On behalf of the Board of Directors of China Sunsine Chemical Holdings Ltd. ("China Sunsine", together with its subsidiaries, collectively the "Group"), I am pleased to present the annual report for the financial year ended 31 December 2018 ("FY2018").
2018 was an exacting and exciting year, full of challenges and opportunities. Since the Chinese government implemented strict environmental protection policies and measures, the rubber chemicals industry became more consolidated, and these had resulted in a shortage in the supply of rubber chemicals in the first half of 2018.
Between the fourth quarter of 2017 and the second quarter of 2018, prices of rubber chemicals soared. The Group and those that excelled in environmental protection and safety benefited greatly from the price spikes. Given its competitive advantages in quality, scale, product range, cost, environmental protection, safety and market leadership, as well as efforts in other areas, the Group achieved very encouraging and unprecedented results in FY2018.
Given its competitive advantages in quality, scale, product range, cost, environmental protection, safety and market leadership, as well as efforts in other areas, the Group achieved very encouraging and unprecedented results in FY2018.
FY 2018 revenue of RMB 3,283.3 million was 20% higher than FY2017. Owing to shortage of market supply and rising raw material prices, average selling price (“ASP”) was 11% higher than the preceding year. Sales volume rose by 8% to a new record of 151,486 tons. This is the 10th consecutive year of sales volume growth since our IPO in 2007. As a result, the Group’s net profit skyrocketed by 88% year-on-year to a new record of RMB 641.3 million.
The Group’s net profit per share for FY 2018 was RMB 130.45 cents; net assets per share as of end-2018 was RMB 473.32 cents. The Group’s financial position was further strengthened with cash and bank deposits amounting to RMB 1,038.6 million, and no borrowings.
The Group has maintained its market leadership position as the world’s largest rubber accelerator producer and China’s largest insoluble sulphur producer. China Sunsine is China’s top rubber chemicals producer by revenue. The “Sunsine” brand has won widespread acclaim from tire manufacturers and peers in the rubber chemicals industry.
The Group continues to vigorously carry out technological and management innovation. Through collaboration with academic institutions, we are gradually transforming and upgrading our production technologies. Environmental protection and safety production are the top priority of enterprises, as it is a basic guarantee for a sustainable and quality growth.
Significant progress has also been made in our three major expansion projects. The new boiler and generator equipment in our Guangshun Heating Plant started operation in the third quarter of 2018. We received trial-run approval for the 10,000- ton insoluble sulphur line in Dingtao was received in November 2018 and commercial production has started. Trial-run approval for the fully automated 30,000-ton of high-end accelerator TBBS project in Yongshun New District was received in January 2019, and we have commenced production of the first 10,000 tons of TBBS.
These projects will increase the Group’s total production capacity by 20,000 tons to 172,000 tons in 2019.
According to the China Association of Automobile Manufacturers, China’s new car sales in 2018 were 28.1 million units, down 2.8% from the previous year. This is the first decline after 28 consecutive years of growth. According to ResearchAndMarkets. com’s research report, the compound annual growth rate (CAGR) of global automobile tires from 2018 to 2025 is estimated at 3.8%, which is mainly driven by the growth in automobile production demand.
For quality growth, we will continue to enhance our production and marketing efforts to maintain or even increase market share, focus on environmental protection and safety production, ensure sustainable growth, and carry out technological innovation.
The Group will also continue with its strategy of productionsales equilibrium with “continual increase in productions to drive higher sales volume, which in turn stimulates further expansions”. We will expand capacity to gain market share in the rubber chemicals industry. As the production of 10,000-ton TBBS line has been operating smoothly, the Group expects its utilization to ramp up rapidly. We will also undertake the second phase of the project for installation of equipment for another 20,000 tons of TBBS this year.
We are confident that the Group’s competitive advantages in quality, scale, product range, cost, environmental protection, safety and market leadership will be further strengthened. Through the innovation, upgrading and expansion of our products at a faster pace, we will achieve quality and sustainable growth.
In appreciation of shareholders’ support, the Board of Directors is recommending a final one tier tax-exempt dividend of 5.5 Singapore cents per share, which is equivalent to 21% of the Group’s 2018 net profit, in line with our dividend policy. This proposal is subject to shareholders’ approval at the upcoming Annual General Meeting.
On behalf of the Board of Directors, I thank all shareholders for their confidence, persistence and trust in the Group over the years. I would also like to thank our customers, business associates, suppliers and the community for their long-standing support. Our achievements would not have been possible without the untiring efforts and professionalism of management and employees.
Looking back, we are proud of our achievements. Today, with confidence and passion, we are moving towards higher goals, taking on more social responsibilities, and creating higher shareholders’ value!
Xu Cheng Qiu