Excerpts from CGSCIMB report China Sunsine Chemical Holdings (SGX: QES)

• Sunsine 1Q22 net profit came in strong at Rmb157m (+11% qoq, +26% yoy), above expectations on the back of better-than-expected profit spreads.
• While Sunsine’s profit spread should remain healthy in the near-term, we think China’s Covid woes may pose downside risk to its sales volumes.
• Reiterate Add given undemanding valuations at 1.5x FY23F P/E (ex-cash), but we lower TP to S$0.67 due to the near-term challenging outlook.

China Sunsine 1Q22 strong performance driven by elevated ASPs China Sunsine reported 1Q22 net profit of Rmb157m (+11% qoq, +26% yoy), above expectations at 35%/32% of our/Bloomberg consensus FY22F forecasts. While sales volumes (-11% yoy) were impacted by the Winter Olympics and China’s Covid control measures, Sunsine achieved 11% yoy revenue growth on the back of higher ASPs (+25% yoy) in 1Q22. GPM came in at 34% (+2.4% pts yoy), as Sunsine benefited from stronger ASPs (especially for anti-oxidant products) while input costs remained stable....