Q4 2013 profit was very high, at RMB 136 m (against RMB 375 m for the full year) because the factory in Yancheng resumed production after upgrading in previous quarters.
Those interested in Sunvic may want to monitor prices of AA and proplyene (the key raw material that produce AA).
Post-transaction, NTA is estimated at S$1.50. Stock is trading at S$0.63 now.
Disposal gains (Rmb1.9bn) alone are about 120% of SVC’s current market cap.
No non-competing clause in place, meaning it can rebuild capacity cheaply using its new-found wealth and some leverage. A cheaper option is to start the rebuilding when volatile AA and AE prices come down in the distant future. Re-listing the company on other bourses in the future.
As at 31 December 2013, the Group’s property, plant and equipment totaled RMB 2,942 million, out of which RMB 1,078 million relates to a cracking plant.
(a) As disclosed in Note 8 to the financial statements, included in the Group’s property, plant and equipment are certain idle assets totaling RMB 391 million as at 31 December 2013. As at 31 December 2013, the Group has neither commenced depreciation nor performed any impairment assessment for these idle assets. Accordingly, we are unable to ascertain the appropriateness of
the carrying value of these assets totaling RMB 391 million as at 31 December 2013.
(b) As disclosed in Note 8 to the financial statements, the commencement date for the production of methyl tertiary-butyl ether (“MTBE”) has been postponed. As the MTBE plant has yet to commence production, it is impracticable to obtain market data for comparables for purposes of performing an assessment of the recoverable amount of the MTBE plant. Consequently, we are
unable to determine whether any adjustment to the carrying value of MTBE plant of RMB 687 million is necessary.
Qualified Opinion
In our opinion, except for the effects, if any, arising from the matter described in the Basis for Opinion
paragraph, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date.
I think EGM for approval to go ahead with the Arkema deal is jut around the corner. Once that is secured, the share price will further rise towrds $1.00 ... especially if Sunvic gives a more concrete indication of the timeline. So far we know that by Dec 2014, Arkema would have paid RMB 1.45 billion cash to Sunvic. Could happen much earlier?
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