Sunvic

Sunvic: Dismal 1Q14 results, as net profit halved y/y to Rmb39m despite revenue growth of 6% to Rmb1.56b. Bottom line was dragged by FX loss of Rmb11.1m (+61%) and lower gross margin of 10.9% (-1.7ppts) due to the higher cost of propylene and lower selling prices of glyphosate, while top line was driven by glyphosate and other chemical products, partially offset by lower sales of AA and AE due to major upgrading works at Yancheng plant. Management anticipate that margins for AA and AE will likely to be under pressure due to the new supplies of AA in China and temporary higher raw material costs because of maintenance shutdown by suppliers of propylene. NAV of Rmb4.297.