Listed Sri Lankan plantation companies with significant rubber exposure are positioned to benefit from rising international rubber prices, First Capital Holdings said in a flash note dated May 4.
The research house identified Agalawatte Plantations (AGAL), Kotagala Plantations (KGAL), Kotmale Holdings (KOTA) and Horana Plantations (HOPL) as the best-placed counters, citing rubber’s roughly 15% or higher share of revenue at each. Watawala Plantations and Sunshine Holdings — both with rubber portfolios — were the largest positive contributors to the All Share Price Index last Thursday as the sector rerated, the note said.
Richard Pieris Exporters is also expected to gain from the combination of rising rubber prices and rupee depreciation, while Dipped Products is likely to benefit through its USD-denominated niche-glove revenue. The trend is also expected to support topline growth at parent Richard Pieris and Company.
The picture is mixed for downstream tyre manufacturers. Kelani Tyres, which holds a 50% stake in CEAT Kelani Holdings, may see margins squeezed by costlier raw material. “The extent of the impact will depend on the company’s ability to pass on higher costs to customers,” First Capital said, adding that higher vehicle registrations following the import-restriction lift were expected to drive top-line growth at Kelani Tyres.
Sri Lanka’s rubber sector — once a flagship export — has shrunk in recent decades as planters shifted to oil palm and tea, with annual production well below the 100,000-tonne mark. Sustained higher prices, driven by tighter Thai and Indonesian output, could reverse some of that decline if planters expand replanting and tapping intensity.
Source: EconomyNext.
