SINGAPORE (Apr 25): China Sunsine Chemical, the producer of rubber accelerators, reported a more than doubling of 1Q18 earnings to RMB149.5 million ($31 million) from a year ago.

The bottomline improvement came on the back of a 49% increase in revenue to RMB 856.9 million due to higher average selling price (ASP) and strong sales volume.

Average selling prices in 1Q18 increased by 34% to RMB 23,168 per ton from RMB 17,300 per ton a year ago, and by 4% as compared to that in 4Q17.

The increase in ASP was due to the continued short supply situation in 1Q18 resulting from China’s enforcement of stringent environmental protection laws and regulations and frequent environmental inspections in 2017 that affected the production of many rubber chemical producers.

Gross profit rose 113% from RMB140.0 million to RMB298.8 million in 1Q18. The overall gross profit margin (GPM) also improved 10.5 percentage points from 24.4% a year ago to 34.9% mainly due to the higher ASP.

Profit before tax (PBT) increased by 114% from 84.7 million in 1Q17 to RMB181.6 million. The group’s wholly-owned subsidiary, Shandong Sunsine Chemical Co., has been granted “High-tech Enterprise” status, which allows it to enjoy a concessionary tax rate of 15% as compared to the headline tax rate of 25%.

The group says it has completed the new Phase I 10,000-ton TBBS production line and 10,000-ton insoluble sulphur production line in Ding Tao facility in FY2017. Trial-run applications for these two projects to the relevant government authorities had been submitted and are pending approval.

The construction of the expansion of Guangshun Heating Plant with addition of one boiler and one generator is completed and now undergoing the machinery testing. Management is confident to start the trial-run by end of 2Q18.

Shares in China Sunsine closed at $1.45 on Wednesday.