- China Sunsine’s volume outlook remains supported by China’s resilient auto market, with 1Q25 and Apr 25 vehicle sales up 11% y-o-y and 10% y-o-y respectively.
- While average ASPs have declined on lower feedstock prices, its market leadership and capacity provide scale advantage and pricing flexibility. We cut our 2025-27 earnings by 1-3% on ASP weakness, though volume growth remains intact.
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Sustained automotive growth supports rubber accelerator demand.
- According to the China Association of Automobile Manufacturers (CAAM), 1Q25 auto sales reached 7.47m units, up 11% y-o-y. Notably, new energy vehicles (NEV) surged 47% y-o-y to 3.1m units, accounting for 41% of total new car sales. The strong momentum in vehicle production and electrification continues to drive healthy demand for downstream materials like rubber accelerators, which are essential in tyre manufacturing.
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Main feedstock aniline prices fall.
- The ASP of rubber accelerators, the main earnings driver for China Sunsine, has declined by around 18% y-o-y to date, in tandem with a 39% y-o-y fall in aniline prices, its key feedstock. This is largely due to lower crude oil prices, as aniline is derived from benzene, a petroleum-based input.
- Additionally, increased aniline supply from resumed production capacity has further weighed on prices. While lower raw material costs may offer some cost relief to China Sunsine, the decline in ASPs is expected to offset most of the margin gains.
1Q25 review.
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