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DRC - Sharp ASP declines dent FY16 results - Earnings Flash

DRC’s Q4 2016 mirrored what happened in 9M 2016. The core business continued to face stiff competition (i.e., Chinese products), leading to substantial ASP declines and unenthusiastic volume growth. Meanwhile, the recent recovery in natural rubber prices poses another direct threat to DRC’s future profitability. We maintain our conservative view on DRC and reiterate a MARKET PERFORM rating on the stock.