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Information goldmine but not for all

If the corporate regulator, the Australian Securities and Investments Commission, decides to bring in more rigid standards for briefings to analysts or large investors it will forever be known as the Newcrest Rules.
There is a bit of panic among the big players in the investment banking and funds management industry this week that the alleged actions of Newcrest 10 days ago – to selectively dole out price-sensitive and detailed information to some analysts days before it was broadly announced – could ultimately punish responsible information flows in the markets.
The particular circumstance of the Newcrest case is certainly extreme and worth a run-through.
An analyst (or analysts) held meetings with Newcrest management in the week leading up to an announcement, and several brokers issued reports containing uncanny insights into the company’s production downgrade, which in turn led to a downgrade in earnings estimates.
Not all the analysts necessarily had a selective briefing. Some would have just read other broker reports, checked out their veracity (probably with the company) and put out similar reports the following day.
And it’s no surprise that the stock price went south after the small avalanche of broker notes.
Here is a taste of some analyst reports published before the June 7 announcement by Newcrest.
From Citi Research: ”Recent presentations have outlined a major change in strategy at Newcrest, with the focus shifting to returns and cash generation at the expense of production growth … We see lower production, earnings and NPV (net present value) materially as a result … downgraded to sell.”
From UBS: ”Newcrest has recently reiterated to investors that production growth in FY14 (full year 2014) will be 5 to 10 per cent over FY13. The production downgrade has lowered our FY14 EPS (earning per share) estimate by 32 per cent.” Downgrade to sell.
From Credit Suisse: ”The precipitous gold price decline will initially drive consensus downgrades to price assumptions, earnings and valuations. This will be followed by secondary downgrades to production. Newcrest’s challenge has moved from achieving a satisfactory return from Lihir by growing production to shrinking production to ensure net free cash generation. Downgrade to underperform.”
From Bank of America Merrill Lynch: ”Maximising cash flow not production is the way forward. In essence this may result in Newcrest shelving its production growth aspirations. Buy.”
The Newcrest announcement to the market on June 7 covered a lot of things, central to which were cutting costs and lowering expectations for increased production in 2014.
The analysts were sufficiently prescient that one fund manager from Platypus Fund Management wrote to Newcrest’s chief executive Greg Robinson (on June 7) saying: ”I was amazed by the co-incidence of the fact that the entire street downgraded your stock yesterday … I have not seen a more appalling example of hosing the street down selectively before informing the wider market by a large cap company in recent years.”
The fund manager wasn’t suffering from sour grapes. He had been given the tip the previous day.
While Newcrest management denies any wrongdoing, it is hard to imagine that ASIC, under the public glare, will not be chasing this down. Selective briefings is one of those issues that falls into a grey area.
Analysts and large investors do often speak to management – a site tour, a coffee, a lunch or in the box in a sporting event.
The line gets drawn when the company representative (the insider) informs someone of facts that are or could be price sensitive.
Fund managers and brokers should be free to speak with executives to better understand their companies. There is a lot of nitty-gritty that isn’t price sensitive and lots of broader industry information is legitimate fodder for investors.
It is their job to research and analyse companies and they are paid to use their skills to assess companies’ investment appeal.
For most analysts once they have published their reports the information is then publicly available. It isn’t – but the audience is pretty large and if it contains anything new or noteworthy it is quickly picked up by the media, thanks to the proliferation of online business coverage.
It falls into more dangerous territory when the information fed to investors and analysts is more of a massaging process. Companies don’t generally feel comfortable if the expectations for their financial performance is too high and they understand the analysts community doesn’t like surprises.
In this instance the engagement between a company and analysts is more likely to be a phone call with a broad-brush suggestions that the market is looking a little tougher or that the assumptions the analyst is using (let’s say a commodity price or currency) are a bit off the mark.
Plenty of companies adhere more strictly to the continuous disclosure provisions. Unfortunately Newcrest appears to be something of a disclosure dinosaur. At the very least its hamfisted processes may result in an unworkable clampdown on companies engaging with shareholders.

The investment and make new achievements

Northeast network Qigihar on June 15th news on June 7th, following a 120000000 yuan investment in the liquor processing projects, investment of 120000000 steel structure and color plate production line project, yuan 110000000 yuan investment in the production and processing bases of man-made board project settled in the East, the investment of the county and fruitful: Liaoning province Panjin Yitong Plastic Pipe Co., Ltd. the total investment 160000000 yuan plastic pipe production project located in Jing at the foot of the mountain.

It is understood, million tons of plastic pipe project with an annual output of Yitong Plastic Pipe Co. Ltd., the main construction of various types of plastic pipe production line 7, can produce all types of plastic pipe products 10000 tons. Projects are all production and deliver results, is expected to achieve annual sales income of 110000000 yuan, profit and tax 11000000 yuan, providing 130 jobs, for the promotion of Kedong County building materials industry development, increase local fiscal revenue, expanding urban and rural employment will play a positive role.

And the lifting of the ban foam tableware

Once the railway white pollution arch-criminal — disposable foaming plastic tableware in cut-off disabled after 14 years, now be allowed to enter the market. In a move that lets a person feel puzzled, the expert from the aspects of the question. (the March 12th JINGWAH times)

The lifting of the ban for fourteen years, suddenly once again go back to the way the name, or simply said, “do not take the unusual way”, but is wearing a “no” hat to dance, and dance happily, otherwise Beijing daily consumption of disposable foam tableware 400000 and not always falls from the day? The lifting of the ban, or simply had a plan of the lifting of the ban, to give consumers a reason. After all, and abolishment of not only related to the health of consumers, but also the relationship between the environmental protection and the environment, this is not a small problem. But even the simple narration are saved.

Because I was afraid of explain too feeble, consumers can not accept; or simply not to consumers as a thing, I do my, “why to want to explain to you?” All don’t know, can only rely on their own assumptions.

Mr. Lu Xun said: I have not fearing the worst malicious to speculate the Chinese people. As a consumer, I am afraid that can not be in the food safety repeated problems in the society with large noble hard reasons to comfort themselves. The author also only in the worst malicious speculation about “behind” the interpretation of.

First, CPPIA and international food packaging Association Qia revealing a hidden behind the interests of the chain. CPPIA vice chairman said disposable foam tableware is a kind of packaging material and safety, green, environmental protection, and in containing oily food or the use of microwave heating, security is difficult to ensure, at this point, I’m afraid CPPIA director not clear, but only talk about the good, reason where? “A barrier.”. Moreover, those with foreign garbage and waste compact disc made of foam and still popular tableware market, how big words “safety, green, environmental protection”? Most people understand that, CPPIA claimed that the product quality and safety undertaking “signed with the enterprises, why not include what enterprises, specific content is what the public disclosure of information? In the past decade, CPPIA for disposable foam tableware “Zhengming” always spare no effort, why? In this regard, the International Food Packaging Association said: because the ban affects CPPIA income. And in the silence of the lifting of the ban, in the sound of a doubt, seems to be the only medium CPPIA in hands welcome, so why not make the person produces behind “money talks, bullshit walks” Lenovo? This is it right?”

EPS over 2.2 million tons of raw materials

Recently, the annual EPS industry event “China EPS Industry Summit Forum” was held in the ancient city of Xi’an, from the country’s more than 230 delegates gathered in the summit, jointly explore future EPS industry’s development.

EPS Houshu Ting special committee chairman at the meeting pointed out: This year, the northern town of energy-saving transformation of the remaining fifty million square meters area remains to be done, so in the three northern regions, EPS sheet usage has stabilized at a high level, the overall sheets dosage and about 15% higher than last year’s growth. On the other hand, EPS packaging products industry tend to be stable, although the Pearl River Delta region has not yet recovered to pre-crisis levels, but the difference is not obvious seasonal market, the annual overall amount compared with last year has been significantly improved. National foam manufacturing enterprises polarization serious, particularly small businesses more competitive and survival difficult. EPS production in China this year, more than 2.2 million tons of raw materials, products, the actual amount of nearly 2 million tons, EPS growth in both production and consumption in more than two. Resin production capacity 570,000 tons, industry-wide cumulative production capacity has more than 4 million tons. The presence of some enterprises operating rate of serious shortage.

China Plastics Processing Industry Association, Liao opening speech, he mentioned in his speech: EPS foam industry for its outstanding development performance attracted the world more and more attention, China’s plastics industry is one of the best . Although this year by the EPS industry overcapacity, and national fire performance of external wall insulation material stringent requirements, future prospects are uncertain, but in general this year, China EPS industry development trend is still gratifying.

SAP end products expected to put into operation this month

1 SAP end products expected to put into operation this month

Superabsorbent (SuperAbsorbentPolymer, referred SAP) by the polymerization of low molecular weight substances by synthesis or by a chemical reaction of polymers made from a moderately crosslinked by a three-dimensional network structure of the new functional polymer materials, molecular chain the strongly hydrophilic group contains a lot, can absorb several times its own weight equal or even thousands of times of water. SAP not only absorbent capacity, water retention capacity is very strong, with a lot of water, have a considerable gel strength, and in a dry environment moisture will slowly release, so called high water retentivity material.

Although many varieties of SAP, but the product is mainly used as a crosslinked polyacrylic acid (salt), acrylic acid ester copolymer and starch – acrylic acid graft polymer, wherein the crosslinked polyacrylic acid (salt) because of its excellent comprehensive class SAP performance, production accounts for more than 80% of world production. SAP is the main application areas of acrylic acid, while the main raw material is acrylic SAP.

Acrylic acid impurities on the quality and stability of SAP has a great influence. Usually esterification stage acrylic compounds containing aldehyde dimer and polymerization inhibitor. Over the production process in the SAP product impurities be color, appearance, have a serious adverse effect on water absorption, while high levels of impurities can lead to skin irritation, not suitable for personal hygiene products. So for the ordinary esterification stage acrylic need to go through further purification to give pure acrylic acid, can be used for the production of SAP. SAP is the acrylic acid and esters industrial chain of high-end products.

SAP because with superior moisture absorption and retention capabilities in industry, agriculture, health care, aspects of daily necessities are widely used, but the most important application is for diapers and hygiene products, which accounted for SAP application of demand 80%. With an aging population while gradually coming era, SAP opened up a broader market.

According to industry data for 2009, SAP’s worldwide production mainly concentrated in Europe and other developed countries and regions, accounting for 77.0% of the global total capacity. By the construction of an SAP enterprise independent production capacity is only 83,000 tons, accounting for Asia (excluding Japan) region capacity ratio was 21.2%, accounting for 4.9 percent global share, but this part of the production capacity is produced by a number of companies, our independently owned SAP capacity of small and scattered, poor international competitiveness. Manufacturer of high-end health supplies are mainly imported using SAP.

Independent research and development satellite petrochemical SAP production process to achieve a product from a small scale, pilot to the development of industrial production, the company became the sole owner of the patent SAP continuous production enterprises. The company will be taken based on the high-end SAP products, in order to point strategy, in 2012 the company’s SAP docking pilot products have stable market.

According to satellite Petrochemical 2013 work plan, the company should ensure that homegrown produce 30,000 tons of SAP project went into operation in mid-2013. We expect that the project will be put into operation this month. At the same time as the company has stabilized docking pilot product market, we believe that the company product technology and quality are at a high level, the company is expected to SAP project put into operation quickly open the market, and gradually complete the import substitution process.

SAP project into production is expected to drive the company’s profit improvement. According to foreign products profitability, SAP product gross margin is expected to reach 40 to 50%. Company 30,000 tons SAP project is finished, we expect net profit of its products t 4,000 yuan in 3000, the company’s contribution to the EPS of 0.25 yuan.

2 projects under construction steadily

Rest of the company’s major projects under construction include acrylic acid and esters projects and propane dehydrogenation project.

Company 320,000 tons of acrylic acid, 300,000 tons acrylate orderly implementation of the project is, we expect that the project will be completed before the end of 2013, thus further enhance the company’s acrylic acid and esters production capacity and performance flexibility.

450,000 tons of propane dehydrogenation (PDH) project is progressing as follows: (1) tank construction. Currently, the tank has been assembled, three 60,000 m3 double refrigerated tanks are speeding assembly; (2) public works. Construction basically completed, will enter the pipeline; (3) production plant is being civil construction; (4) long-cycle all equipment purchases done other procurement matters according to the project schedule requirements orderly; (5) the staff. Technicians and operators basically in place, the operator entered the training phase. We expect that the project will be completed before the end of 2013, Sinopec is expected to become the first satellite built PDH projects listed companies.

The company has 160,000 tons of acrylic acid, 150,000 tons of production capacity acrylate; With the construction projects coming on stream, we expect to end 2013, the company will have 450,000 tons of propylene, 480,000 tons of acrylic acid, 450,000 tons acrylic ester production capacity, the company’s results for the acrylic acid and esters flexibility will be significantly enhanced. Acrylic acid and esters when the company’s annual sales will reach 60 million tons, while the price of acrylic acid and esters rose 1,000 yuan each, the static case, the company will thicken EPS 1.04 yuan. Meanwhile PDH completion of the project will allow the company to form a “propane – propylene – Acrylic – acrylate” the whole industry chain, reduce the company’s production costs, enhance the company’s resistance to price fluctuation risks, while significantly improving the company’s profitability.

3. Earnings forecasts and investment ratings

The company has more projects under construction will be completed and put into operation during the year. SAP will shortly become an important profit growth in the long term performance of the company resilient acrylic acid and esters will further increase, while the company will form a “propane – propylene – Acrylic – acrylate” a complete industrial chain, thereby reducing the procurement of raw materials costs. In addition the company through its own funds and bank loans can solve the investment funds needed, does not require equity financing, equity in the company under the same multi-project production company’s revenue is expected to make profits grow exponentially. We expect the company from 2013 to 2014 EPS were 1.05,1.73 yuan, according to 2014 EPS and 15 times PE, we give the company a target price of 25.95 yuan, maintaining a “buy” rating.

Dart Container reports progress on polystyrene recycling

Dart Container Corp. is one of the largest manufacturers of polystyrene foam food packaging, so maybe it’s fitting that the company also is a major player in foam recycling.

Earlier this year, the Mason, Mich.,-based company was given the Excellence in EPS Recycling Award from the EPS Industry Alliance, recognizing its “extraordinary commitment to the advancement of expanded polystyrene recycling.”

Dart says it has been recycling expanded PS for about 20 years and accepts post-consumer foam packaging for recycling at 18 of its plants worldwide.

The company collects more than 1.5 million pounds of the material annually, which is recycled and sold to manufacturers that turn it into crown molding, picture frames, agricultural material and other products, said Michael Westerfield, corporate director of recycling programs for Dart, in a phone interview.

Dart also operates foam cup collection programs for its customers.

The company has sold more than 2,800 of its Recycla-Pak program kits, Westerfield said. The kits contain two corrugated recycling bins and promotional information on foam recycling. The bins are used to collect foam cups and double as a pre-paid shipping container to send the cups back to Dart for recycling.

Dart’s Cups are Recyclable — or CARE — program is aimed at larger customers, like college campuses or hospitals. Customers collect used foam food service packaging in the bin and Dart picks up the material once a month for recycling.

The company is also working with school districts in California as part of the “Going the Extra Mile” foam recycling program. Schools in the Chula Vista Elementary School District and the Riverside Unified School District collect foam lunch trays and send them to Dart to be processed for recycling.

While Dart’s collection programs are great for customers, and bring in needed material, they aren’t reaching the masses, Westerfield said.

So in recent years, the company has turned its focus curbside.

About 71 million pounds of expanded PS was recycled domestically in 2010, including 37.1 million pounds of post-consumer and post-commercial material, up from 69.4 million total pounds in 2008, according to the Alliance of Foam Packaging Recyclers.

“Most people, when you talk to general public, they don’t even know foam is recyclable,” Westerfield said. “The fact that we’ve overcome that and grown in such a short period of time, that’s very positive.”

Los Angeles launched California’s first foam packaging recycling program in 2007. Seeing such a large city take on a material that was considered difficult to recycle made people realize that foam recycling is “something that has legs,” Westerfield said.

According to Dart, more than 65 cities in California have access to curbside expanded PS recycling and the number keeps growing. Based on population, about 20 percent of the state can put foam packaging in their recycling bin, Westerfield said.

The company deserves some of the credit: Dart decided to invest in manufacturers and technology that could make it easier to recycle foam at municipal recycling facilities.

Foam is about 95 percent air, which can make it challenge to store and recycle. Recyclers use compacters, called densifiers, which use mechanical pressure to compress foam into smaller, workable units.

Dart has helped developed densifiers that can recycle foam of varying densities at the same time, and take care of everything from grinding onward in one step.

The compact densifiers have a small footprint and take up little room, so they can be installed in unused spaces in recycling plants, and are designed to cut down on labor.

They can be installed underneath sorting lines, so as soon as foam is removed from a line it can go down a chute and right into the machine or an automatic blower can move the material to the machine hands-free, Westerfield said.

The densifiers can also be leased to Dart customers that participate in the CARE program.

Much of Dart’s attention has been on foam recycling in California because the area already has relatively high diversion rates, and the company was also approach by California’s Department of Resources Recycling and Recovery to help improve expanded PS recycling rates, Westerfield said.

Realistically, foam recycling will take off in locations that have already conquered “low hanging fruit” and are looking to improve recycling more difficult materials, Westerfield said.

But he was hopeful that other areas will start embracing the material.

“A lot of people thought [expanded PS recycling] couldn’t be done, but it can be done, and the programs aren’t stopping, they’re expanding,” Westerfield said. “It’s possible and practical.”