Eastern Polymer Group Public Company Limited

Yuanta Securities has revised up its profit forecast for Eastern Polymer Group Public Company Limited (EPG), noting that the thermal insulation rubber business remains outstanding and helps accelerate profit growth. The positive information comes from company representatives on three main points: revenue from the thermal insulation rubber business continues to expand well from Q1 2026, supported by increased orders in the US following investment in AI Infrastructure, including data centers and electronic component manufacturing plants. Meanwhile, sales in Thailand are starting to recover after gaining new customers in the electronic components and Photonics sectors, and there is a positive effect from price increases since May, which will push the gross margin of this business higher from Q1 2026's 49.6%. The company plans to expand thermal insulation rubber production capacity in the US after capacity utilization reached 70% of the current 8,000 tons per year, with an additional 2,000 tons per year this year and another 2,000 tons per year in 2027, a total increase of 50%, to accommodate orders from AI Infrastructure customers. The automotive parts business has not yet recovered in line with the sluggish internal combustion engine vehicle industry, but management will focus on cost management and creating synergy with other business groups, while transitioning to more EV parts production. Yuanta Securities has revised up its 2026 normal profit forecast by 10.1% and 2027 by 10.3%, mainly due to higher revenue from the thermal insulation rubber business and adjusting the gross margin assumption from 33.7% to 36.2%. It expects 2026 normal profit of 1.759 billion baht, growing 27% from the previous year, and continuing to grow 11.4% in 2027. The stock is trading at a low 2026 forward PER of only 9.6 times, with 50% upside after raising the 2026 fair value from 8.15 baht to 9 baht, based on a 3-year average PER plus 0.5 standard deviation at 14.3 times, and expects a dividend yield of 4.7%. Therefore, it maintains a "Buy" recommendation.

Kasikorn Securities said the construction materials group reported combined normalised profit of 2.2 billion baht in the second quarter of 2026, up 11 percent from a year earlier, supported by a higher gross margin despite weak sales. Profit fell 11 percent from the previous quarter due to seasonal demand and more holidays. Combined normalised profit for the first half of 2026 was 4.8 billion baht, up 28 percent from a year earlier, representing 61 percent of the full-year estimate of 7.9 billion baht. Combined revenue in the second quarter of 2026 was 24 billion baht, up 6 percent from a year earlier and 1 percent from the previous quarter. Gross profit margin rose to 28.2 percent, up 0.7 percentage point from a year earlier and 0.3 percentage point from the previous quarter, as higher selling prices fully offset higher oil-linked raw material costs. Such raw materials account for 35 to 45 percent of cost of sales. The selling, general and administrative expense to revenue ratio rose to 17.9 percent, up 0.2 percentage point from a year earlier and 1.8 percentage points from the previous quarter, due to higher logistics costs. As a result, the normalised profit margin rose 0.4 percentage point from a year earlier to 9.4 percent, but fell 1.3 percentage points from the previous quarter. Ceramic tile sales at Dynasty Ceramic and SCG Decor fell 6 percent and 7 percent from a year earlier respectively, because they have a high proportion of revenue from the private sector where demand is weak, while normalised profit fell 4 percent and 5 percent respectively. Tipco Asphalt revenue rose 20 percent from a year earlier on higher asphalt prices following the war between the United States and Iran, lifting normalised profit by 22 percent. TOA Paint sales rose 4 percent on higher market share and inventory stocking, but normalised profit rose only 3 percent because of higher selling, general and administrative expenses and Myanmar-related costs. Eastern Polymer Group delivered the strongest performance, with sales up 9 percent and normalised profit up as much as 43 percent on demand for insulation products in the United States. Kasikorn Securities maintained a neutral view on the sector, focusing on stock selection. It picked Eastern Polymer Group as a top pick with a buy rating and a target price of 6.70 baht, and TOA Paint with a buy rating and a target price of 19.0 baht, because they have stronger demand than other companies. Eastern Polymer Group benefits from strong demand for insulation products in the United States, while TOA Paint's market leadership supports stable paint demand.

Kasikorn Securities said Eastern Polymer Group, or EPG, reported first-quarter fiscal 2025 profit above expectations, with revenue growing 9 percent year on year, well above management's target of 2 percent, and gross margin at 37.1 percent, above the 30 to 33 percent target, thanks to a higher revenue share from the thermal insulation business and higher average selling prices. Revenue from the Aeroflex thermal insulation business rose to 1.3 billion baht, up 21 percent year on year and 23 percent quarter on quarter, supported by US sales rising 28 percent year on year and 34 percent quarter on quarter to 28 million US dollars, driven by demand from data centre, pharmaceutical and semiconductor customers. Aeroflex gross margin rose to 49.6 percent. The Aeroklas auto parts business posted revenue of 1.6 billion baht, up 2 percent year on year but down 3 percent quarter on quarter. The EPP packaging business posted revenue of 765 million baht, up 19 percent year on year but down 4 percent quarter on quarter. Management expects expected credit losses from the South African joint venture to persist but remain below 50 million baht per quarter, and expects revenue and gross margin to stay strong in the second quarter of fiscal 2025. Kasikorn Securities maintained a buy rating and a target price of 6.70 baht, based on a price-to-earnings ratio of 13 times.

The Office of the National Economic and Social Development Council reported that gross domestic product in the second quarter of 2026 expanded 1.9% from a year earlier, slowing from 2.8% in the first quarter but above the market forecast of 1.7%. The main support came from private investment, which grew strongly in line with investment promotion applications, while private consumption slowed to 1.9% from 3.3% in the previous quarter amid higher domestic energy prices, and government spending was weak because disbursement had already been accelerated earlier. Yuanta Securities expects consumption to recover clearly in the third quarter from the full-quarter impact of the Thai Chuay Thai Plus measures, and government spending to accelerate toward the end of the fiscal year. It maintains a positive view on construction contractors, power plants, industrial estates, retail, and food and beverage, citing stocks CK, STECON, GUNKUL, GULF, FORTH, SAMART, EPG, BJC, CPALL and CBG. The planning agency also raised its GDP forecast for this year to 2.0 to 2.5% from 1.5 to 2.5%, and lowered its inflation forecast to 1.5 to 2.0% from 2.0 to 3.0%, which helps ease pressure on monetary policy tightening.

EPG shares rose more than 5% after the company reported first-quarter normalized profit for fiscal year 2027 of 490.8 million baht, 17% above expectations and a record quarterly high. Finansia Syrus Securities said profit rose 50.3% from a year earlier and 40.4% from the previous quarter, supported by strong gross margins and lower interest expenses. The Aeroflex business remained the key driver, with revenue up 20.8% year-on-year, while Aeroklas began to recover on returning OEM orders. The research team raised its 2027-2029 profit forecasts by 3.6-10.4% and lifted its target price to 9.00 baht from 8.50 baht, maintaining a buy recommendation.

Dao Securities (Thailand) expects the SET Index to move sideways with an upward bias after US inflation came in line with expectations, easing investor concerns about Federal Reserve rate hikes, while the market continues to watch second-quarter earnings announcements. MSCI announced the inclusion of GUNKUL and HANA in the MSCI Thailand Small Cap Index, while removing CHG and JTS. The main strategy expects buying in large-cap stocks on potential foreign fund inflows, especially DELTA, and recommends speculative plays on stocks with expected strong results. Today's standout is SPALI, whose second-quarter 2026 net profit beat expectations by 111 percent at 1.6 billion baht, up 49 percent from a year earlier and 310 percent from the previous quarter, driven by strong transfers and a rise in profit sharing from joint ventures to 890 million baht. Dao Securities upgraded the stock to buy and raised its target price to 19.00 baht after lifting its 2026 profit forecast by 9 percent to 4.4 billion baht, with a dividend yield of about 8 percent per year. EPG posted record first-quarter fiscal 2027 core profit, beating expectations by 14 percent at 474 million baht, up 53 percent from a year earlier and 28 percent from the previous quarter, as all businesses improved, especially Aeroflex, which stood out in the US market. Dao Securities recommends buying EPG and raised its target price to 8.50 baht after lifting its fiscal 2027 core profit forecast by 5 percent to 1.6 billion baht, up 21 percent from a year earlier, with the stock trading at a fiscal 2027 core price-to-earnings ratio of 10.3 times, or minus 1.1 standard deviations. Today's SET Index range is seen with support at 1,600 to 1,606 points and resistance at 1,617 to 1,623 points.

Eastern Polymer Group, or EPG, views the global data centre investment trend, which Moody’s Ratings forecasts could total as much as 3 trillion US dollars over the next five years, as a major opportunity for its thermal and cold insulation business under the Aeroflex brand. That segment currently accounts for around 30 percent of the company’s revenue. The products are internationally certified and sold in Thailand, the United States, and many other countries worldwide. At the same time, the weaker baht is supporting export revenue, which makes up about 60 percent of total revenue, and the company targets revenue growth of around 2 to 3 percent in fiscal year 2027 from the previous year. Analysts at InnovestX Securities have a target price of 8.50 baht, noting that US investments, including TSMC’s 265 billion US dollar project in Arizona, will support long-term demand for insulation.

The government is considering restructuring excise tax rates for electric vehicles, with a plan to impose higher taxes on imported EVs that lack a manufacturing base in Thailand. Meanwhile, operators that set up factories and use domestic production networks will receive greater benefits. The proposal is expected to be submitted to the cabinet within September. Analysts from Yuanta Securities Thailand noted that this issue negatively affects MGC and ASAP stocks, which import EVs for sale, but is positive for KGEN, as it has a production base in Thailand and directly holds shares in domestic factories. Parts manufacturers have proposed increasing the tax differential between imported and domestically produced EVs to at least 30 to 50 percent, up from the current roughly 8 percent. This would enhance the advantage of domestically produced vehicles and encourage EV makers to use local supply chains more, benefiting Thai parts makers such as AH, SAT, STANLY, and EPG. SAT is highlighted as a top pick with a buy recommendation and a target price of 18.80 baht per share.

Eastern Polymer Group, or EPG, disclosed that the recent weakening of the baht to around 33.80 per US dollar, its weakest in 15 months, will positively impact overseas revenue, which accounts for about 60% of total revenue, and help drive further business expansion. Associate Professor Dr. Chalieo Vitoorapakorn, Deputy Chief Executive Officer, said the business outlook for the remainder of the fiscal year 2027 remains positive, supported by growing demand across all business segments. The Aeroklas automotive parts and accessories segment is expected to grow about 2%, the Epp food packaging segment around 5%, and the Aeroflex thermal insulation segment 3%, leading the company to maintain its full-year revenue growth target of 2–3% from the previous year. In addition, the government's promotion of data center and AI investments, with 877 projects applying for BOI support in the first half of 2026 representing total investment of approximately 1.36 trillion baht, will support long-term demand for Aeroflex insulation.