Sunvic Chemical: Mgt expects 3Q10 profit to be similar to RMB100m in 2Q, appears on track to achieving full year profit target of at least RMB300m this year vs RMB4m in FY09, when sales were hurt by the global economic downturn. Expects new cracker plant that produces propylene, a key ingredient for making acrylic acids, to lead to further cost savings of at least RMB100m pa when fully operational in 2011…
Hopeful for acrylic acid ASPs to maintain at ~RMB15k/ton, underpinned by anticipated 15-20% pa growth in demand for acrylic acid in China over next 3 yrs. Guides for additional US$400m in revenue (~1.5x of FY09 revenue) next year from the sale of the petrochemical products to distributors in China. At forecast P/E of 4.2x, valuations appear compelling. Phillps has a Buy rating with $0.60 price target.
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