STA Rises 3% on Stronger Performance Outlook, Driven by Higher Rubber Prices

On Tuesday at 2:10 PM (Bangkok time), the share price of Sri Trang Agro-Industry Public Company Limited (SET: STA ) gained 3.13% or THB 0.60 to THB 19.80, with a trading value of THB 237.49 million. Yuanta Securities (Thailand) wrote that the price of SICOM TSR20 rubber has reached a ten-year high and is expected to continue rising due to ongoing supply shortages. Meanwhile, STA has seen a recovery in its rubber glove business. Preliminary estimates suggest that STA’s profit for the second quarter of 2026 could reach THB 1 billion, compared to THB 500–600 million in the first quarter and a loss in the second quarter of 2025. Furthermore, the company is expected to post even stronger results in the third quarter of 2026 for both its natural rubber and rubber glove businesses. Following these, Yuanta has assigned a ‘Buy’ recommendation for STA. Finansia Syrus Securities (FSS) noted that STA’s profits in 2Q26 are expected to grow both quarter-on-quarter and year-on-year. This growth is attributed to strong sales volumes for natural rubber and an approximate 5% increase in selling price compared to the previous quarter. The rubber glove segment is also expected to post a year-on-year sales increase of about 10%. STA’s short-term forward sales, with a lead time of just two to three months, allow the company to promptly reflect market prices (SICOM) and manage costs more efficiently. The gross margin from the rubber business is expected to rise to around 9–9.5% from 8.7% in 2026, exceeding the company’s annual target of 8–9%. The rubber glove business is also projected to recover, supported by both improved sales volume and better pricing, which should enable a year-on-year profit turnaround in 2026, excluding partial proceeds from insurance claims. In terms of annual sales volume, management has maintained its target for 2026 at 1.6 million tons, despite the company achieving a volume of approximately 700,000 tons, or around 44% of the annual target, in the first half of the year. STA remains confident in its adequate raw material supply, reporting no signs of shortages and no pressure from competitive bidding. The company continues to secure materials at prices ranging from the average market rate to premium prices. Overall, demand is expected to grow modestly by about 1–3%, with most clients making staggered purchases. Global natural rubber production is anticipated to face ongoing deficits for the next six years, with a shortfall of around 400,000 tons expected for 2025, marking the fourth consecutive year of production deficits and supporting long-term price trends. Moreover, management indicated that Thailand’s natural rubber production is likely to decline over the longer term due to land-use changes. STA has responded by managing its raw material supply through a network of over 46 rubber collection centers, with plans to expand to 60 centers, while also utilizing digital platforms to facilitate raw material procurement from farmers. Finansia maintains a ‘Buy’ rating on STA, with an assessed rubber price range of 200–220 cents per kilogram. Should geopolitical tensions ease, there may be some short-term downward pressure on rubber prices, but production costs are expected to provide support. The target price for the stock is reiterated at THB 22.00 per share, and short-term profit prospects for 2026 remain supported by continued improvements in both volume and price.