HÀ NỘI — A recent surge in rubber prices has significantly supported the performance of stocks within the rubber industry, despite a generally subdued stock market environment. 

Companies such as Đồng Phú Rubber JSC, TABIRUCO, Đắk Lắk Rubber Investment and Tây Ninh Rubber (TANIRUCO) have reported remarkable gains, setting new peaks and generating considerable interest in the sector.

The increase in rubber stock prices is largely driven by strong business performance, as rubber prices remain elevated. 

Global rubber prices have entered a new upward phase after hitting a mid-term low at the end of 2022. Currently, natural rubber is trading above US$2 per kg, representing a more than 70 per cent increase from two years ago and maintaining levels not seen in the last eight years.

On Wednesday, it traded at $2.0603, or 206.03 US cents, per kg. 

Vietcombank Securities (VCBS) said that rising export prices are influenced by adverse weather conditions in key production regions, particularly in Thailand, and the gradual recovery of the electric vehicle sector in China, leading to higher demand for tyres. 

This environment has enabled many natural rubber companies to report substantial profit growth in the fourth quarter of 2024, with net profits increasing by tens to hundreds of percentage points year-on-year. Listed companies in this sector saw net profits rise nearly 60 per cent, with some reaching record profitability.

Vietnam Rubber Industry Group (GVR) reported a net profit of nearly VNĐ2 trillion (US$78.2 million) in the last quarter, marking a 70 per cent increase. 

Its cumulative profit for the entire year exceeded VNĐ4.2 trillion, the highest figure since 2012. 

TANIRUCO also benefitted from increased selling prices and the liquidation of rubber plantations, achieving a net profit of over VNĐ220 billion, its highest since 2014.

Meanwhile, TABIRUCO saw average selling prices rise, contributing to a record net profit of over VNĐ368 billion last year. 

Đắk Lắk Rubber Investment also experienced a substantial profit increase in the last quarter to VNĐ38 billion, its highest since the second quarter of 2017, with annual profits surpassing VNĐ110 billion, marking a seven-year high.

Remaining high

Market analysts predict that rubber prices will remain elevated in the first half of 2025 due to ongoing supply shortages. 

The Association of Natural Rubber Producing Countries (ARNPC) has warned that these supply constraints could persist until 2028, with a potential shortfall of 600,000 to 800,000 tonnes per year.

VCBS experts agree that natural rubber prices are likely to stay high due to supply constraints and adverse weather conditions, projected to last at least until 2026. 

They estimate that the output price for GVR will remain above VNĐ38 million per tonne in 2025, with an average yield of 1.4 tonnes of rubber per hectare, potentially generating over VNĐ23 trillion in revenue from rubber products.

Phú Hưng Securities anticipates that domestic rubber companies will maintain robust profit growth, with projected selling prices for rubber increasing by between 4 per cent and 23 per cent year-on-year in the first two quarters of 2025. 

The rubber sector is well-positioned to leverage substantial inventory levels by the end of the year, benefitting from a shift in investment towards the tyre industry amid escalating global trade tensions.

The industry is also exploring opportunities related to the liquidation of rubber trees and land conversion for industrial zones. 

The new Land Law, which took effect in August 2024, is expected to enhance compensation income from rubber plantation land as compensation rates are updated to reflect market values, potentially increasing by over 30 per cent from current levels.

Regions with significant rubber plantations, such as Bình Dương and Đồng Nai provinces, are likely to expedite land valuation approvals to expand their leasing inventory. 

The industrial real estate segment presents substantial potential for rubber companies, with GVR currently managing eight industrial park projects covering a total area of 2,921ha, some of which have recently received investment approvals.

The planned conversion of over 20,000 hectares of rubber land to industrial zones between 2025 and 2030 represents a significant opportunity for GVR, with estimated compensation rates exceeding VNĐ1 billion per ha, potentially generating around VNĐ500 billion annually.

With the combined momentum from high rubber prices and increased land compensation, GVR is projected to achieve record revenues of VNĐ29.9 trillion, reflecting a 13 per cent growth, and a net profit after tax of nearly VNĐ6.1 trillion, up 18 per cent, marking the highest level since 2012. 

Similarly, Phú Hưng Securities has raised its profit forecast for Đắk Lắk Rubber Investment, anticipating a 15 per cent growth to VNĐ127 billion, the highest since 2017. — BIZHUB/VNS