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DRC [M-PF +1.7%] - Rising input rubber costs to deflate margins - Update

We lower our TP by 3.5% but maintain a MARKET PERFORM rating with a +1.7% total return. We expect 6.3% growth in FY17 sales driven by 26.2% growth in radial tire sale volume on the back of capacity expansion and growing demand for radial tires. However, bias truck tire sales will see a slight drop of -1.1% YoY due to a further 4.0% reduction in ASP.