Regional rubber listcos expected to finish 2018 on steady note

DECEMBER 11, 2018 - 1:39 PM

SOUTH-EAST Asia rubber companies listed in Singapore are on track for a solid full-year performance, with the sector spurred on by rising demand and support from prices.

The Singapore Exchange (SGX)’s six rubber-focused stocks have average total returns of 18 per cent for the year to Dec 10 - against 18.5 per cent in all of 2017 - with an average return on equity of 16.4 per cent.

Besides demand and price factors, these companies are also affected by operational efficiency  and technical capability in rubber plantations and processing, according to a report from the SGX’s “My Gateway” investor education portal.

Currency rate movement also weighs on their revenues from rubber product exports.

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The report flagged Malaysian minister Teresa Kok Suh Sim’s observation, made in September, that the rubber industry is on track to be the Malaysian economy’s top commodity contributor - a development that comes amid woes in the palm oil industry.

Malaysian glove makers Top Glove Corp, Riverstone Holdings and UG Healthcare make up three of the six companies, alongside Thai rubber producer Sri Trang Agro-Industry Public Co and Indonesia’s Halcyon Agri. The sixth company is China Sunsine Chemical Holdings, which has 65 per cent revenue exposure to its Chinese home market.

The “My Gateway” report noted that, besides the rubber-focused businesses dealing in natural rubber products, rubber chemicals, rubber glove manufacturing and distribution, it also lists other stocks with rubber-related operations such as automotive products group Stamford Tyres.