chemical Fibre said on Thursday the financial crisis is starting to bite, as customers ask for lower prices and longer credit.

Chief financial officer John Chan said China's garment and textile export industry is being dragged down by a slowing US economy. He expects the industry's sales to fall 10 per cent this fiscal year and nylon fibre prices to drop 2-5 per cent this year.

'There are requests of lowering our selling prices, and they are also asking sometimes for longer credit periods,' said Mr Chan of his customers. 'We are starting to feel some heat, in terms of pricing of our product,' he told Reuters in an interview.

China-based Li Heng, which has a market cap of US$302 million, aims to ease the burden on cash-strapped clients by transferring savings in input costs such as polyamide chips, used to make nylon.

The relatively stable price of polyamide in a largely volatile commodities market affords nylon producers this buffer, Mr Chan said.

'We think the (Chinese) export sector is definitely going to be hurt, but we are also glad to see the increased influence of domestic consumption in the past few years,' he said.

Analysts are waiting to see whether growth in Asian countries such as China and India will be propped up by domestic demand in the face of faltering exports to the West.

Mr Chan estimated his business could handle a price cut between 5 and 10 per cent without affecting its earnings, though he declined to give any forecasts for profits or revenues.

'There's no denying that the third quarter will not be as good as the second-quarter,' Mr Chan said. 'So in terms of absolute revenue, it will be lower than the first half.'

Shares in Li Heng were down 3.85 per cent, outperforming a 5.3 per cent fall in the benchmark Singapore index . The stock has slid 69 per cent since its IPO price in March. -- REUTERS

Re: Li Heng

PostPosted: Fri Oct 17, 2008 3:09 pm
by winston
Not vested. From Lim & Tan:-

The stock which had hit a high of 87 cents in May ’08 is down 71% to 25 cents currently, giving it a market cap of $425mln and putting its trailing and forward PE at 2.1x.

However, its net cash position as of mid ’08 is RMB2.1bln, representing almost 100% of its current share price.

Winston's Comment: The question then is whether their business would be burning cash over the next 3 years. This would be a long slowdown.

Little wonder that major shareholders such as CEO Chen Jianlong and his family and David Loh (the “A” team of UOB Kay Hian) have been busy buying shares in the open market.

We maintain our BUY recommendation

Re: Li Heng

PostPosted: Wed Nov 12, 2008 9:45 pm
by winston
• Revenue up over 42% and gross profit grew over 37% for both 3Q08 and 9M08
• Declares special dividend for 3Q08 of S$0.015 per ordinary share

Singapore, 12 November 2008 – Mainboard-listed Li Heng Chemical Fibre Technologies Limited (力恒化纤科 技有限公司) (“Li Heng”, or together with its subsidiaries, “the Group”), a leading manufacturer of high-end nylon fibres, today announced that its nine months’ revenue ended 30 September 2008 (“9M08”) rose 42.0% to RMB2,996.8 million from RMB2,110.8 million in the previous corresponding financial period (“9M07”).

Net profit for 9M08 increased 19.2% to RMB823.2 million from RMB690.7 million in 9M07. For this financial reporting
quarter, Li Heng also declared a special dividend of S$0.015 per ordinary share.

The Group’s topline and bottomline growth in 3Q08 as compared to 3Q07 was the result of an increase in sales volume of products with the expansion of annual production capacity of 74,800 metric tonnes that came on stream with the commencement of Liheng Phase II and Liyuan Phase III production facilities in February and March 2008 respectively as well as an enlarged customer base from 178 at the end of June 2008 to 182 at the end of September 2008.

Revenue for 3Q08 increased 53.7% to RMB1,024.8 million while gross profit grew 39.4% to RMB318.0 million. Gross profit margin inched down to 31.0% from 34.2% from 3Q07 due to a general decrease of average selling prices (“ASPs”) of the nylon yarn products in all of the product segments. The overall decline in ASPs of the nylon yarn products was attributed to a change in product mix which saw a stronger demand of a different variety of lower ASPs nylon FDY and DTY products of lower gross profit margins.

In addition, the slow-down in the global economy, which inevitably also affected China’s textile and garment industry, has led to pressure on upstream manufacturers. Prices of global commodities, including nylon chips, have fallen sharply recently, particularly in September 2008. The overall ASP of the Group’s nylon products dropped by 5.7% to RMB 30,900 per mt as compared to July and August 2008 due to the drastic drop in nylon chip prices. While the Group procures its nylon chips approximately 3 months in advance of its production schedule, the Group prices its nylon yarn products based on current nylon chip prices. Hence, the sharp drop impacted the Group’s gross profit margins severely.

Commenting on the Group’s results, Mr Chen Jianlong (陈建龙), Executive Chairman of Li Heng said, “It has been a particularly challenging time for us, especially in the month of September, where the economic slowdown has accelerated pressure on all textile manufacturers in the textile chain. Our effort to provide a large variety of quality nylon products and thoroughly looking after our customers’ needs had paid off as demand for our products is strong even as we encountered a general decline in our selling prices. Despite such a trying time, we managed to secure 4 new customers.

Moving forward, the Group expects that in light of the unstable global economic outlook, ASPs of nylon products in China will fall in the coming quarter and may continue to do so in 2009 with the weak demand from the consumer products market. To stimulate Chinese domestic consumption, the PRC government has recently implemented measures to benefit the textile and garment industry.

The Group is on track with its Liheng (PRC) Phase III development, which includes the construction of additional production capacity, a polyamide chip plant, as well as a self-contained R&D centre. Li Heng commenced construction of its polyamide chip plant, which has a designed daily production capacity of 200 metric tonnes of high quality textile grade polyamide chips, in July 2008. With the expected completion of Liheng (PRC) Phase III in 3Q09, the Group’s production capacity will increase by approximately 90,000 metric tonnes to 257,000 metric tonnes. As part of the Group’s plans to expand its sales and marketing network and enhance its customer services, Li Heng is currently in the planning stages of establishing service centres in the major textile cities in the PRC.

Re: Li Heng

PostPosted: Wed Feb 04, 2009 11:26 am
by winston
DJ MARKET TALK: Li Heng +1.9%; Nylon Yarn Prices To Firm - DMG

0135 GMT [Dow Jones] Li Heng Chemical Fibre (E9A.SG) +1.9% at S$0.265; traders, brokers note prospect of weak 4Q08 results somewhat offset by hopes of stabilization in China nylon market. DMG says China nylon prices may be finally flattening out so while China-based nylon yard maker's 4Q08 results expected to be "dismal," polyamide chip and nylon yarn prices are expected to firm steadily after long Chinese New Year holiday.

"This should help Li Heng re-attain their double-digit gross margins, and is positive for them as earnings are adversely affected in a down trending nylon chain price environment;" maintains Buy rating with S$0.49 target price. Chart shows stock oversold on technical indicators but remains in S$0.24-S$0.33 band for past 3 months; may struggle to break out of range until more clarity on earnings outlook; near-term resistance at 50-day moving average of S$0.28.

Re: Li Heng

PostPosted: Fri Feb 06, 2009 3:59 pm
by winston
DJ MARKET TALK: UOB KH Cuts Li Heng Chemical Target To S$0.22

0622 GMT [Dow Jones] STOCK CALL: UOB KayHian cuts target price for Li Heng Chemical Fibre (E9A.SG) to S$0.22 from S$0.275, based on 2.5X 2009 P/E, after lowering earnings forecast by 21.9% to assume 30% fall in average selling prices.

Notes Li Heng keeps about one month worth of inventory of raw materials, but prices of both nylon chips, nylon yards are dropping sharply; "this means it is buying raw materials at higher historical prices but selling its products at lower current prices."

Says while China's recent measures to boost textile sector positive (including raising rebates on textile exports), "it takes time" for sector to turn around. Keeps Hold call. Stock flat at S$0.26

Re: Li Heng

PostPosted: Thu Mar 12, 2009 2:32 pm
by winston
DJ MARKET TALK: Li Heng Dn 9.1%;1H Profit Likely Thin At Best-UOB

0424 GMT [Dow Jones] Li Heng Chemical Fibre (E9A.SG) off 9.1% at S$0.10 having hit all-time low of S$0.095 earlier in session as near-term trading outlook remains challenging, Singapore-listed China plays generally weak following string of accounting, corporate governance problems (FTSE ST China index down 3.3%).

UOB-KayHian says nylon fiber maker suffering from weak export markets, falling demand from downstream textile and garment producers; selling prices, margins under pressure in recent weeks.

Expects company to merely break even or make very thin profits in 1H09; cuts FY09, FY10, FY11 net profit forecasts by 61.4%, 43.2%, 47.7%, respectively to factor in lower selling prices and profitability. But says 2H09 may be better as China government's move to raise export tax rebate may help increase export sales; maintains Buy with target price of S$0.20. Order book quotes suggest floor at S$0.08 with buying interest heaviest there.

Re: Li Heng

PostPosted: Fri Nov 13, 2009 8:46 pm
by winston
Not vested. From Kim Eng:-

Lacking catalysts; Maintain Hold

Our target price has been reduced from $0.38 to $0.28, pegged at 8x PER. We believe that at 7.7x PER, better operating performance in 2010 has been priced in.

Catalysts are lacking now that dual-listing plans have been shelved. However, we still favour Li Heng for its healthy balance sheet and concrete growth plans.

We would enter at a price of below $0.21. Maintain Hold.

Re: Li Heng

PostPosted: Sat Nov 21, 2009 7:57 am
by winston
Not vested. From Phillips:-

Li Heng Chemical Fibre Technologies Ltd – 3Q Results Update (Mark Chow)
Recommendation: HOLD
Previous close: S$0.255
Fair value: S$0.285

• Li Heng Chemical Fibre Technologies Limited (“Li Heng”) recently announced their third quarter results for the financial year ending 31 December 2009 (“3Q09”). It shows a modest sequential quarter-on-quarter recovery but is still a far cry from last year’s performance.

• The PRC textile and garment industry seems to show signs of recovery as the global environment continues to improve. ASPs for the Group’s nylon yarn products have shown signs of recovery but we remain cautious, as we do not see significant improvements in the short to medium term.

Furthermore, margins are still being depressed and with the introduction of the anti-dumping deposits for imported PA chips, it brings with it a possibility of higher raw material costs.

We maintain our HOLD call with a downward adjustment in our fair value estimate from S$0.33 to S$0.285 after reducing our forecasted revenue and expense figures.

Re: Li Heng

PostPosted: Tue May 04, 2010 2:03 pm
by millionairemind
Published May 4, 2010

Li Heng hit by polyamide chips tax


CHINA'S anti-dumping tariffs on imported polyamide chips have hit Singapore-listed chemical fibre company Li Heng Chemical Fibre Technologies. Imported polyamide chips are a major raw material in its nylon yarn production.

Li Heng said yesterday that it has since mitigated this impact of potentially higher costs by ramping up its in-house production of polyamide chips and minimising procurement from the US, which has been slapped with the highest tariff rates.

Its spokeswoman told BT yesterday that the tariff rates have just been announced and have not been factored into the operating costs yet. It is unable to ascertain the financial impact at this point.

The Ministry of Commerce of the People's Republic of China had on April 21 announced that China will impose anti-dumping tariffs on polyamide chips imported from the US, the European Union, Russia and Taiwan at rates ranging from 4 per cent to 96.5 per cent for a period of five years from April 22.

All polyamide chips used by Li Heng are sourced from the US, the EU or Taiwan. This exposes the company to risks of higher raw material costs.

Other Chinese chemical fibre producers such as China Gaoxian and C&G Industrial Holdings produce other types of chemical fibres and source their raw materials within China and are therefore not affected by China's trade move.

Li Heng said that it has commenced in-house production of polyamide chips since October last year from facilities that are equipped with a maximum annual capacity of 70,000 tonnes.

'We have achieved optimisation of our polyamide chip facilities' production capacity in April 2010 which will enable us to reduce the reliance on imported polyamide chips and mitigate the impact of an increase in cost of production brought by the anti-dumping tariffs,' the group said.

'We expect self-produced polyamide chips may be sufficient to support as much as 55 per cent of our total production needs for the year ending Dec 31, 2010.'

Since October last year, Li Heng has also made arrangements with its suppliers to minimise the procurement of polyamide chips originating from the US, which now accounts for less than 5 per cent of the group's imported polyamide chips.

Re: Li Heng

PostPosted: Wed Dec 23, 2015 10:05 pm
by behappyalways
Li Heng Chemical Fibre to be taken private by majority shareholders with $1 per share offer