Sunvic

Sunvic: Weak set of results below expectations. Rev at Rmb783.3m, -20.9% yoy, while Net profit of Rmb7.79m, -99.7% yoy. Overall gross profit margin decreased from 35.2% to 9.4%. Decrease in rev was mainly due to lower ASP’s from acrylic acid (AA) and acrylate esters (AE) and other chemical products, which decreased abt 66.4% to Rmb11,000/ton, despite an increase in sales vol by 11,700 tons. This was partially offset by an increase in rev from PMIDA and glyphosate. Grp expect 2012 will be a challenging year due to the prolonged sovereign debt crisis in the Europe and slowdown in the growth of the Chinese economy. We note that Net gearing at 71%, is a tad high, while current ratio stands at a weak 68% which raises concerns on grp’s liquidity going forward.