KGI Research highlighted two SGX-listed companies which are benefitting from China's upswing in industrial demand and chemical prices – China Sunsine Chemicals (CSSC SP, TP: S$0.53) and Jiutian Chemical (JIUC SP, TP: S$0.155).


Excerpts from KGI report


Analysts: Joel Ng & Chen Guangzhi, CFA

China Sunsine Chemicals
We will give a detailed update when China Sunsine’s FY20 full year results are out.

We currently have an OUTPERFORM rating with a TP of $$0.47.

However, in the short term and as a trading opportunity, we recommend a trading TP of S$0.53 given that the current upward momentum is improving.


Profit margin has bottomed out. Rubber chemicals fully turned around in 2020 despite COVID-19.

robot9.19China Sunsine is the world's largest producer of rubber accelerators, supplying to tyre makers such as Pirelli and Bridgestone. On average, multiple types of accelerators and anti-oxidants dropped to the lows in 3Q19 and formed a double bottom together with the previous lows of 4Q17.

Interestingly, both price spreads and YoY changes touched similar levels in these two periods.

We believe that the strong market resiliency is due to the much lower breakeven operating costs for market leaders compared to the medium and smaller players in the market.

Therefore, economy of scale is an important moat in the rubber chemical industry.


Risks: Decline in profit margins due mainly to a drop of ASPs of rubber chemicals.

Jiutian Chemical Group
• Average Selling Prices (ASP) are once again near all-time highs as demand remains resilient and supply stays tight.

Industry sources point to low inventories in the supply chain, which could lead to even higher ASPs in 2021.

• China’s economy has benefited from supply disruptions in the rest of the world. We see this trend continuing this year and could surprise on the upside if trade tensions were to ease under the new US administration.

• On a micro level, Jiutian has focused on improving operational efficiency, raising its utilisation rates in order to take advantage of the favourable environment.

• We do not have formal coverage of Jiutian but estimate that it should trade at least 15.5 Sing cents based on 7x earnings of RMB 201mn in FY2021F.


Full report here. 

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.2800.140
Avi-Tech Electronics0.265-
Best World1.6700.040
Broadway Ind0.1000.013
China Sunsine0.4000.010
ComfortDelGro1.3700.020
Delfi Limited0.9700.005
Food Empire1.440-
Fortress Minerals0.280-
Geo Energy Res0.330-
GSS Energy0.026-0.001
Hong Leong Finance2.480-
Hongkong Land (USD)3.250-0.130
InnoTek0.440-0.010
ISDN Holdings0.315-0.005
ISOTeam0.035-
IX Biopharma0.045-
Jiutian Chemical0.025-
KSH Holdings0.250-
Leader Env0.050-0.001
Medtecs Intl0.130-0.002
Nordic Group0.3400.005
Oxley Holdings0.091-
REX International0.1350.002
Riverstone0.7000.025
Sinostar PEC0.138-0.002
Southern Alliance Mining0.600-
Straco Corp.0.505-0.025
Sunpower Group0.230-
The Trendlines0.085-
Totm Technologies0.023-
Uni-Asia Group0.810-0.030
Wilmar Intl3.3700.050
Yangzijiang Shipbldg1.7700.020
 

We have 189 guests and one member online

rss_2 NextInsight - Latest News