SINGAPORE (Jan 29): Phillip Capital is initiating coverage on China Sunsine, the largest producer of rubber accelerators in the world, with a “buy” call and target price of $1.60 or 10 times FY18 earnings.
In a Monday report, analyst Chen Guangzhi says he expects the group’s current attractive product spread to sustain growth for the next couple of years as supply continues its consolidation in China.
This is led by the nation’s supply-side reform initiatives and stringent environmental policies, which are phasing out smaller producers in favour of leading producers such as Sunsine. The move has in turn seen a surge in average domestic market prices over the recent two years due to supply shortage.
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