SINGAPORE (Feb 28): China Sunsine Chemical Holdings, the specialty rubber chemicals producer, reported 4Q earnings doubled to RMB132 million ($27.6 million) from a year ago.

4Q17 revenue grew 58% to RMB873.3 million compared to RMB553.4 million in 4Q16, mainly due to the increase in both overall average selling price (ASP) and sales volume.

ASP in 4Q17 increased by 40% to RMB22,384 per ton from RMB16,000 per ton a year ago and 21% as compared to that in 3Q17. The increase in ASP was due to the continued short supply situation in 4Q17 resulting from the stringent environmental protection inspection and higher raw materials costs which allowed the group to increase its ASP.

Sales volume in 4Q17 increased by 13% mainly due to the short supply of rubber chemicals situation in China which continued in 4Q17, and many rubber chemical producers failing to meet the requirements of environmental protection laws and regulations, thereby adversely affecting their production.

During the quarter, gross profit rose 103% from RMB143.8 million to RMB291.2 million. The average gross profit margin (GPM) also improved 7.3 percentage points to 33.3% from 26.0% a year ago mainly due to the higher ASP.

For FY17, the group’s revenue grew 34% to RMB2.74 billion compared to RMB2 billion in FY016, boosted by strong demand and the significant increase in ASP.

The overall ASP climbed 30% to RMB19,398 per ton in FY17 from RMB14,956 per ton in FY16. GPM in FY2017 rose 2.3 percentage points from 26.5% a year ago to 28.8%.

Selling and distribution expenses increased by 4% to RMB75.7 million mainly due to higher freight cost and incentives which was in line with the growth of sales volume.

Administrative expenses increased by 32% to RMB227.8 million mainly due to the increase in staff incentive, R&D expenses and safety production cost.

As such, earnings in FY17 escalated to RMB341.3 million or $71.4 million, up 54% from RMB221.7 million in FY16.

During the year, China Sunsine says sales volume of accelerators, insoluble Sulphur (IS) and anti-oxidant products increased by 1%, 11% and 7% respectively. As a result, total sales volume for FY17 reached a new record high at 140,476 tons. Sales to both domestic and international markets continued to grow.

In its outlook, the group has completed the new Phase I 10,000-ton TBBS production line and 10,000-ton IS production line in Ding Tao facility in FY17.

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 is now undergoing the machinery testing.

Management is confident to start the trial-run by 2Q18.

The board is recommending a final one-tier tax exempt dividend of $0.025 per ordinary share. This is on top the interim dividend of $0.005 per share.

Shares in China Sunsine closed 1 cent higher at $1.28 on Wednesday.