Natural Rubber (RSS)

Krungsri Securities has upgraded its recommendation for STA to "Buy" and raised its 2027 target price to 24.00 baht from 22.00 baht, reflecting upward revisions to normal profit estimates for 2026-2027 by 16% and 12%, to 2,940 million baht and 3,233 million baht, respectively. This is supported by higher-than-expected rubber prices and good cost control. Although the company has lowered its 2026 sales volume target to 1.45-1.50 million tons and expects a capacity utilization rate of 55%, the research house sees downside risks from first-half sales volume of only 0.70 million tons, representing 48% of the target. Meanwhile, the trend for Q3 2026 is expected to slow due to weak demand. However, the enforcement of the EUDR regulation in 2027 is seen as an upside not yet included in estimates, with the company aiming to sell about 30,000 tons of EUDR rubber per month, accounting for roughly 25% of the total projected sales volume.

Trinity Securities has raised its target price for Sri Trang Agro-Industry (STA) shares to 24.60 baht from 23.00 baht, while maintaining a speculative buy recommendation. The firm expects the company to return to profitability in 2026, driven by higher natural rubber prices. The research department forecasts 2026 profit to increase to 2.6 billion baht from 1.9 billion baht, after raising gross margin assumptions on higher average selling prices. Sales volume for 2026 is projected at 1.45-1.50 million tonnes, down from 1.6 million tonnes, due to reduced supply from heavy rainfall, particularly in Thailand where output may decline by 5% and Indonesia by up to 25%. Meanwhile, natural rubber prices remain 20% cheaper than synthetic rubber, attracting glove and tire manufacturers to use more natural rubber, despite overall tire demand growing only 1-3%. The company also announced an interim dividend of 0.50 baht per share, with the XD date on August 27, 2026, representing a dividend yield of 2.8%.

Deputy Prime Minister and Minister of Commerce Supachai Suthamphan announced 90-day achievements and unveiled the next 7-step strategy, accelerating the conclusion of the Thailand–United States reciprocal trade agreement, or ART, and pushing 2026 exports to double-digit growth. In negotiations with the United States, Ms. Chotima Iamsawadikul, Director-General of the Department of Trade Negotiations, will travel in advance on 25 August 2026, before Ms. Supachai arrives on 30 August 2026, to speed up concluding the talks and safeguard trade benefits. On international trade, in the first six months of 2026 Thailand recorded total trade value of 425.23 billion US dollars, up 27.8 percent, with exports of 196.74 billion US dollars, up 17.6 percent, imports of 228.49 billion US dollars, up 38.0 percent, and a trade deficit of 31.74 billion US dollars. The Thai Helping Thai programme reduced public living costs by more than 818 million baht and generated over 2.9 billion baht in economic and trade value. Prices of several agricultural products improved, with cassava at 3.65 baht per kilogram, up 79 percent, oil palm at 8.70 baht per kilogram, up 45 percent, rubber at 36 baht per kilogram, up 30 percent, and feed corn at 7.28 baht per kilogram, up 6 percent. Integrated nominee problem-solving across 23 agencies inspected 46 areas in 13 provinces, reducing at-risk companies from 561 to 141, a decline of 75 percent.

Shenwan Hongyuan Research noted that the probability of a super El Niño event has recently risen to 95%, and extreme weather could significantly disrupt global agricultural supply. A strong El Niño will cause drought and lower output in major natural rubber and palm oil producing areas in Southeast Asia, while sugarcane production in India and Thailand will come under pressure, supporting expectations of higher sugar prices. Core blueberry producing regions in Peru and Chile also face output reduction risks, pushing prices higher in the fourth quarter. Historical experience shows that such climate events often reshape the supply and demand landscape for some tropical cash crops through weather premiums, thereby lifting inflation expectations. As of 10:41 a.m. on August 20, 2026, the China National Grain Industry Index tracked by the ChinaAMC Grain ETF was down 2.47%, but the ETF had seen four consecutive days of net capital inflows.

NER has announced an interim cash dividend of 0.05 baht per share, with the XD date set for 20 August and payment on 4 September. Chief Executive Officer Chuwit Jungthanasomboon said the outlook for the second half remains bright, driven by continued growth in global natural rubber demand, reflecting the company's position as a consistent dividend stock that delivers returns to long-term shareholders.

Thai Eastern Group Holdings Public Company Limited, or TEGH, reported second-quarter results for the fiscal year 2569 with total revenue of 4.405 billion baht and net profit of 165 million baht, up 104% from the previous quarter. The natural rubber business remained the main revenue driver, accounting for about 85% of total revenue, with revenue of 3.746 billion baht, down 5% from the previous quarter, but supported by average TSR20 block rubber prices on the SICOM market at 217.8 US cents per kilogram, up 13.7% quarter-on-quarter and 29.7% year-on-year. The company targets block rubber sales volume of 260,000 tonnes this year, up 4% from last year, and expects EUDR-compliant block rubber to account for 30–40% of sales in the second half. The crude palm oil business posted revenue of 566 million baht, up 35% quarter-on-quarter, and expects to increase production capacity by about 50% within this year. The renewable energy and organic waste management business recorded revenue of 90 million baht, up 37% quarter-on-quarter, with the phase-two project expected to be completed in the second quarter of 2570, adding biogas production capacity of about 23.76 million cubic metres per year. For the 2569 outlook, the company targets total revenue growth of 10% to reach 22 billion baht and is considering the timing for listing TEBP on the stock exchange through an IPO after the Securities and Exchange Commission approved an extension of the execution period.

Sri Trang Agro-Industry Public Company Limited, or STA, reported second-quarter 2026 net profit of 895 million baht, up 38.7 percent from the previous quarter and the highest level in four years. Revenue came in at 31.0038 billion baht, growing 15.5 percent from the previous quarter. As a result, first-half 2026 net profit reached 1.5404 billion baht, swinging from a loss in the same period last year, supported by high natural rubber prices and a pickup in customer restocking. The average TSR20 block rubber price on the SICOM market in the second quarter was 217.8 US cents per kilogram, up 13.7 percent from the previous quarter and 29.7 percent from a year earlier. The board of directors approved an interim dividend of 0.50 baht per share, with the stock set to trade excluding dividend on 27 August 2026 and payment scheduled for 11 September 2026.

Yuanta Securities recommends a Strong Buy on STA after the company reported second-quarter 2026 normalized profit of 1.142 billion baht, up 116% from the previous quarter and a turnaround from a normalized loss of 852 million baht in the second quarter of 2025. Net profit was 895 million baht. Revenue came in at 31 billion baht, up 15.5% from the previous quarter and 0.5% from a year earlier. The natural rubber business posted revenue of 24.883 billion baht, growing 16.5% from the previous quarter, driven by a 3% increase in sales volume to 354,210 tonnes and a 12.4% rise in average selling prices. The rubber gloves business recorded revenue of 6.104 billion baht, up 11.6% from the previous quarter. Although sales volume fell 6.6%, selling prices rose 17.8%. Overall gross margin was 12%, better than the expected 11.3%. The natural rubber business achieved a gross margin of 9.3%, the highest in seven quarters, while the rubber gloves business delivered 17.0%, the highest in four years for STGT. The company announced a dividend of 0.50 baht per share, with the ex-dividend date on August 27, offering a yield of 2.7%, which is better than the expectation of a single payment at year-end. Normalized profit in the third quarter of 2026 is expected to grow both from the previous quarter and from a year earlier, supported by higher rubber prices and a recovery in rubber glove sales volume. First-half normalized profit was 1.669 billion baht, representing 61% of the full-year estimate, with upside risk. The current share price trades at a 2026 price-to-earnings ratio of only 10.5 times and a price-to-book value of just 0.6 times. The company also holds assets that have not yet been revalued, such as carbon credits amounting to hundreds of thousands of tonnes of carbon.

Krungsri Securities stated that NER has lowered its 2026 sales volume target to 440,000 tonnes from 450,000 tonnes due to the impact of El Niño on rubber output, but has maintained its revenue target at approximately 30 billion baht, flat year-on-year, as higher selling prices offset the volume shortfall. For 2027, the company targets sales volume of 400,000 tonnes, down 10 percent year-on-year, amid persistently tight rubber supply, yet keeps its revenue target steady at around 30 billion baht, expecting higher average selling prices to compensate for lower volumes and support gross margin expansion. On the fundraising front, the company may seek loans or issue debentures in late 2026 to early 2027 to accommodate rising raw material costs, focusing primarily on cash flow management and not on capacity expansion in a tight supply environment. As of the second quarter of 2026, the company's debt-to-equity ratio stood at 1.1 times, and it maintains a full-year dividend payout ratio of 40 percent, with an interim dividend of 0.05 baht per share declared, representing a yield of 1.1 percent for the first half, with the XD date set for 20 August 2026. Krungsri Securities maintains a buy recommendation and a 2027 target price of 5.30 baht, with a neutral view on NER, as positives from higher selling prices and improving gross margin trends are offset by concerns over potentially higher interest expenses from fundraising, which are not yet factored into current estimates and remain uncertain in both amount and timing. For the third quarter of 2026, normalised profit is expected to recover both year-on-year and quarter-on-quarter, driven mainly by rising rubber selling prices, while gross margin is likely to expand due to the lag between immediate selling price increases and the slower adjustment of weighted average inventory costs.

Northeast Rubber Public Company Limited, or NER, has lowered its natural rubber sales volume target for 2026 to 440,000 to 450,000 tonnes, down from 500,000 tonnes, after assessing supply and market risks. However, it is maintaining its full-year revenue target at 30 billion baht, supported by higher global rubber prices. The gross profit margin in the second quarter improved to 10.24 percent from 8.62 percent in the first quarter, and the company expects it to remain in the 9 to 11 percent range in the second half. The company has decided to postpone construction of its third factory indefinitely due to concerns over the impact of the El Niño phenomenon, which could reduce rubber output in the first three quarters of 2027. It is also pushing into new export markets in India to replace the increasingly saturated markets of China and Singapore.

Northeast Rubber Public Company Limited, or NER, reported a second-quarter net profit for 2026 of 436.36 million baht, up from 254 million baht in the previous quarter. Total sales revenue came in at 7,143.58 million baht. Gross profit margin rose to 10.24 percent and net profit margin to 6.11 percent, reflecting effective cost management and price risk management amid high natural rubber prices. The board approved an interim dividend of 0.05 baht per share, with the XD date set for August 20 and payment on September 4, 2026. Management expects continued growth in the second half of the year, driven by tight global supply and strong demand for natural rubber.

The Commerce Ministry is preparing to push for 13 more key Thai export products, with a combined value of 4.95341 billion US dollars, to negotiate additional import tariff exemptions under Section 301 of the United States. Arada Fuangtong, Director-General of the Department of Foreign Trade, revealed that Thailand currently has 2,120 products exempted and not subject to the additional 12.5 percent tariff, accounting for more than half of Thai exports to the US. The 13 products to be proposed for additional exemptions represent 8.81 percent of total export value, covering handicrafts, pet food, rice, rubber gloves, processed seafood, and other consumer goods. Meanwhile, the Thai side has been scheduled for technical-level discussions in the negotiations on the Agreement on Reciprocal Tariffs, or ART, and expects that the US may raise the issue of structural overcapacity to pressure for faster negotiations, with possible clarity around September or early October.