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'06 profit to grow 50%
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allantanhc
Veteran |
05-Oct-2006 23:35
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Just check the chart of CG tech. It actually broke out of a triangular formation on 18 Sep. Based on the depth of the triangular formation, technically, CG Tech has a potential to hit $0.40. |
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Nostradamus
Supreme |
28-Sep-2006 09:52
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It has started production of a new high margin product called dye-absorbing PET chips. These chips are produced using the same production line as that of current existing bright and semi-dull PET chips. Dye-absorbing PET chips offer a higher gross margin of 25% compared with 14% from the bright and semi-dull PET chips. Capex is minimal in the new PET chip operation with total investment in R&D and equipment for the dye-absorbing PET chips estimated to top off at RMB2m. The new product is a testament of its initiative in renewing its product mix; the new focus on high margin differentiated functional products should also enhance the group''s profitability and shareholders' returns in the mid-long run. From the current 15,000 tons annual production capacity of bright and semi-dull PET chips, 8,000 tones will be consumed as the raw materials for Polyester Short Fibre (PSF) products, targeted for launch in March 2007. While the current annual production capacity of dye-absorbing PET chips is only 1,000 tons, it is expected to replace the low margin bright and semi-dull PET chips in FY07. The production of dye-absorbing PET chip is expected to have a positive impact on earnings. Management has reiterated its earnings guidance for 50% net profit growth in FY06. This would imply PE valuations of 3.8X FY06 and 3.1X FY07, respectively. KE has a buy on CG Technologies. |
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fruitty
Senior |
20-Sep-2006 17:23
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Anyone has any news on why the trading volume for CG Tech is so high today? |
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Nostradamus
Supreme |
30-Aug-2006 19:21
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It said it is expecting net profit this year to grow by 50% from 2005 on the back of strong demand for both its polyethylene terephthalate (PET) chips and yarn products. "Global demand will continue to mitigate raw material cost pressures caused by rising crude oil prices," CEO Cai Junyi said. During the first half of the year, CG Tech's gross profit margin improved to 26.4% from 24.9% a year ago despite higher costs as new products offered better margins and after the company upgraded existing production facilities and built new ones. This helped lift the group's net profit by 57.9% during the six-month period. Going forward, Cai said CG Tech will continue to improve profit margins by differentiating its PET chips and yarn products by adding more features such as breathability , anti-odor, and anti-ultraviolet into the yarns. But cost management will remain a key priority given that raw material costs account for 85% of the company's operating expenses, he said. CG Tech is also expanding downstream by building a 65m yuan manufacturing facility for the production of polyester short fibres (PSF), which is a raw material for its yarn products, Cai said. The facility, which will start operating in the second quarter of 2007, will have the capacity to produce 7,500 tons of PSF annually. "The plant is expected to start contributing in 3-4 years time and will make up 10-15% of the group's total revenue when it is fully operational," Cai said. Over the next 12 months, CG Tech will be rolling out new products such as anti-bacterial PET chips, yarn and PSF for children's wear, socks, underwear and hotel garments, anti-ultra violet PET chips, yarn and PSF for outdoor sportswear and anti-mosquito outdoor wear. "We're not into the volume business, because this will require a lot of capital," Cai said. "What we are doing is differentiating our products to achieve better pricing and hence, higher margins." CG Tech mainly sells its products to chemical fibre and textile manufacturers in China, but Cai said the company is looking at other markets. "We want to bring new products and market to garment makers in Europe and North America," Cai said. |
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