Sharp rise this morning in this Chinese oil refinery company. Tipped over the weekend in Small Company Share Watch to be the next ReneSola. Changes in the way pricing operates since China joined WTO is set to change the company dramatically, plus results in the coming weeks could surprise on the upside.

www.haikechemical.com

Quarter 1 update

First Quarter 2007 Highlights

- Total revenues increased by 28% to US$ (or '$') 73.9m (2006Q1: $57.9m)

- Petrochemical revenues increased by 15% to $56.1m (2006Q1: $48.6m)

- Speciality chemical revenues increased by 87% to $17.0m (2006Q1: $9.1m)

- Biochemical revenues increased by 300% to $0.8m (2006Q1: $0.2m)

- Gross margin improved to 12.1% (2006Q1: 7.2%) to $8.9m (2006Q1: $4.1m)

- Net profit after tax increased by 625% to $5.8m (2006Q1: $0.8m)

- Net profit (after minority interests) increased by 650% to $4.5m
(2006Q1: $0.6m)





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Few sellers taking the price a bit lower with general market malaise. Volume low and pretty insignificant. Bound to be fairly large percentage swings up and down. Nice buying opportunity for some no doubt.

Something I was posting on another thread....

The HaiKe placing document makes interesting reading albeit almost 100 pages. Here are some abbreviated bullets points taken from the report:

High barriers to entry, which help to strengthen the Group's position, including:

Regulatory environment - strict regulation, new entrants subject to series of approval processes and certification.

Capital Expenditure - Group has significant production facilities and significant investments in plant and equipment making it difficult for new entrants to replicate without capital expenditure

Labour - Group has skilled technicians. Directors believe it would be difficult for market entrants to obtain similarly high calibre workforce.


Large customer base. No reliance on individual distribution channel. Hi Tech Chem's 5 largest customers accounted for only 14.4% of revenue in 2005, 28% in 2006.

HaiKe operates 1000 acre salt field with a 3rd party. Production capacity is over 50k tonnes of salt - abundant raw material for production process.

Group has established an office in Zhejiang Province and developed relationships in Hebei Province in order to expand sales outside Shandong Province.

The Group has installed various types of anti-pollution equipment in its facilities to reduce, treast and where feasible recycle waste generated in the manufacturing process. The Group has a number of certificates from government environmental agencies and the Directors believe the Group complies with all applicable environmental laws and regs.

Intellectual prop. In collaboration with an academic inst. in China, HaiKe developed a new method for producing isopropyl alcohol. In Jan 04 Group signed a technology transfer contract with Dalian Inst. of Chem. Physics which grants it the right to use this method for 5 years. The method can significantly increase production, reduce the consumption of energy and lower costs (thereby increasing margin).

That's enough for today - maybe more to follow if I can maintain enthusiam!

RSI fallen to its lowest, think we'll see this heading higher now.

I'm not too sure about that...resistance has been breached.

Had a good chat with the CFO this morning, catching him in HongKong. Very positive and approachable. Obviously it's difficult to try and get hold of anything new, but I get the impression Q2 has gone well. Q2 is possibly one of the lower quarters with Q4 traditionally being the best. I also get the impression that the new capacity facilities are running slightly ahead of schedule. Specialty chemicals margins quite wide, somewhere between 10-20%. Discussions regarding oil pricing are ongoing and naturally it's all something we would like to see progressed but again I get the impression it's nothing untoward just local bureaucracy. Results Sep. Looking overdone to me here but I'm not concerned.

After a long profit taking stretch, we're seeing gains two days running. The RSI turns bullish and we jump 8% today. Still believe this is very undervalued.

Results only a few weeks away and this is picking up again after these topsy-turvy days we're experiencing.

I had another chat with our CFO as well and whilst naturally there's nothing new, he remains very postive and I believe all is running to schedule for the capacity expansion. We talked about the oil price and the removal of pricing restrictions in China. I understand that Petrofina and Sinopec are also petitioning the government but these things take time. I guess it could happen any day or be months away. That said we wait until 7/9 for the Q2 results and hopefully any pressure being experienced on the petro side will be offset by the high performing specialty chems.

Another good set of results today coming out of HaiKe. Good all round improvement with excellent gains coming from specialty/bio chemicals. The Petro revenues were better than I had expected but we didn't see the highest crude prices during early Q2.

This stock is now looking very undervalued to me and perhaps we can look to some broker update soon.

and it's chinese too!!!

And on schedule for capacity increase in the autumn.

Don't think Haike will go up...China just announced that its inflation rate is 6%...will have more interest rate increases.

It's not so much the inflation rate impacting business but the price of crude. As a means of countering this, as indicated in their statement yesterday they are able to focus on the higher margin areas in order to balance the petro side but are still confident of meeting their expectations. The new facility is on track however and price of residual oil is less than crude, so there will be further benefits here.

114p now.

Kin'ell, Eugene Wong knew what he was doing when he sold out at 1.90p, 1.88p and 1.84p..doh!!

perhaps i am looking through yellow-coloured glasses, but it does seem that so many of these chinese stocks, so strongly touted by a good number on this BB, are being or already have been walloped - e.g. SOLA, HAIK, WCC and even TAIH ..... i know the markets in general are pretty freaky at the moment, but the low liquidity of these stocks + the (now) general view of chinese stocks makes these reactions of little surprise, to me at least

It has been a dismal performance but I'm reluctant to go yet despite losses. It's somewhat tempered for me by my gains in shorting Sola. Perhaps hindsight will prove me wrong but I would have thought around here we're overdue a move higher. Having spoken to the CFO I'm still reasonably confident over the medium term. Even holding something like Alliance and Leicester is a risky business these days...

99p today. Time to cut losses.

for goodness sake guys!! ..... what is with you?? ..... why did you not cut your losses before? .... the writing has been on the wall for a while .... this is another of these damn chinese stocks into which so many of you have allowed yourselves to be suckered when clearly from day 1 there was limited free market and liquidity.

I'm already out but should have stuck with rigid stop-loss. C'est la vie!