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Improving Fundamentals for Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT)

Delta Technology Holdings Limited – Ordinary Shares

(NASDAQ:DELT)

A rebound of China’s chemical industry is already having an impact on Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) through a growth in demand for one of its core byproducts. According to the company the price of solvent, which has dichlorotoluene as an ingredient, has quadrupled over the past year.

Improving Fundamentals

The uptick in price for solvent is a big relief for Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) given that China’s chemical industry has been in turmoil for the past few months. With the price of solvent now going for 4500RMB/Ton, the company’s prospects are looking brighter than ever given that it produces between 100 and 300 tons of solvent a month.

Given that solvent is essentially a byproduct, Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) stands to generate a substantial amount of revenues given that it won’t incur any manufacturing cost on its production. Revenue growth from the byproduct is now expected to contribute to margin growth which should lead to improved earnings going forward.

For the fourth quarter of 2016, the chemical company says it sold 133% more products compared to Q4 2015. Product revenues also soared by 139.5% on the back of growing demand.

Streamlining Productions

Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) has already started to streamline its production process as it looks to generate maximum value from the byproduct. Earlier this year the seller of specialty chemicals announced an increase in the number of clients it services.

Pharmaceutical and pesticide companies are some of the companies that Delta Technology is aggressively eyeing as it looks to bolster its customer base. The company currently services some of the world’s largest chemical companies such as Bayer, BASF Corporation, and FMC Corporation.

The last time that Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) reported earnings, it reported revenues of $53,418,112 for the full year ended June 30 2016. This represented a decline from revenues of $202,009, 160 for the full year ended June 30, 2015. Net loss came in at $7,558, 230 compared to a net loss of $5,135,757 for the previous year.

Delta Technology Holdings Limited – Ordinary Shares (NASDAQ:DELT) stock was down by 9.38% in Wednesday’s trading session consequently ending the day at lows of $2.03 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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