CSM - BUY - A Rubber and Radial Rebound - Initiation
We are initiating coverage of Casumina (CSM) with a buy recommendation and target price of VND26,000. In the short-term, CSM is benefitting from the fall of rubber prices to the USD2,800-3,000/tonne level, which has boosting its OPM from 4.4% in FY11 to 13.4% in 2Q12. In the longer-term, CSM will begin production of radial tyres in 2014, a key driver of its future growth. We do not believe investors fully appreciate its recent good earnings or its long-run prospects, so now is a time to buy.