Yuanta bullish on STA with Strong Buy after earnings beat and surprise dividend

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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.

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