The company 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, says Chong.
As the world’s largest rubber accelerator producer, Chong says the company can leverage on this heft to support market share gains through the industry cycles.
Chong expects capacity to rise to 272,000 tonnes in FY2026, up from 254,000 tonnes at end-FY2025, thereby supporting volume-led growth as weaker producers face utilisation, environmental and working-capital pressure.
For the coming FY2027 to FY2030, Chong expects the company to enjoy an uplift in its average selling price as margins normalise, which will keep the analyst's earnings case "grounded".
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Chong values the company using a DCF methodology using 12% WACC and 2% terminal growth, thereby deriving a target price of $1.145.
Key downside risks include rubber chemical ASP pressure and industry overcapacity; volatility in the costs of raw material and energy prices; weaker tyre demand or customer utilisation; expansion and utilisation execution risk; and last but not least, forex and capital-allocation risk.
China Sunsine Chemical Holdings shares closed at 69 cents on July 6, up 1.47% for the day.
