China Sunsine (CSSC SP): Bigger is better

  • RE-ITERATE BUY Entry – 0.54 Target – 0.68 Stop Loss – 0.48
  • China Sunsine produces rubber chemicals. The company is the largest producer of rubber accelerators in the world and the largest producer of insoluble sulphur in China. It has three production plants in Shangxian, Weifang, and Dingtao in Shandong Province.
  • Rubber chemicals prices have turned around since October 2020. Most prices are approaching the levels of the peak in mid-2018. The current price of chemicals like anti-oxidant A has reached new highs.
  • Bigger and better performance in 2021. China Sunsine will commence commercial production of 30,000 tonnes insoluble sulphur and 30,000 tonnes antioxidant TMQ in 2H21. Theoretical production volume of insoluble sulphur is expected to increase by 100% YoY in 2H21 and 50% YoY in FY21; production volume of anti-oxidant is expected to increase by 66.7% YoY in 2H21 and 33% YoY in FY21.  Meanwhile, we believe the ASP in 2H21 will be comparable to 1H21 on a conservative assumption. 
  • We have an Outperform rating and 12-month target price of S$0.68 driven by the upswing in ASP and higher sales volume in FY21 and FY22. Read our full report here
CSSC SP (Source: Bloomberg)