Kasikorn Securities maintains Buy on STA with 26 baht target, expects strong second-half 2026 profit

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Kasikorn Securities said in an analysis note following its KS C-Series event with STA management on September 30 that executives remain positive on the upcycle in natural rubber, expecting global rubber supply to stay tight through 2027-2028 as shrinking supply outweighs modest demand growth. STA expects Thailand's natural rubber output to fall about 5-12% year on year this year, hurt by heavy rain that disrupted tapping and by some farmers switching to oil palm. Indonesia's output is expected to drop by about 500,000 tons, or 25% year on year, while additional supply from Ivory Coast is seen at only about 200,000 tons, leaving net regional supply significantly lower. Management expects the average selling price of natural rubber to rise to about USD 2.3 per kilogram in the third quarter of 2026 and USD 2.5 per kilogram in the fourth quarter, from USD 2.1 per kilogram in the first half of 2026. It kept its 2026 rubber sales volume target at 1.5 million tons and its gross profit margin target for the natural rubber business at 8-9%, compared with 9.3% in the second quarter of 2026 and 8.7% in the first quarter. Sales of rubber meeting EUDR standards are expected to exceed 40,000 tons in the third quarter of 2026 and 60,000 tons in the fourth quarter, versus only 17,000 tons in the second quarter, though uncertainty remains over EUDR enforcement. At STGT, management expects production costs for rubber gloves to rise in the second half of 2026 on higher latex prices, with sales volume still uncertain. The research team maintained its Buy rating and 26.00 baht target price, based on a sum-of-the-parts method using a target price-to-earnings ratio of 8.5 times for the natural rubber business and a 13.00 baht target price for STGT. It said it prefers STA over STGT given the more positive second-half 2026 profit outlook.

Impact on assets 3

Synthetic Biology (non-pharma)▲
Materials▼
Others▲
⛏Natural Rubber (RSS)
RUBBER
▲ PositiveSupplyrelevance

Shrinking Thai and Indonesian natural rubber output is expected to keep global supply tight and lift average selling prices to USD 2.3-2.5/kg in H2 2026.