NATURAL RUBBER INDUSTRY REPORT - VCBS

Analyst

Nguyen Thi Thu Hang

[email protected]

+84-38 200 751 (Ext: 640)

VCBS’s report system

www.vcbs.com.vn/vn/Services/AnalysisResearch

VCBS Bloomberg

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NATURAL RUBBER INDUSTRY REPORT

06 th

Jan 2020

NATURAL RUBBER

VCBS Research Department Page | 0

REPORT SUMMARY

GLOBAL NATURAL RUBBER INDUSTRY

The total NR production increased for 2.43% from 13.54 million tons in 2017 to

13.87 million tons in 2018. The oversupply of global rubber cultivation leads to

declining in NR price.

Southeast Asian region is the world’s most important plantation area for natural

rubber. Thailand, Indonesia, and Vietnam are three major producers with total

production representing 65% of the global output.

Tire industry is the major consumer of natural rubber. 71% of NR is used for tire and

tubes.

China is ranked as the world’s largest importer, consuming around 40% of the total

global output. Among continents, Asian countries exported $11.1 billion or 84.7% of

international natural rubber sales.

Vietnam is the 3rd

NR producer in the world, shared about 7.7% of global NR

production and shared 5.6% of global rubber area.

OUTLOOK:

Over the next 3 years, global output of rubber is forecasted to increase by an annual

average of 3-6%, growing in line with the total area of rubber under cultivation.

Demand for rubber on world markets is expected to grow by 4-5% per year, and the

likely gap between supply and demand will lead to an average annual supply glut of

0.35-0.45 million tones

This will then put downward pressure on the prices of rubber on global markets in

2019-2021 and prices are therefore expected to remain flat from the low levels seen

at the end of 2019.

RECOMMENDATION:

PHR: Buy – Target price (59,951 VND/share), upside 33.8%.

DPR: Hold – Target price (38,335 VND/share), downside 4.5%

TRC: Hold – 33,360 (VND/share), downside 13.4%.

mailto:[email protected]

http://www.vcbs.com.vn/vn/Services/AnalysisResearch


NATURAL RUBBER INDUSTRY

Contents

I. NATURAL RUBBER OVERVIEW ............................................................................................................... 2

1. NATURAL RUBBER: .................................................................................................................................. 2

1.2 Substitution: NR Vs. SR? ............................................................................................................................. 3

1.3 Natural rubber by end use ............................................................................................................................ 4

1.4 Type of Natural Rubber ................................................................................................................................ 5

1.5 Main use of natural rubber ........................................................................................................................... 7

2. GLOBAL NATURAL RUBBER: ............................................................................................................... 8

2.1 Global NR Production, Consumption, Export Import by Region: ............................................................... 8

2.1 Global Natural Rubber Area Harvested: ...................................................................................................... 8

2.2 Global Natural Rubber Production: .............................................................................................................. 8

2.3 Global Natural Rubber Export/Import by Region: ..................................................................................... 11

3. KEY MARKET TRENDS: ........................................................................................................................ 11

3.1 Thailand Natural Rubber: Thailand dominates the market ........................................................................ 11

3.2 China Natural Rubber: China is the largest importer ................................................................................. 13

3.3 Vietnam Natural Rubber: ........................................................................................................................... 15

II. NATURAL RUBBER INDUSTRY OUTLOOK ......................................................................................... 20

III. SITUATION OF LISTED NATURAL RUBBER COMPANIES .............................................................. 21

1. GVR: Vietnam Rubber Group ..................................................................................................................... 21

2. PHR: Phuoc Hoa Rubber JSC. .................................................................................................................... 26

3. DPR: Dong Phu Rubber JSC. ...................................................................................................................... 28

4. TRC: Tay Ninh Rubber JSC. ....................................................................................................................... 29



I. NATURAL RUBBER OVERVIEW

1.1 Product Overview and Scope

of Natural Rubber

1. NATURAL RUBBER:

1.1 Product Overview and Scope of Natural Rubber:

Natural Rubber tree (Hevea Brasiliensis) is a latex producing tree belongs to a member of the

spurge family, it responds to wounding by producing more latex. The economic life period of

rubber tree in plantation is around 32 years of 7 years of immature phase and about 25

years of productive phase. At the end of its life rubber wood provides a valuable end product as

a medium density tropical hardwood.

The rubber is extracted in the form of latex, a white, milky fluid which is held in cells found in

the inner layers of the bark of the trees, using a method known as ‘tapping’, which involves

paring away a thin slice of bark without damaging the growing layer in a series of half-spiral cuts,

usually on alternate days, using a special knife. The latex then oozes from the cut and flows into a

collecting cup for a period of several hours or more until it begins to coagulate and the flow

ceases.

Natural rubber is used extensively in many applications and products, either alone or in

combination with other materials. In most of its useful forms, it has a large stretch ratio and high

resilience, and is extremely waterproof.

6 months – 2

years 6-7 years ~ 10 years ~ 8-10 years

Wood

Liquidation

NURSERY IMMATURE YOUNG

MATURE MATURE

OLD TREES



1.2 Substitution: NR Vs. SR?

There are two main types of rubber, natural and synthetic. The former is made from the latex

derived ‘naturally’ from the rubber tree, while the latter is synthesized from chemicals sourced

from petroleum refining.

The price relationship and demand switchability between NR and SR are far more complex

than initially meets the eye. In the case of NR and SR technical factors and end product

specifications limit the degree in which NR and SR can be substituted. In fact, there are some

properties of NR (tensile strength for example) that SR cannot replicate. In the case of tire

(passenger car, truck, bus etc.) production there are certain amounts of both SR and NR required,

with each rubber type performing specific functions.

In China (the largest consumer of NR and SR), approximately 8% of NR demand is

switchable to SR. It should be understood that SR and NR are to some degree substitutes as well

as complimentary products to each other. In the tire sector, this depends on whether the tire is for

passenger car or for commercial vehicle. The former weight is about 4-5 kg/tire and for the latter

the average is about 20 kg/tire. Furthermore, rubber weight per tire tends to be higher for radial

tire than for a cross-ply tires. NR is more important in radial and commercial vehicle (CV) tires

than cross-ply or passenger car (PC) tires.

17.4 18.2

19.4 20.7 20.9

22.6 22.9 22.4 21.2

23.7 25.3 25.7 26.5 26.2 26.8 27.5

28.7 29.1

0

10

20

30

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Un

it:

Mil

lio

n T

on

s

Global Rubber Production

Natural rubber Synthetic rubber Total rubber

17.3 18.2 19.0

20.3 20.8 21.9 22.7 22.4

20.5

24.0 24.9 25.0 25.6 26.3 26.8 27.5

28.4 29.1

0

10

20

30

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Un

it:

Mil

lio

n T

on

s

Global Rubber Consumption

Natural rubber Synthetic rubber Total rubber

Source: IRSG (International Rubber Study Group), compiled by VCBS)



Source: Bloomberg, VCBS compiled

1.3 Natural rubber by end use

Rubber is an indispensable resource. It is required in the manufacturing of many industrial and

consumer products, such as tires, gloves, elastics, and hoses to name just a few important

applications.

In terms of application, the natural rubber market can be segmented into automobile tires and

other automotive parts, gloves, conveyor belts, footwear, rubber pipes, and others such as general

and industrial rubber goods.

Tire industry is the major consumer of natural rubber. It is well suited for the manufacture of

tire especially radial, heavy duty and highspeed tires because of its dynamic qualities such as

good tear strength and low heat build-up. Beyond the use of rubber for manufacture of tires,

rubber is used for the manufacture of specific products such as flexible oil resistance pipelines for

offshore oil fields, inner tubes of tires, footwear, bridge pad and building foundation in

Earthquake prone areas. Latex concentrate is used for production of carpet underlay, adhesives,

foam, balloons, condoms, and medical accessories such as gloves and catheters. Rubber wood is

used for furniture, particleboards and fuel.

Source: Statista, VCBS compiled

0

50

100

150

200

250

300

350

400

450

500

550

JPY/kg NATURE RUBBER PRICE

707.3 772.2 864.0

340.0 336.7

347.9

-

200

400

600

800

1,000

1,200

1,400

2016/17 2017/18 2018/19'000 Tons

Consumption of NR worldwide , by

end use

Tires and tubes General rubber goods

71%

29%

Consumption of NR worldwide

2018/19, by end use

Tires and tubes General rubber goods



1.4 Type of Natural Rubber 1.4 Type of Natural Rubber:

Natural Rubber (NR) is produced from latex obtained from rubber trees in plantations. The most

important forms in which NR is processed are the following: Sheets, Crepes, Block Rubber and

Preserved Latex Concentrates.

Based on type, the global natural rubber market can be segmented into ribbed smoked

sheets (RSS), concentrated latex, solid block rubber, and others (such as reclaimed rubber &

crepe rubber).

After collection the latex, which at this point is about 70% water, may be taken to a processing

plant, where it may be sieved to remove extraneous matter, blended, coagulated, rolled into sheets

and then dried in ‘smokehouses’ to produce ‘ribbed smoked sheets’ (RSS).

Alternatively, after coagulation, it may be washed, shredded and granulated under controlled

conditions before being dried in deep-bed driers to form a ‘block’ rubber known as Technically

Specified Rubber (TSR).

Whichever process is used, the rubber is then pressed into bales and wrapped into polythene bags

for despatch. Finally, a small proportion of natural rubber is also processed and sold as latex

concentrate. Concentrated latex is pure and is one of the most clean raw material in terms of

rubber. Fresh field latex is preserved with added chemicals and centrifuged to obtain a

concentrated latex of 60% DRC (Dry Rubber Contents). Ammonia is added during the process to

enhance the preservation of latex but depending on specific requirements of the customer, various

degrees are added to the concentrated latex.



Production Method of Midstream NR Products:

Source: VCBS compiled

Ribbed smoked sheet (RSS): is produced by first filtering field latex to remove dirt and

impurities. This filtered latex is then mixed with concentrated formic acid, which causes the

rubber to coagulate and these solids are then rolled into raw sheet rubber before being dried

for six hours in the sun to produce air-dried sheets. If these sheets are then smoked or further

dried, a process which reduces the moisture content and with it the risk of fungal infection,

these are called ‘Ribbed Smoked Sheet’ (RSS). This is a form of dried rubber which can

be stored for longer periods of time than can other types.

RSS of NR are generally made from unsmoked rubber sheets. They are categorized into five

classes: RSS1, RSS2, RSS3, RSS4, and RSS5 depending on color, elasticity, and purity

where RSS1 denotes the best quality of RSS natural rubber and then according to descending

order of quality, RSS5 is of least quality. Natural rubber producers collect raw field latex and

preserve the latex through centrifugal action and chemicals such as ammonia to produce

concentrated latex having a 60.0% dry rubber content.

Concentrated latex is produced from field latex. The latter comes directly from tapping and

typically has a rubber content of around only 33% and it usually also has properties which

make it unsuitable for use directly in downstream production. It is therefore converted into

RUBBER

PLATATION

FIELD

LATE

X

CUP LUMP

AND

OTHERS

LAT

EX

DRY

RUBBER

COAGULATION &

GRANULATION

DILUTION &

COAGULATIO

N

MIXING

CLEANING &

BLENDING

DRYING &

PRESSING

ROLLING DRYING &

SMOKING

COOLING FORMING

CONCENTRAT

ED

LATEX

TECHNICALL

Y SPECIFIED

RUBBER (TSR)

(main grade:

TSR, 5,

TSR 10,

TSR50...)

RIBBED

SMOKED

SHEET (RSS)

(Main grade:

RSS1,

RSS3...)

COMPOUND

RUBBER

OTHERS

(e.g. skim

rubber,

crepe rubber)

Trees take 6-7

years to

mature before

harvesting

-Diagonal

incision

made to

extract

latex

- Latex

flows into

a cup

attached

to rubber

trees

A blanket crepe rubber

produced from the dries

films and lumps of

rubber found in the

tapping cups

Mixing latex with

chemicals and

heating it to make

rubber harder and

stronger (15 days)

-Diagonal incision made to

extract latex

- Latex flows into a cup

attached to rubber trees

- Cup lumps washed & mixed

in blending pools

- Cleaned rubber reduced to

crumbs

- Cup lumps washed & dried

at temperature up to 140 o C

- Dried rubber pressed into

bales

- Latex diluted with water in

trays

- Coagulated using formic

acid or acetic acid

- Roll coagulated rubber to

thinner slab

- Roll in a maggie machine

to be ribbed rubber sheet

- Ribbed sheet hung outdoor

to dry

- Ribbed sheets smoke at

temperature up to 60 o C

Mixing ingredients for each

batch of rubber (sr of nr,

carbon black, sulfur &

chemical agents are weighed

using computer controlled

electronic scales

Lowering the temperature of

the mixed rubber compound,

deterioration of quality can

be prevented

A process to form the mixed

rubber compound to the

required configuration for

provide granular or sheet

shape



concentrated latex by high-speed spinning to separate out water, dissolved chemicals and

other impurities. The resulting concentrated latex is at least 60% rubber and now has the

qualities required for use as a raw material in further processing.

Technically specified rubber (TSR) or block rubber is made from either field latex or some

form of dried rubber such as sheet rubber, cup lump and scrap rubber that is separated into

small pieces, washed, dried, and cut into bars.

Source: IRSG, Shanghai International Energy Exchange, GVR, compiled by VCBS

Amongst the world’s natural rubber products, TSR, RSS and Latex account for about 70%,

15% and 15% of the market respectively. Of all TSRs, TSR 20 accounts for about 90%. In

2018, the global production of natural rubber was 13.87 million tons, of which about 8.73 million

tons was TSR20, accounting for 63% of the world’s total. Currently, TSR20 has become the

world’s mostly produced and consumed variety of natural rubber.

1.5 Main use of natural rubber

Conventional Grades of RSS Used for the manufacturing

RSS 1x Aero tires

PLC 1x Injection bottle caps etc.

PLC Food Conveyer Belts etc.

RSS 1 Tubes

RSS 2 Extruded hoses, Quality Footwear items

RSS 3, RSS 4

Tires & Tubes, Tread Carcass, Off road tires & ADV tires,

Extruded hoses, Footwear

RSS 5 Cheap items, hand - made hoses

Technically Specified Crepe

Rubber

Medical, Engineering, Retreading, Automobile and

Footwear

Source: Thomson rubbers, VCBS compiled

TSR

70%

RSS

15%

Latex

15%

Global Natural Rubber

Production (%) 0 500 1,000 1,500

Mủ latex 60% drc

SCR CV 50

RSS1

SCR CV 60

RSS3

SVR L

SVR 3L

SVR 5S

SVR 5

SVR 10

SVR 20

USD/ton

Price of some types of NR

0% 25% 50% 75% 100%

Global Rubber Market Share, by Application 2018

Tire Non-tire Automotive Footwear Industrial Others

Source: B Fortune, VCBS compiled



2.1 Global NR Production:

Thailand, Indonesia & Vietnam

with total production

representing 65% of the global

output.

2. GLOBAL NATURAL RUBBER:

2.1 Global NR Production, Consumption, Export Import by Region:

2.1 Global Natural Rubber Area Harvested:

In the period 2004-2010, the high prices of NR stimulated an expansion of the area given over to

rubber plantations, specially in Asia and this in turn has led to a significant and continuing over

supply of the market. It is estimated that at the end of 2017, total world plantation of rubber

harvested area came to 11.74 million hectares and this has put downward pressure on prices.

The oversupply of global rubber cultivation leads to declining in natural rubber price.

Global supply of natural rubber has increased on an expansion of cultivation of rubber

trees in many Asian countries, though especially so in Thailand (as a consequence of the plan to

extend the area of national rubber plantations by 1 million rai that was put into effect by the Thai

government between 2004 and 2006) and the CLMV nations (as a consequence of Chinese

investment in rubber plantations, which added 7 million rai to the area cultivated between 2006

and 2012). Generally, rubber trees open for tapping begin production of latex after 7years so the

expansion of supply began to be felt from 2012 onwards but problems with over supply

accelerated since 2016 as both the total area under tapping and yields (which increases after 3 4

years of tapping) continued to rise. As a consequence, world output of rubber increased from 11.0

million tons in 2011 to 12.8 million tons in 2017.

Source: FAOSTAT, compiled by VCBS

2.2 Global Natural Rubber Production:

Southeast Asian region is the world’s most important plantation area for rubber. Thailand,

Indonesia, Vietnam and India are four major producers with total production representing

72% of the global output.

Thailand is the world’s largest single producer, its output of 4.87 million tons representing 33.4%

of world production in 2018. Thailand is followed in order of importance by Indonesia, Vietnam,

China and Malaysia, which respectively account for 24.7%, 8.5%, 6.4% and 3.8% of global

output.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

20

17

20

14

20

11

20

08

20

05

20

02

19

99

19

96

19

93

19

90

19

87

19

84

19

81

19

78

19

75

19

72

19

69

19

66

19

63

Area harvested NR of the World

(hectare)

31.2%

26.8% 9.2%

5.8%

5.6%

Area harvested NR of the

world by Region Indonesia

Thailand

Malaysia

China

Vietnam

India

Nigeria

Côte d'Ivoire

Burma

Philippines

Rest of the

world



Ribbed Smoked Sheet (RSS)

Thailand 62.9%

Vietnam 9.5%

Indonesia 8.5%

Myanmar 7.4%

Rest of the world 11.7%

Technically Specified Rubber (TSR)

Indonesia 38.1%

Thailand 27.5%

Malaysia 9.4%

Vietnam 7.6%


Latex

Thailand 75.8%

Vietnam 5.6%

Malaysia 4.1%


Compound Rubber

Germany 16.8%

USA 13.4%

Italia 8.6%

Thailand 5.7%


9.5%

RSS Thailand

Vietnam

Indonesia

Myanmar

Rest of the

world

7.6%

TSR

Indonesia

Thailand

Malaysia

Vietnam

Rest of the

world

5.6%

Latex Thailand

Vietnam

Malaysia

Rest of the

world

Compound Rubber

Germany

USA

Italia

Thailand

Rest of the

world



Source: FAOSTAT, VCBS compiled


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Average Yield of Top 10 (ton/ha)

Yield 2017

Yield 2016

Natural Rubber, Production Quantity (tons)



2.3 Global Natural Rubber

Consumption:

NR consumption in Thailand,

Indonesia & VN accounts for

only 10-20% of total output in

each country. Therefore, excess

supply for export is ample.

2.3 Global Natural Rubber Export/Import by Region:

Global purchases of imported natural rubber cost an estimated total of US$14.4 billion in

2018. Year over year, imported natural rubber depreciated by -18.7% from 2017 to 2018.

From a continental perspective, Asian countries bought the highest dollar worth of imported

natural rubber during 2018 with purchases costing $8.6 billion or 59.4% of the global total. In

second place were European importers at 21.2% while 14.8% of worldwide natural rubber

imports were delivered to North America.

Global sales from natural rubber exports by country totaled US$13.1 billion in 2018. Among

continents, Asian countries exported $11.1 billion or 84.7% of international natural rubber

sales. African exporters supplied 8.3% of the global total followed by Europe at 4.9%.

Source: Global Rubber Markets (GRM), compiled by VCBS

3. KEY MARKET TRENDS:

Thailand dominates the market.

China is the largest importer.

Vietnam is ranked as the 3rd NR producer in the world. Its NR production shared about

7.7% of global NR production and area under rubber plantations shared 5.6% of global

rubber area.

Thailand is ranked as the

world’s number 1 producer and

exporter of NR. However, the

industry is facing with

significant shrink in its overall

export value and volume.

3.1 Thailand Natural Rubber: Thailand dominates the market

Thailand is the largest producer and exporter of natural rubber in the world, the country

exports accounted for more than 60% of the world’s exports, which is largely due to the use

of advanced methods of cultivation, tropical climate, and dedication to R&D. The country has

significantly improved the quality and consistency of natural rubber output.

25.0%

12%

9%

8%

6%

4%

3%

2%

2%

28%

China

US

Malaysia

Japan

India

South…

Germany

Brazil

Spain

Other

Natural Rubber Imports by

Country 2018

34.5%

29.9%

7.5%

7.1%

5.7%

2.0%

1.5%

1.3%

1.2%

1.0%

8.3%

Thailand

Indonesia

Vietnam

Malaysia

Côte d'Ivoire

Myanmar

Belgium

Laos

Guatemala

Liberia

Other

Distribution of the leading natural

rubber exporting countries in 2018




Thailand is the world’s largest single producer, its output of 4.87 million tons representing

33.4% of world production in 2018.

Thailand is ranked as the world’s number one exporter of natural rubber. However, the

industry is facing with significant shrink in its overall export value and volume. The overall

export value of Thailand’s NR in 2018 was USD 4.6 billion which was shrink from the previous

year by 23.6%.

China remains to be Thailand’s major export country with the value of USD 1.9 billion in

2018 reducing from previous year for 32.7% which was USD 2.19 billion. But presently Thailand

is facing increasing competition from neighboring countries such as Cambodia, Laos, Myanmar

and Vietnam (CLMV), which have established their own plantations, many of which have been

funded by Chinese companies.

-

0.50

1.00

1.50

2.00

2.50

3.00

20

17

20

14

20

11

20

08

20

05

20

02

19

99

19

96

19

93

19

90

19

87

19

84

19

81

19

78

19

75

19

72

19

69

19

66

19

63

Thailand Area Harvested (million

hectares)

-

1.0

2.0

3.0

4.0

5.0

20

18

20

14

20

10

20

06

20

02

19

98

19

94

19

90

19

86

19

82

19

78

19

74

19

70

19

66

19

62

Natural Rubber Production of

Thailand (million tons)

STR

36%

RSS

17%

Latex

17%

Compoun

d &

mixtures rubber

29%

Other

1%

Type of Thailand NR product 2018

Export

86%

Domestic

14%

Thailand NR industry 2018



Source: International Trade Center, Thai NR, Compiled by VCBS

Output by the Thai rubber sector is forecast to slide through the period 2019-2021 as

producers confront the problem of declining demand in export markets, especially as regards

exports to China of sheet rubber and technically specified rubber.

The market is expected to face the twin challenges of a persistent oversupply of products and

subsequent high levels of stockholding, and pressure from additional supply coming on stream

from new competitors in the CLMV region, where Chinese investors have been establishing new

rubber plantations over the past few years. Despite this generally negative outlook, positives will

be found in exports of concentrated latex and compound rubber, for which opportunities for

growth will exist on world markets. The steadily falling price of rubber, which has now hit low

levels, will however, pull down the total value of exports and this will expose producers to the

risk of stock losses.

Source: Mordor Intelligence

3.2 China Natural Rubber: China is the largest importer

Natural Rubber is a vital agricultural commodity, which is used for manufacturing a wide range

of products. It is used in automotive, consumer good, manufacturing, and medical industries.

China was the world’s largest importer of natural rubber and the largest consumer of natural

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2012 2013 2014 2015 2016 2017 2018

4.11

Mil

lio

n t

on

s

Export Natural Rubber of Thailand

48%

17%

6%

5%

3%

21%

42%

19%

6%

6%

4%

23%

Thailand's major customer in 2017-

2018

China

Malaysia

Japan

US

South

Korea

Others

Inner 2017

Outside 2018

4,600

2015 2016 2017 2018 2019F 2024F

Th

ou

ssa

nd

to

ns

NR Market: Production of Thailand



rubber, consuming around 40% of the total global output.

Source: SHFE, compiled by VCBS

The NR of China mainly depends on import. According to the statistics from the China

General Administration of Customs, China imported 5.66 million tons of natural rubber in 2018.

China’s imports of natural rubber mainly come from Thailand, Malaysia, and Indonesia,

accounting for 75% of the total imports.

Currently, China is the world’s largest consumer of natural rubber and TSR20, and the largest

producer of tire. In 2018, the total apparent consumption of natural rubber in China was over 6

million tons, of which about 4.5 million tons was TSR20, accounting for 70%. The rapid

development of China’s tire industry had led to a fast growth of natural rubber consumption.

As a major tire producer bolstered by growing domestic demand and pivoting international tire

production to China, China has seen its tire industry growing rapidly in recent years before

entering the current low-speed growth period.

Source: Mordor Intelligence

2,000

457.6

393.6

266.1

197.6

TOP 6 supplier from which China

imported NR 2018 (Million dollars)

Thailand

Malaysia

Indonesia

Vietnam

Myanmar

Laos

Others0

100

200

300

400

500

600

Q1/10 Q1/12 Q1/14 Q1/16 Q1/18

Thousand tons China Shanghai NR Inventory

254.2

-

100

200

300

400

500

600

2015 2016 2017 2018 2019F 2024F

NR Market: Import Value in USD thousand, China



3.3 Vietnam Natural Rubber:

Rubber trees were brought to Vietnam in 1897, mainly in the southeastern provinces such as

Dong Nai, Binh Duong, Binh Phuoc and Tay Ninh. In 1975, the rubber area was about 75,200 ha,

of which Vietnam Rubber Corporation managed 55,790 ha, the remaining 19,410 ha were

managed by local and private authorities.

After more than 100 years of development, the natural rubber industry is one of Vietnam's most

important agricultural and forestry industries.

3.3.1 Natural rubber production in Vietnam:

In 2017, Vietnam is ranked as the third NR producer in the world behind Thailand and

Indonesia. Its NR production shared about 7.7% of global natural rubber production and

area under rubber plantations shared 5.6% of global rubber area.

The total area under rubber trees in Vietnam was 653,213 hectares (+5.1% yoy) and the NR

production was 1.094519 tons (+5.7% yoy) in 2017. Average yield was 1.676 ton/ha (+0.6%

yoy).

Estate rubber plantations in Vietnam are composed of state-owned of joint-stock companies under

Vietnam Rubber Group, provincial companies and private enterprises. With low rate of growth

due to limited land, this sector was only dominated in area until 2008.

According to the Ministry of Agriculture and Rural Development, in the period of 2011 - 2018,

the area of rubber from over 800,000 hectares in 2011, the output will reach more than 789,000

hectares; In 2018, the area reached 965,000ha, exceeded the plan by 165,000ha, the output

reached 1.1 million tons. In 2018, rubber export volume reached 1.56 million tons with an

export turnover of US $ 2 billion, up 13% in volume but down 7% in value.

Source: General Statistic Office, Vietnam Rubber Association, compiled by VCBS

At present, there are 246 private enterprises and establishments engaged in rubber

processing, with a capacity of 1,245 million tons/year. The total capacity of the current

processing facilities exceeds the rubber output by 15% -20%. There are still some limitations,

such as: No national standards for rubber materials have been developed yet, so the price has not

0

100

200

300

400

500

600

700

800

900

1,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

'000 ha Natural Rubber Platation of Viet Nam

Area Harvested Immature area



been able to regulate the prices in the past, depending on the world market. There is no national

rubber processing facility planning and the construction of a factory without raw material areas.

As a result, many private construction facilities are spontaneous, resulting in competition in

rubber latex trading.

2017 South

East

Central

Highlands Central Northern Total

Area (‘000 hectares) 549 249.00 141.5 30.5 970

Area harvested (‘000 hectares) 417 152.50 80.9 2.6 653

Production (thousand tons) 777 215.40 100 1.9 1,095

Yield (ton/ha) 1,863 1,412 1,236 731 1,676

Source: Compiled by VCBS

Vietnam Rubber Group (Ticker: GVR) is the biggest enterprise on rubber plantations with

20 member companies, which owned 100% and 45 member companies, which owned more than

50% of ownership in charter capital. GVR owned more than 400.000 ha and produced about

nearly 300,000 tons of NR in 2018, accounting for 41% and 27% of NR area and NR production

respectively in Vietnam.

Rubber smallholdings have been developed in quick growth rate since 2006. In 2018, this sector

shared 50.8% in total rubber area and 61.6% in the total NR production of Vietnam.

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

20

18

20

16

20

14

20

12

20

10

20

08

20

06

20

04

20

02

20

00

19

98

19

96

19

94

19

92

19

90

19

88

19

86

19

84

19

82

19

80

19

78

19

76

19

74

19

72

19

70

19

68

19

66

19

64

19

62

Vietnam Area Harvested (hectare)

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

20

18

20

16

20

14

20

12

20

10

20

08

20

06

20

04

20

02

20

00

19

98

19

96

19

94

19

92

19

90

19

88

19

86

19

84

19

82

19

80

19

78

19

76

19

74

19

72

19

70

19

68

19

66

19

64

19

62

Natural Rubber Production of Vietnam (ton)




3.3.2 Export of natural rubber by Vietnam:

With the addition of some NR import from neighboring countries such as Korea, Japan,

Cambodia, Laos…, NR export of Vietnam reached 1,257,942 tons and US$ 1.7 billion in

10M.2019. In last year, total NR export of Vietnam was 2.1 billion US.

NR of Vietnam was exported to 31 countries in 10M.2019. China was the most important

destination of Vietnam NR export with a share of 67.8%, equivalent to 864,695 tons. Other

top importers were India (9.1%), Korea (3.2%), Malaysia (2.5%), and the US (2.1%).

In 4 months of 2019, the major type of the NR export from Vietnam were rubber block (87.7%),

including SVR 3L (12.8%), SVR 10 (8.7%), compound (1.0%) and SVR CV 60/50 (7.1%). Latex

concentrate and RSS were 4.5% and 4.4% respectively.

Source: General Department of VN Customs, compiled by VCBS

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

20

17

20

15

20

13

20

11

20

09

20

07

20

05

20

03

20

01

19

99

19

97

19

95

19

93

19

91

19

89

19

87

19

85

19

83

19

81

19

79

19

77

19

75

19

73

19

71

19

69

19

67

19

65

19

63

19

61

ton/ha

Yield of Vietnam vs. Thailand

Vietnam Thailand

-

200

400

600

800

1,000

1,200

0

100

200

300

400

500

600

700

800

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

11

M.1

9

Million dollar '000 tons

Imxport Natural Rubber of

Vietnam

Production Value

-

500

1,000

1,500

2,000

2,500

3,000

3,500

-

200

400

600

800

1,000

1,200

1,400

1,600

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

11

M.1

9

Million dollar '000 tons

Export Natural Rubber of Vietnam

Production Value



Source: General Department of VN Customs, compiled by VCBS

3.3.3 Rubber-based products in Vietnam :

Domestic NR consumption was still low. It was about 18.6 % of national NR production.

However, it was an encouraging signal in rubber manufacturing industry.

Major rubber products in Vietnam are tires accounting for 70% of total value of rubber

products. Motorcycle tires, bicycle tires and agricultural tires can meet the local demand. But

Import Export

21%

15%

12% 10%

10%

8%

8%

Import market of Vietnam NR

10M.2019

Korea

Japan

Cambodia

Laos

Taiwan

Thailand

China

Indonesia

US

Malaysia

Others

68%

Export market of Vietnam NR

10M.2019

China

India

Korea

Malaysia

US

Taiwan

Germany

Turkey

Indonesia

Brazil

Others

TOP 5 Import Market of VN NR

10M.2019

Taiwan 87.4 million USD

Laos 87.4 million USD

Cambodia 110.7 million USD

Japan 131.8 million USD

Korea 187.6 million USD 21%

15%

12%

10%

10%

TOP 5 Export market of VN NR

10M.2019

US 35.6 million USD

Malaysia 42.3 million USD

Korea 53.6 million USD

India 154.9 million USD

China 1,152 million USD

68%

9%

3%

2%

2%

579 thousand tons

(+16.5% yoy)

~ USD 966.9 billion

(+6.0% yoy)

1,304 thousand tons

(+7.5% yoy)

~ USD1,764 billion (+6.3%

yoy)



truck/bus tires and car passenger tire are still imported as the local production is lower than

demand.

Non-tire products produced in Vietnam are technical rubber products, shoe soles, gloves, rubber

threads, conveyor belts, mattress etc. The local production of non-tire products does not adapt to

domestic market.

So the import value of rubber products into Vietnam was progressively increased even as the

export value of rubber products made in Vietnam has had a good progress in recent years.

Rubber wood products in Vietnam:

The wood manufacturing and furniture industry in Vietnam have grown steadily in recent years.

Rubber wood is used to produce indoor furniture and household goods for export and domestic

market. In 2018, raw rubber wood and products made by rubber wood achieved an export

turnover of USD2.1 billion.

Demand of rubber wood as raw material increased very fast during recent years; therefore,

Vietnam must import rubber wood from other neighboring countries namely Cambodia, Malaysia

and Thailand.

3.3.5 Expansion of rubber plantations in Laos and Cambodia:

The rising of world NR demand and favorable prices in 2004-2010 encouraged Vietnam

Government to support investment programs to expand rubber plantations under a project of

100,000 hectares in Laos and another project of 200,000 hectares in Cambodia since 2005.

Until 2015, Vietnamese enterprises planted about 50,000 hectares under rubber trees in Laos and

150.000 hectares in Cambodia. In which, members of GVR planted 30,000 hectares in Laos and

70,000 hectares in Cambodia.

Weaknesses of Vietnam Rubber Industry:

Vietnam’s natural rubber export rate is still high, domestic consumption for deep processing is

still low, so Vietnam has a little power of NR price.

Currently, the main export items of the rubber industry are still mainly raw products, with the

amount of natural rubber exported accounting for over 80% of total export volume. The quality

products only account for 17 - 18%.

Perspectives of Vietnam rubber industry

To ensure the sustainable development, the strategy of Vietnam rubber industry should focus

some key measures as follows:

+ Due to the rapid increase of rubber plantation in 2005-2012, the rubber acreage continued to

increase from 2017-2025, resulting in high supply and low prices. Over the course of 8 years from

2011-2018, the rubber plantation increased rapidly from 801,600 hectares to 965,000 hectares, a

surplus of 165,000 hectares compared to Government plan. Therefore, the VN Rubber Groups

aims to reduce the rubber acreage by shifting rubber lands to other purposes such as high-tech

agriculture and industrial park development.

+ Strengthening Research and Transfer of Technology to improve NR productivity and quality

and income of producers.

+ Encouraging investment in rubber and rubber wood manufacturing towards “green” products.

+ Promoting information and communication to reduce the volatility of rubber prices.



II. NATURAL RUBBER INDUSTRY OUTLOOK

By the end of 2018, the market

still hovered at the bottom and

showed no signs of recovery.

In 2019, global natural rubber

price will go on setting all-time

lows until 2020 or 2021 when the

price may level off and pick up.

The shift toward radial tires, which use a higher percentage of natural rubber than bias-ply

tires, has resulted in an increase in natural rubber consumption over the past 35 years. The

increased rubber consumption in the natural rubber–producing countries has been one factor, as

well as the greatly increasing demand for natural rubber in China and India.

Overall, tire production and tire weight greatly influence natural rubber demand. Tires and

tire products accounted for 70% of the total consumption of natural rubber in 2018. General

rubber product uses include automotive and mechanical parts, medical and health-related

products, and nonautomotive mechanical parts, which collectively account for the remaining 30%

of natural rubber consumption. These shares are not expected to change in the next five years.

Because of natural rubber’s large consumption volume, the limited area of commercial

production, and its importance to the world today, the management of its supply is of dire

importance. This includes two major areas—stabilizing the current supply of natural rubber and

developing diversified sources of natural rubber.

Between 2018 to 2027, The consumption of passenger cars and commercial vehicles are

forecasted to rise a compound annual growth rate (CAGR) of 6.8% and 6.1% respectively. The

growth in automobiles consumption will also lead to the increase in rubber tire consumption and

production. The world’s automotive industry and the demand for passenger cars have been

increasing steadily which impacts to the demand for rubber tires. The world’s rubber tire

market is expected to grow 6.3% CAGR from the year 2017 to 2027 and expected to value

approximately USD 645 billion at the end of 2027. Asia Pacific will remain to be the world’s

major production and consumption of rubber tire. As economic growth in the region such as

China, Japan and Indian have raised people’s demand for automobiles which boost the market

growth for rubber tire.

The impacts of China – US trade war:

The prolonged trade war would significantly impact to global rubber industry because

China is the major importer in order to produce rubber processing products especially

vehicle tires and rubber gloves. Parts of the rubber products from China are exported to the

United States, the raising of tariffs affect the export of Chinese vehicle tires and other products

produced from NR.

Source: IRSG, VCBS compiled

0

1

2

3

4

5

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F

World Natural Rubber Balance (Million tons)

Surplus/Deficit Ending stock



Demand: The Economist Intelligence Unit expects global consumption growth of NR to slow to

an annual average of just 2.8% in 2019-20, down from an expansion of 4.6% in 2018. A

slowdown in global economic growth, in part driven by the lagged impact of early monetary

tightening in the US, explains much of this deceleration. They expect China’s economy to soften

and anticipate markedly lower US GDP growth in 2020. This accommodative stance could be

positive for capital investment and vehicle purchases – 2 key drivers of NR demand.

Supply: Global NR production is expected to slow to an annual average of around 1.8% in 2019-

20 as high stocks and weak prices discourage supply. The three largest producers, Thailand,

Indonesia and Vietnam, are also planning replanting programs, which will inevitably reduce

supply. However, the market will still be oversupplied because of very high stocks. Trees planted

in 2011, during a price boom, have been reaching maturity in the last couple of years,

contributing to the glut in the market.

Over the next 3 years, global output of rubber is forecast to increase by an annual average

of 3-6%, growing in line with the total area of rubber under cultivation. Through the period

2004-2012, the area given over to rubber plantations steadily rose and production from these is

increasingly entering the market. Among these newer plantations, Chinese-backed production in

the CLMV countries will have a strong impact on the market as these trees begin to be tapped and

yields increase.

Over the same period of time, demand for rubber on world markets is expected to grow by

4-5% per year, and the likely gap between supply and demand will lead to an average annual

supply glut of 0.35-0.45 million tons, which is then expected to lift stockholdings of rubber above

4 million tons in 2019-2020.

This will then put downward pressure on the prices of rubber on global markets in 2019-

2021 and prices are therefore expected to remain flat from the low levels seen at the end of

2019.

III. SITUATION OF LISTED NATURAL RUBBER COMPANIES

1. GVR: Vietnam Rubber

Group

Vietnam Rubber Group (Ticker: GVR) is the biggest enterprise on rubber plantations

with 20 member companies, which owned 100% and 45 member companies, which owned

more than 50% of ownership in charter capital. GVR owned more than 400.000 ha and

produced about nearly 300,000 tons of NR in 2018, accounting for 41% and 27% of NR area

and NR production respectively in Vietnam.

+ NR segment: Currently, GVR manages 407,800 hectares of rubber area.

+ Wood processing segment: GVR has advantages in developing material plantation and

wood processing. The company has 13 factories processing wood products such as medium-

density fiberboard (MDF), plywood, refined wood, rubber.

In 2018, the Group produced 1,286,968 m3 of wood, of which laminated wood accounted for

about 60% of the market supply and MDF board accounted for 50% of the domestic market

share.

+ Industrial Park segment: VRG is managing 12 industrial parks with a total area of 6,000

ha, of which the commercial area is 4,013 ha. The occupancy rate by the end of 2018

averaged over 85% of the area.

+ High-tech agriculture: lying in the strategic direction to increase the efficiency of land use



of forest. In 2018, the Group has piloted the conversion of nearly 200 hectares of banana

tissue culture plantations in Dau Tieng Rubber, Dong Phu and Phuoc Hoa.

9M2019: GVR recognized sale of VND12,948 billion, net income of VND 2,309 billion. The

figures represent 53.5% of the revenue target and 55.6% of the profit target for this year. In

the 3rd

quarter alone, the Group earned VND5.334 (+10,0% yoy) billion in revenue and

VND1219,5 billion (+149,6% yoy) in net income.

The Group aims to invest heavily in industrial parks between 2019-2020 and 2021-2025

to offset profits from natural rubber. The group will continue to invest in infrastructure of

existing industrial zones such as Nam Tân Uyên, Rạch Bắp and Tân Bình… in the Southern

province of Bình Dương. It will also develop residential areas and service areas for industrial

parks. In 2020-2025, the Group expects to transfer 5,000-7,000 ha of rubber land to IP.

Top 5 companies in the sector in terms of production and acreage are Dong Nai, Dau Tieng,

Phu Rieng, Binh Long and Phuoc Hoa. All these companies are located in the South East

and have high yielding rubber.

TOP 10 SUBSIDIARIES IN THE VIETNAM RUBBER GROUP

N

o. Company

Acreage

(ha)

Harvestable

2018 (ha)

Yield 2018

(ton/ha)

Tapping

output

2018 (ton)

Consump

tion

2018

(ton)

Revenue

2018

EBT

2018

1 Dong Nai Single-Member Rubber Co. Ltd 33,182 18,166 1.626 27,665 32,200 3,200 634

2 Dau Tieng Single-Member Rubber Co.

Ltd 26,182 16,180 1.77 27,199 41,359 2,652 1,277

3 Phu Rieng Single-Member Rubber Co. Ltd 17,849 10,878 2.21 25,318 36,000 1,530 346

4 Binh Long Single-Member Rubber Co.

Ltd 14,603 9,439 2.005 17,405 22,623 1,186 373

5 Phuoc Hoa Jsc. 15,341 6,978 1.879 13,110 31,453 1,561 770

6 Loc Ninh Single-Member Rubber Co. Ltd 11,000 5,000 2.04 11,548 18,018 n/a 104

7 Kon Tum Single-Member Rubber Co. Ltd 9,293 8,430 2.02 14,556 15,236 475 41

8 Dong Phu Jsc. 10,065 6,194 2.673 13,654 16,557 882 307

9 Chư Prong Single-Member Rubber Co.

Ltd 8,964 5,081 1.3 6,983 7,136 268 20

10 Ba Ria Jsc. 8,524 5,001 1.715 9,233 10,789 437 94




Industrial Park: Strong

demand & sufficient supply to

serve an increasing demand

At the first established industrial areas in the country, Binh Duong and Dong Nai are

considered as the leading regional, contributing about 55% of the total supply in

Southern Vietnam. Two provinces are the most desired destinations for newly established

manufacturers, thanks to their favorable locations, comprehensive infrastructure and well-

established administrative procedures to support enterprises’ operation.

According to Jones Lang LaSalle (JJL), in Q2.2019, the South registered a total land lease

area of 25,060 ha, 2.5 times higher than the North market. Strong demand thanks to the

China-US trade war, which pushed the average occupancy rate achieved a high rate at 81%.

Therefore, the outstanding supply from the expansion of existing or new supply has been set

up to take advantage of the increasing demand of the market.

Outlook: With an additional 18,290 ha of supply is oriented for industrial development in the

Southern area, mostly in Long An, Binh Duong and Dong Nai provinces.

-

5,000

10,000

15,000

20,000

25,000

30,000

Đồng

Nai

Dầu

Tiếng

Phú

Riềng

Bình

LongPhước

Hòa

Lộc

Ninh

Việt Lào Kon

TumĐồng

Phú

Chư

Prông

Bà Rịa

II

Mang

Yang

Lai

ChâuChư Păh Tây

Ninh

Ha TOP 15 biggest NR platation companies of GVR in VN

Tapping area Total area

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Chư Sê

Kampong

Thom

Mang Yang

Rattanakiri

Tân Biên

KampongThom

Phước Hòa

Kampong

Thom

Dầu Tiếng

Việt Lào

Bà Rịa

Kampong

Thom

Đồng Nai

Kratie

Quasa

GerucoĐồng Phú

Kratie

Krông buk

Ratanakiri

Ha TOP 10 biggest NR platation companies of GVR in Laos & Cambodia

Tapping area Total area



As US-China trade tensions will likely escalate, the trend of manufacturing shifting away

from China to the South East Asia region will continue to benefit the whole region, including

Vietnam. Further, Vietnam’s continuous expansion of trade networks, with the European

Union –Vietnam Free Trade Agreement (EVFTA) newly signed at end-June 2019 being the

latest, also expectedly bolsters the attractiveness of Vietnam's industrial market, generating

further demand for industrial property in the country.

Source: JJL, VCBS compiled

List some Industrial Parks of GVR and members:

N

o

.

Name of IP Parent Co. Location

Distance

to CBD

(km)

Total

Area

Total

Leasable

area (ha)

Occupancy

rate Phase 1

Phase

2

Time start

operation

1 An Điền -

Rạch Bắp

Dau Tieng Rubber

Co.

Ben Cat,

Binh Duong 20 638.6 189.5 (P1) 100% (P1) 278.6 360.0 2008

2 Hố Nai Ho Nai Industrial

Zone Jsc.

Trang Bom,

Dong Nai 12 496.7 150 (P1) 99,9% (P1) 226.0 270.7 1998

3 Nam Tân

Uyên

PHR 32.9%

GVR 20.4%

Tan Uyen,

Binh Duong 8 619.0 404.75

98% (P1)

4,3% (P2) 330.5 288.5 2005

4 Long

Khánh

Dong Nai Rubber

Co.

Long Khanh,

Dong Nai 50 629.5 177.58 (P1) 91.4% 264.5 365.0 2008

5 Bắc Đồng

Phú

DPR 51%

NTC 40%

Binh Phuoc,

Dong Phu 7 575.0 189.57 (P1) 100% (P1) 258.0 317.0 2009

6

Bình Long-

Minh Hưng

III

Binh Long Rubber

Co. -40%

NTC 36.7%

Chon Thanh,

Binh Phuoc 40 881.4 614.2 97.1% (P1) 291.4 590.0 2008

7 Dầu Giây Dong Nai Rubber

Co. NTC 22.17%

Thong Nhat,

Dong Nai 38 405.8 220 (P1) 73.9% 330.8 75.0 2008

0%

20%

40%

60%

80%

100%

-

2,000

4,000

6,000

8,000

Binh

Duong

Dong

Nai

BR-VT Long

An

HCMC

Total Stock and Occupancy Rate

Total Leasable Area (ha) Occupancy Rate

0

1

2

3

4

5

6

-

20

40

60

80

100

120

140

160

180

Binh

Duong

Dong

Nai

BR-VT Long An HCMC

Average Land and Factory Rents

Land Price Factory Rent



8 Bàu Xéo

Dong Nai Rubber

Co. 30%

Tin Nghia 30%

GVR 10%

Trang Bom,

Dong Nai 20 499.8 353.03 (P1) 98.0% 499.8

380

(**) 2007


(*):It will be established a new IP Bau Xeo II (opposite to Bau Xeo)

There are 7 natural rubber companies listed on the stock market. All have similar structures with

limited leverage and high cash dividend payout ratio. Among seven listed firms, 3 companies

PHR, DPR and TRC are in the top with decent market cap, large plantation area and healthy

financial ratios.

PHR DPR TRC

GVR’s ownner ship 66.62% 55.81% 60.0%

NR area of parent Co. (ha) 12,815 8,844 6,637

NR area of Subsidiary in

Laos/Cambodia 7,664 6,510 6,419

Tapping area of parent (ha) 6,099 (~ 48%) 6,218 (~70%) 3,986 (~60%)

Tapping area of Subsidiary (ha) 7,350 (~96%) 6,133 (~ 95%) 473 (~7%)

NR sales/Total sales (9M.19) 63% 67% 87%

IP sales/Total sales (9M.19) 32% 4% 0%

Gross profit margin 24.9% 27.1% 14.6%

48%

21%

20%

12%

PHR

33%

8% 41%

18%

DPR

0-6 7-10 11-25 >25

41%

15%

38%

6%

TRC

0

2,500

5,000

7,500

PHR DPR TRC

ha NR area in Laos and Cambodia of

subsidiaries

Immature area Mature area (7-10 years)



Net profit margin 56.1% 18.8% 19.0%

Debt/Equity 81% 51% 23%

Debt/ Total asset 45% 34% 19%

EPS trailing 6,212 4,013 3,681

P/E trailing 8.84 10.84 11.41

Book value 22,750 47,260 52,640

P/B 2.41 0.92 0.80

Cash dividend 2019 VND 4,000 VND 5,000 VND 1,500

Land transfer to other purpose

2020-2025

High-tech agriculture (ha) 2,500 n/a 1,200

IP, urban/residential areas (ha) 7,500 317 550


2. PHR: Phuoc Hoa Rubber

JSC.

0%

20%

40%

60%Cash dividend payout ratio policy

TRC DPR PHR

66.6% 6.8%

26.6%

Shareholder structure

GVR Foreign shareholder Other

0

20,000

40,000

60,000

80,000

Jan-1

7

Apr-

17

Jul-

17

Oct

-17

Jan-1

8

Apr-

18

Jul-

18

Oct

-18

Jan-1

9

Apr-

19

Jul-

19

Oct

-19

PHR

PHR Relative VN Index



Source: PHR, compiled by VCBS

PHR ranks 5th

among top plantation companies in the term of acreage, production of members

Vietnam Rubber Group. And it is the biggest company among listed NR companies.

Core business: natural rubber and industrial park development.

+ Natural rubber:

- Parent company: ~ 6.500 hectares immature area + ~ 10.000 hectares tapping area

- PH Kampong Thom – Cambodia: ~ 2.600 hectares immature area + ~ 5.072 hectares

tapping area

+ IP segment:

Tân Bình IP: (PHR owned 80%): accumulated total leased area is 202.76 ha (82,9% occupancy

rate). In Q3.19, the rental price was increased to 80 USD/sqm), rose ~20% compared to last year.

+ Land compensation:

- VSIP 3 (691 ha): VND 1.3 bn per ha, plus 20% of subsequent profit from the project (at

least VND 1.2 bn per ha.

- Nam Tan Uyen (345ha): VND 2.5 bn per ha

- Tan Lap IP: phase 1 with an area of 200 ha.

+ 5 year plan 2020-2030: PHR will convert 10,000 ha of rubber planting land in a total land

bank of 15,900 ha of rubber land to other purposes, including land for developing industrial

parks and selling land of 7,500 hectares.

9M.2019 results: In the first 9 months of 2019, according to PHR's consolidated financial

statements, net revenue reached VND 1,159.1 billion (+ 31.1% yoy), profit before tax reached

VND 794.7 billion (+63.7 % yoy); net income is VND 650.1 billion (+ 63.5% yoy), equivalent

to EPS trailing of 6,565 dong/share. Higher profit growth results came from the change in the

method of recording Tân Bình industrial’s revenue and abnormal income from land

compensation.

Increasing demand for industrial real estate has created an impetus for PHR to focus on this

segment. 2019-2021earnings will mainly come from land compensation income while natural

rubber segment contribute less than 10% .

Download the report at: VCBS Update report PHR

http://www.vcbs.com.vn/vn/Communication/GetReport?reportId=6882



3. DPR: Dong Phu Rubber

JSC.

DPR ranks 2nd

largest NR company listed on HOSE.

Core business: natural rubber and industrial park development.

+ Natural rubber:

a. Parent company: ~ 3.000 hectares immature area + ~ 6.200 hectares tapping area

b. Dong Phu Kratie – Cambodia (58.34% ownership): ~ 300 hectares immature area + ~ 6.100

hectares tapping area

c. Dong Phu Dak Nong (88.41% ownership): ~ 750 hctares tapping area

+ IP segment:

Bac Dong Phu Jsc. Co.: (DPR owns 51%, Nam Tan Uyen Jsc. Owns 40%), including 2 IPs: Bac

Dong Phu IP with 189 ha and Nam Dong Phu IP with 69.4 ha. Currently, the occupancy rate has

reached nearly 100% in both areas.

9M.2019 results: In the first 9 months of 2019, according to DPR's consolidated financial

statements, net revenue reached VND 624.1 billion (+ 1.7% yoy), net income is VND 117.5

billion (- 33.3% yoy), equivalent to EPS trailing of 4,010 dong / share.

2020-2025 plan: Bac Dong Phu will be expanded 317 hectares in 2020-2025 and Nam Dong Phu

will expand to an additional 480 hectares in 2026-2030.

Download the report at: VCBS Update report DPR

55.8%

6.7%

37.5%


GVR Treasury stock Others

25,000

30,000

35,000

40,000

45,000

Jan-1

7M

ar-1

7

May

-17

Jul-

17

Sep

-17

Nov

-17

Jan-1

8M

ar-1

8

May

-18

Jul-

18

Sep

-18

Nov

-18

Jan-1

9M

ar-1

9

May

-19

Jul-

19

Sep

-19

Nov

-19

DPR

PDR Relative VN Index




4. TRC: Tay Ninh Rubber

JSC.

TRC ranks 3rd largest NR company listed on HOSE.

Core business: natural rubber

+ Natural rubber:

a. Parent company: ~ 2.900 hectares immature area + ~ 4.250 hectares tapping area

b. Siem Riep – Cambodia (100% ownership): ~ 470 hectares immature area + ~ 5.950 hectares

tapping area

9M.2019 results: TRC reported 217.1 billion (-8.0% yoy, fulfil 55.7% plan), and net income

VND38.7 billion (-28.3% yoy).

In 2021-2025 TRC expects to transfer 1,750 ha of rubber land to industrial parks (550 ha) and

high-tech agriculture (1,200 ha).

TRC planed to expand its core business to IP development with Hiep Thanh IP phase 1 - 250

hectares. TRC’s main earnings still come from natural rubber, with consumption volume 10,000

tons per year, so business result highly depend on NR prices.

Download the report at: VCBS Update report TRC

60%

7%

6%

3%

24%


GVRAmerica LLCSai Gon VRG Investment CorporationTreasury sharesOthers

20,000

25,000

30,000

35,000

40,000

45,000

TRC

TRC Relative VN Index




DISCLAIMER

This report is designed to provide updated information on the results of companies’ business as well as analysis of factors affecting the

prospects of the business. The report and / or any judgments and information in the report are by no means construed as investment

advices, buy or sell offers, or investment proposals of any financial products, securities of related companies analyzed in the report.

Therefore, this report should be best considered as a reference only. VCBS does not bear any responsibility for unwanted results when the

information in the report is used.

All the information stated in the report has been collected and assessed as carefully as possible, however VCBS does not guarantee the

accuracy of the information and has no obligation to update the information after the report was released.

All opinions, judgments, estimations and projections in this report represent independent views of the analyst at the date of publication

only. Therefore, VCBS and/or departments of VCBS may have securities transactions inconsistent with recommendations in this report.

This report may not be copied, reproduced, published or redistributed by any person for any purpose without the written permission of an

authorized representative of VCBS. Please cite sources when quoting. Copyright 2010 Vietcombank Securities Company. All rights

reserved.

CONTACT INFORMATION

Tran Minh Hoang Ly Hoang Anh Thi Nguyen Thi Thu Hang

Head of Research

[email protected]

Head of Research Department

[email protected]

Equity Analyst

[email protected]

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Documents

NATURAL RUBBER INDUSTRY REPORT - VCBS