He adds that although overall operating dynamics remain favourable for local manufacturers, the sector's valuation has likely run ahead of its earnings recovery prospects. While the current sector forward price-to-book value (P/BV) of 1.9 times is trading at a premium against its two-year historical average of 1.2 times, Oong notes that this valuation “appears hefty” compared to the sector’s earnings recovery prospects in 2026, which he estimates at 39% of pre-Covid 19 earnings.
RHB Bank Singapore analyst Oong Chun Sung has downgraded his sector rating on rubber products from “overweight” to “neutral” in light of the normalising of volume sales in the first half of this year due to front-loading activities.
“Our previous sector call has been largely played out, with share prices rallying 40% to 50% in 2024” writes Oong in his Jan 9 note.
