Sinostar PEC (SGX:C9Q)
1. One of the largest producers of downstream petrochemical products (mainly propylene and polypropylene) within the 400km radius of its production facilities in Dongming Petrochem.
2. Not your typical S-chip (with a strong heritage and backing). Listed in 2007, Sinostar shares a strategic affiliation with Shandong Dongming Petrochem Holdings Group, which is one of the largest privately-owned crude oil refiners in PRC.
3. 2.4% dividend yield. Sinostar has been consistently paying out dividends of at least S$0.005/share in the last 5 years, translating to a dividend yield of 2.4%
4. Announced expansion plans hints at future growth ahead. Sinostar is increasing its production capacity of propylene and polypropylene by 1x and 5x respectively. Propylene and polypropylene forms more than 90% of the total profit of the group.
- Double propylene production capacity, which will start contributing from FY19. At the end of FY18, Sinostar has completed its acquisition of a 70% equity stake in Dongming Qianhai Petrochemical Co., which will double the Group’s propylene production capacity to 180,000 metric tons/year, and will start contributing to the group from FY19 onwards.
- 5x increase in polypropylene capacity by FY21. It is also constructing a polypropylene production plant, which is expected to increase the Group’s production capacity by 5x to 250,000 tonnes per annum. The grade of the polypropylene produced is also expected to be higher, as it adopts the latest production technology, Spheripol, and is expected to drive margins ahead, as the higher grade polypropylene produced can be used in higher valued products such as high-end medical equipment, automotive accessories, home appliances, electrical films, food packaging and other consumer products. The plant is expected to be ready in end 2020/2021.
5. Vote of confidence from major shareholder. Major shareholder, Mr Li has been increasing his stake in the group as early as 3Q2015, with more aggressive additions in recent years, consistently adding on to his stake in each quarter since 4Q2017. His stake has increased by nearly 3% since 4Q2017 to 55% as at 15 Mar 19.
Price: S$0.210; Market Cap: S$134m
Free Float: 45.0%; Major Shareholders: Li Xiang Ping 55%;
FY18 PE: 8.1x; Dividend yield: 2.4%; P/B: 0.9x
- Listed in 2007
- One of the largest producers and suppliers of downstream petrochemical products within the 400km radius of our production facilities within the Dongming Petrochem Industrial Zone in Dongming County of Shandong Province, PRC.
- Process raw LPG (annual capacity: 550,000 tonnes)
- Propylene – extracted from raw LPG to produce other chemical intermediates such as polypropylene, vinyl (annual capacity: 180,000 tonnes)
- Polypropylene – major derivative of propylene which is resistant to chemicals and heat. Mainly sold to plastic manufacturers to produce plastic products for various industrial applications eg. Flexible and rigid packaging, automotive and consumer products (annual capacity: 50,000 tonnes- but is currently constructing new plant to increase its capacity by 5x to 250,000 tonnes)