Land and Houses Securities has initiated coverage on STA, or Sri Trang Agro-Industry, Thailand's leading natural rubber producer, with a Buy rating and a target price of 23.90 baht. The company holds roughly 35% market share and has production capacity of 3.72 million tonnes per year. The target price is based on a PER of 11.30 times, or 0.75 standard deviations above the five-year historical average, reflecting upward rubber price momentum, a recovery in gross margin, and forward EPS of 2.12 baht per share in 2027. It also expects a 2026 dividend of 1 baht per share, implying a dividend yield of about 4.8%. The research team forecasts normalised profit of 2.701 billion baht in 2026, up 734.3% from a loss of 426 million baht the previous year, driven by expected revenue of 128.517 billion baht, up 13.3%, and GPM expanding from 6.2% to 9.7%, under the assumption of an average full-year rubber selling price of 220 US cents per kilogram. For the third quarter of 2026, normalised profit is expected to grow year on year but decline quarter on quarter from the high base in the second quarter. The SICOM TSR20 rubber price rose to about 230 US cents per kilogram from 220 US cents per kilogram in the previous quarter, and EUDR rubber sales volume is expected to increase to about 30,000 tonnes from 17,214 tonnes in the second quarter, with more than 60,000 tonnes expected in the fourth quarter. The company continues to pursue a strategy of raising the share of EUDR rubber, which sells at a higher price than general rubber, targeting sales volume of 30,000 tonnes per month. Meanwhile, limited rubber supply from Indonesia and Ivory Coast, along with the effects of El Nino, leaf fall disease in Indonesia, and the reduction of rubber plantation area as land is converted to palm oil, are factors supporting rubber prices. China remains the main market, accounting for more than 60% of natural rubber business revenue, while the rubber glove business exports to more than 175 countries worldwide.
Sri Trang Agro-Industry Public Company LimitedLand and Houses Securities initiates Buy on STA with 23.90 baht target, forecasting 734% profit surge in 2026 on margin recovery.
