Excerpts from UOBKayHian report

• Sales volume is falling as a result of lower consumer confidence, amid lower ASPs for rubber accelerators expected in the coming term.
• However, capacity expansion efforts are still ongoing by China Sunsine.
• We have lowered earnings expectations for 2022-23, due to the macroeconomic uncertainties.

Maintain BUY with a lower target price of S$0.45. Sales volumes fell amid economic slowdown Due to the rising interest rate environment and unprecedented European energy crisis, the economy is slowing down, leading to lower demand for tyres. This is worsened by former China’s zero-COVID policy, which has impacted most Chinese tyre manufacturers’ production utilisation rates as well as consumer confidence. According to McKinsey & Co, optimism about China’s economy has dwindled to below 50% on China’s COVID-19 control measures, and consumers are spending more conservatively. This is in line with the fall in sales volume in 3Q22 to 48,268 tonnes (-6% yoy). Lower ASPs expected in the near term...