Chemical manufacturer Jiutian Chemical Group overshot earnings expectations in 3QFY2020, driven by the shutdown of a competitor, says UOB Kay Hian analyst Clement Ho in a Nov 12 note. Ho is maintaining his ‘buy’ call on the company with a raised target price of 18 cents from 16 cents. 

“3QFY2020 net profit of RMB51.9 million (+2,038% y-o-y, +59% q-o-q) overshot our estimate of RMB38.8 million, due mainly to higher-than-expected DMF average selling price (ASP),” says Ho. Dimethylformamide (DMF) ASP increased to RMB6,195/tonne, notes Ho. 

On the back of higher DMF ASP of RMB6,195/tonne (+36.4% y-o-y, +37.3% q-o-q), 3QFY2020 revenue rose to RMB267.0 million (+8.8% y-o-y) but slipped 3.4% q-o-q due to a lower utilisation rate of 44% (3QFY2019: 49%, 2QFY2020: 56%) for Anyang Jiutian DMF plant arising from the scheduled maintenance shutdown of 20 days in September.

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