CSSC SP / CSSC.SI
Tyre-chain scale leader with volume resilience and FY26 spread upside
Materials
Sunsine supplies accelerators, insoluble sulphur and anti-oxidants used in compounding and vulcanisation. Rubber chemicals are a small share of tyre cost, but they affect cure speed, durability and production reliability; qualified suppliers therefore have stronger retention than a generic commodity label implies.
Sunsine is world’s No. 1 global rubber accelerator producer and operates with 254kt of finished annual capacity at end-FY25. We expect capacity to rise to 272kt in FY26E, supporting volume-led growth as weaker producers face utilisation, environmental and working-capital pressure.
The Yanggu outage and sulphur tightness should improve Sunsine’s bargaining position, especially in insoluble sulphur. Our model still assumes only moderate blended ASP uplift and FY27E-FY30E margin normalisation, keeping the earnings case grounded.
We initiate coverage on China Sunsine Chemical Holdings Ltd. with an OUTPERFORM rating and a 12-month target price of S$1.145, based on a DCF using 12.0% WACC and 2.0% terminal growth. Our target price implies 69.6%upside from S$0.675.
Key downside risks include (i) rubber chemical ASP pressure and industry overcapacity; (ii) raw-material and energy price volatility; (iii) weaker tyre demand or customer utilisation; (iv) expansion and utilisation execution risk; and (v) FX and capital-allocation risk.
