Broker: UOB Kay Hian
Date of Report: 28 May 2025
China Sunsine Chemical, Hong Fok Corp, and Singapore Tech Engineering: Key Singapore Market Insights, Earnings Analysis, and Top Trading Ideas
Market Overview and Key Indices Performance
The Singapore equity market continues to show resilience, with leading indices posting mixed returns across global benchmarks. The Dow Jones Industrial Average closed at 42,343.7 (+1.8% 1D), S&P 500 at 5,921.5 (+2.0% 1D), and the FTSE 100 at 8,778.1 (+0.7% 1D). Singapore’s FSSTI stands at 3,896.1 (+0.5% 1D, +2.9% YTD), reflecting a steady performance in a volatile macro environment.
Top Trading Turnover and Gainers
- DBS Group Holdings: S\$44.53 (+0.6%), S\$168.9m 5-day ADT
- Singapore Telecommunications: S\$3.85 (+0.3%), S\$116.7m 5-day ADT
- United Overseas Bank: S\$35.50 (+0.6%), S\$98.9m 5-day ADT
- Oversea-Chinese Banking Corp: S\$16.31 (+0.9%), S\$74.2m 5-day ADT
- Yangzijiang Shipbuilding: S\$2.07 (+1.5%), S\$51.1m 5-day ADT
Top gainers include Tianjin Pharmaceutical Da (S\$2.33, +5.0%), Singapore Tech Engineering (S\$7.75, +2.5%), Centurion Corp (S\$1.37, +2.2%), SATS (S\$3.11, +2.0%), and Hong Leong Asia (S\$1.19, +1.7%).
Top Losers
- Nio Inc-Class A: S\$3.77 (-2.6%)
- Digital Core REIT Management: S\$0.49 (-2.0%)
- Raffles Medical Group: S\$0.99 (-1.5%)
- Jardine Matheson Holdings: S\$45.21 (-1.5%)
- Capitaland China Trust: S\$0.68 (-1.4%)
Key Macro Assumptions
| Country/Region |
GDP Growth 2024 (%) |
2025F (%) |
2026F (%) |
| US |
2.8 |
1.8 |
2.5 |
| Euro Zone |
0.7 |
0.9 |
1.2 |
| Japan |
0.1 |
1.0 |
1.5 |
| Singapore |
4.4 |
2.5 |
1.8 |
| Malaysia |
5.1 |
4.7 |
4.8 |
| Thailand |
2.5 |
2.9 |
3.0 |
| Indonesia |
5.0 |
5.2 |
5.3 |
| Hong Kong |
2.5 |
2.2 |
2.5 |
| China |
5.0 |
4.2 |
4.2 |
Commodities forecasts: CPO (RM/mt) at 4,180 (2024), 4,500 (2025), 4,000 (2026); Brent crude (US\$/bbl) at 80.0 (2024), 70.0 (2025), 67.0 (2026).
China Sunsine Chemical: Holding Steady Amid Pricing Pressure
Company Snapshot
- Ticker: CSSC SP
- Sector: Materials
- Share Price: S\$0.565
- Target Price: S\$0.63 (+11.5% upside)
- Market Cap: S\$538.7m (US\$418.6m)
- Major Shareholder: Xu Cheng Qiu (61.4%)
- 52-week high/low: S\$0.570/S\$0.365
- Dividend Yield (2025F): 5.2%
Resilient Volumes Backed by China’s Auto Sector
China Sunsine Chemical’s outlook is underpinned by China’s robust automotive market. In 1Q25, vehicle sales rose 11% year-on-year to 7.47 million units, with new energy vehicles (NEVs) surging 47% to 3.1 million units—making up 41% of all new car sales. The China Association of Automobile Manufacturers forecasts total vehicle sales to reach 32.9 million in 2025, a 4.7% increase, sustaining strong demand for rubber accelerators, a key input in tyre manufacturing.
Pricing and Margin Analysis: Impact of Falling Feedstock Costs
Rubber accelerator average selling prices (ASPs) have dipped 18% year-to-date, mirroring a 39% year-on-year drop in aniline prices, the main feedstock. The decline is driven by lower crude oil prices and increased aniline supply following resumed production. While this reduces raw material costs for Sunsine, the benefit is largely offset by lower ASPs, maintaining margin stability but capping upside.
1Q25 Financial Review
- Net profit: Rmb108m (+27% yoy), in line with expectations
- Revenue: Rmb839m (slightly below expectations by 2%)
- Sales Volume: 53,093 tonnes (+1% yoy)
- ASPs: Rmb15,592/tonne (down 2%)
- Gross margin: 24.1% (+0.7ppt yoy)
The lower ASPs reflect Sunsine’s flexible pricing strategy to remain competitive, with gross margin improvement supported by cost efficiencies.
Scale Leadership and Market Position
- Sunsine is the world’s largest producer of rubber accelerators with 117,000 tonnes annual capacity, well ahead of Tianjin Kemai (70,000 tonnes) and Yanggu Huatai (60,000 tonnes).
- Holds a 35% share of China’s market and 23% globally (2024).
- Operates a “sales and production equilibrium” model, expanding volume for scale and competitiveness.
Financial Forecasts and Valuation
| Year (Rmbm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net turnover |
3,490 |
3,516 |
3,500 |
3,592 |
3,702 |
| EBITDA |
604 |
718 |
770 |
794 |
818 |
| Operating profit |
453 |
585 |
602 |
615 |
630 |
| Net profit (adj.) |
372 |
424 |
436 |
446 |
456 |
| EPS (Fen) |
38.8 |
44.5 |
45.7 |
46.8 |
47.9 |
| PE (x) |
8.1 |
7.1 |
6.9 |
6.8 |
6.6 |
| P/B (x) |
0.8 |
0.7 |
0.7 |
0.6 |
0.6 |
| EV/EBITDA (x) |
1.0 |
0.9 |
0.8 |
0.8 |
0.8 |
| Dividend yield (%) |
4.1 |
4.9 |
5.2 |
5.4 |
5.7 |
| Net margin (%) |
10.7 |
12.1 |
12.5 |
12.4 |
12.3 |
| Net debt/(cash) to equity (%) |
-43.0 |
-49.3 |
-53.3 |
-56.3 |
-59.1 |
| ROE (%) |
9.8 |
10.4 |
10.0 |
9.6 |
9.2 |
Balance Sheet and Cash Flow Highlights
- 2025F Cash/ST investment: Rmb2,397.2m
- 2025F Shareholders’ equity: Rmb4,496.3m
- No debt on balance sheet; net cash position continues to strengthen.
- Operating cash flow (2025F): Rmb537.2m
- Capex (2025F): Rmb140.6m
- Dividend payments (2025F): Rmb148.2m
Attractive Dividend Yield and Capital Return Potential
Sunsine’s strong net cash position (Rmb2,074m as of end-2024, +23% yoy) supports a 5.2% dividend yield, with room for future dividend increases or share buybacks. Cash per share stands at Rmb2.18 (S\$0.40), approximately 70% of its market cap.
Peer Comparison Table
| Company |
Ticker |
Price (lcy) |
Market Cap (US\$m) |
PE 2025 |
PE 2026 |
P/B 2025 |
P/B 2026 |
EV/EBITDA 2025 |
EV/EBITDA 2026 |
ROE 2025 |
Yield 2025 |
| China Sunsine |
CSSC SP |
S\$0.565 |
419 |
6.9 |
6.6 |
0.7 |
0.6 |
1.1 |
1.0 |
9.9% |
5.2% |
| Shandong Yanggu Huatai |
300121 CH |
CNY 15.43 |
963 |
15.7 |
12.0 |
1.9 |
1.7 |
n.a. |
n.a. |
12.0% |
n.a. |
| Lanxess AG |
LXS GR |
EUR 26.18 |
2,566 |
47.6 |
20.0 |
0.5 |
0.5 |
7.8 |
6.8 |
-0.7% |
0.8% |
| Eastman Chemical |
EMN US |
USD 80.54 |
9,299 |
10.9 |
9.8 |
1.5 |
1.4 |
8.1 |
7.5 |
14.0% |
4.1% |
| Arkema SA |
AKE FP |
EUR 63.75 |
5,504 |
8.9 |
7.7 |
0.6 |
0.6 |
5.3 |
4.9 |
6.8% |
5.7% |
Revised Forecasts and Valuation
Revenue forecasts for 2025-2027 have been revised down by 4-6% due to persistent ASP pressure, but volume growth remains robust. Earnings estimates for 2025-2027 are trimmed by 1-3%. The stock is maintained at BUY with a target price of S\$0.63, pegged at a 7.5x 2025F PE (1 standard deviation above mean PE). The ex-cash 2025F PE is a compelling 1.3x.
Potential Catalysts
- Commencement of new manufacturing capacity
- Higher ASPs for rubber chemicals
- Utilisation rates above expectations
Traders’ Corner: Technical Trade Ideas
Hong Fok Corp (HFC SP)
- Trading Buy Range: S\$0.735–0.740
- Last Price: S\$0.745
- Target Price: S\$0.830
- Protective Stop: S\$0.720
Hong Fok Corp’s price is currently above the cloud, indicating an intact uptrend and a potential flag pattern in formation. The MACD remains bullish, suggesting further upward movement upon breakout. The suggested trade timeframe is 1–2 weeks if the entry range is achieved within three trading days.
Singapore Tech Engineering (STE SP)
- Trading Buy Range: S\$7.62–7.63
- Last Price: S\$7.75
- Target Price: S\$8.65
- Protective Stop: S\$7.35
STE’s price is far above the cloud, reinforcing a strong uptrend. The stock broke its recent highs, and the MACD remains bullish, supporting the likelihood of continued price gains. The suggested timeframe for this trade idea is 1–2 weeks, conditional on entry price range being hit within three trading days. The broker’s institutional research rates STE as HOLD with a fundamental target price of S\$7.37.
Conclusion
The Singapore market remains resilient amid global volatility, led by robust sectors like banking and chemicals. China Sunsine Chemical stands out for its volume-driven growth, strong cash position, and attractive yield despite pricing pressure. Technical trade ideas in Hong Fok Corp and Singapore Tech Engineering present short-term trading opportunities for active investors. With a focus on market leadership, cost efficiency, and strong balance sheets, these stocks remain on the radar for both fundamental and technical investors.
