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CSM - HOLD - Margin peaked, fair value - Update

CSM reported Q2 net profit growth of 41% yoy as gross profit margin increased by 3.6% to 26.5%. We believe the company’s gross margin has peaked as it seems rubber prices have bottomed, but are not likely to move up in the short term. Since our BUY recommendation on 10 May, the stock has moved up 32% and reached our target price.