CSM - BUY - Dramatic fall in rubber prices boost earnings forecast, target price raised - Update
Rubber prices continue to freefall, dropping 20% yoy to US$2,600/tonne. That’s really good news for Casumina. With rubber prices at this level and accounting for about 58% of CSM’s production costs, we estimate gross margins will expand to 25% from 23% (at US$3,000/tonne), which translates to a 17% boost to our previous earnings forecast. Thus, we’re increasing our EPS forecast to VND5,060 from VND4,332. We reiterate our BUY recommendation and raise our 12M target price to VND40,400.