ASL Securities holds a positive view on STA's earnings outlook, expecting second-quarter 2026 profit to recover strongly both year-on-year and quarter-on-quarter, driven by higher sales volumes and average selling prices. The second-half 2026 trend continues to show positive momentum, with the natural rubber business benefiting from forward sales contracts at elevated prices, while the rubber glove business is supported by rising demand for natural rubber gloves. This follows the Middle East conflict, which has raised synthetic rubber glove costs and tightened supply. Macro factors also support medium- to long-term growth in the rubber business, given tight natural rubber supply as farmers switch to higher-yielding oil palm cultivation, along with weather impacts reducing output. Meanwhile, demand continues to grow with the expansion of the electric vehicle industry and restocking by tire manufacturers, particularly customers in China, keeping rubber price trends at levels conducive to STA's profitability. STA also enjoys competitive advantages from its ESG leadership and readiness for the European Union's EUDR regulations through its continuously developed traceability system, enhancing opportunities to sell premium products and maintain market share. Valuation is attractive, with the stock trading at only about 0.6 to 0.7 times price-to-book value, below historical averages, and an expected dividend yield of around 6 to 7 percent. There is also hidden value from the T-VER carbon credit project, which has already been certified for over 14,000 tonnes of carbon and is expected to increase to around 300,000 tonnes by the end of 2026. ASL therefore views STA as a stock offering profit recovery potential, undemanding valuation, and attractive dividend returns. In terms of sentiment, STA may serve as a natural hedge for investment portfolios amid prolonged Middle East tensions, as rising oil prices tend to support natural rubber prices through higher synthetic rubber production costs, positively impacting STA's revenue and margins. This aligns with the SGX SICOM TSR20 futures price, which has risen 4.7 percent over the past three months, reflecting an upward rubber price trend. On the technical front, the price has pulled back in the short term to test support at the 13-day SMA around 18.40 to 18.30 baht, before seeing a technical rebound with a long white candlestick firmly closing above 19.00 baht. This buy signal suggests a test of resistance at the previous candlestick high or double top at 19.30 to 19.40 baht, and psychological resistance at 20.00 and 20.50 baht. ASL Securities recommends "buy" for existing shareholders to hold or accumulate, with potential to test resistance at 19.40, 20.00, and 20.50 baht. For those without positions, short-term buying is advised, focusing on holding above support at 19.00 baht and 18.40 to 18.30 baht, which should not be breached.
Sri Trang Agro-Industry Public Company LimitedHigher sales volumes and average selling prices driven by rising demand for natural rubber gloves and tight natural rubber supply.