Tires & Rubber

Entering October, the fourth round of concentrated price hikes in China's tire industry this year has officially entered its implementation period. Leading tire companies including General Science Technology, Zhongce Rubber, Sailun Tire, and Linglong Tire have raised prices by 2% to 5% across all product categories such as all-steel tires, semi-steel tires, and off-the-road tires. This is already the fourth round of concentrated price-increase notices issued by the tire industry since March this year. In its price adjustment notice, General Science Technology pointed to raw materials as the reason for the increase, saying that prices of natural rubber, synthetic rubber, and carbon black have continued to rise sharply, causing tire manufacturing costs to climb rapidly. Raw materials account for more than 70% of tire production costs, with natural rubber, synthetic rubber, and carbon black together accounting for more than 60%. The simultaneous rise of these three major raw materials is the fundamental driver of this round of price increases. On carbon black, data from SunSirs shows that on October 1, the benchmark price of carbon black was reported at 11,692.86 yuan per ton, up about 59.74% year on year. On natural rubber, as of the end of the third quarter, the main Shanghai rubber futures contract closed above the 20,000 yuan per ton mark, while the average spot price in the domestic market over the same period was about 19,400 yuan per ton, up 31% year on year. On synthetic rubber, according to SunSirs data from October 1, the benchmark price of butadiene rubber was reported at 16,220 yuan per ton, up 39% year on year, and the benchmark price of styrene-butadiene rubber was reported at 16,175 yuan per ton, up about 36% year on year. According to data from Longzhong Information, as of September 29, the raw material cost index for semi-steel tires and the raw material cost index for all-steel tires both rose about 25% year on year. Zhongtai Securities believes that after cost disturbances ease, leading tire companies are expected to return to high year-on-year growth, but industry divergence will further intensify.

Goodyear Tire & Rubber Company will close its remaining chemical plants in Niagara Falls, New York, and Bayport, Texas, eliminating about 85 jobs, most of them in Niagara Falls. The company is exiting the remaining chemical business after selling most of its polymer operations in 2025, and says it will concentrate on core tire products and services. Goodyear expects to complete the rationalization plan substantially by the end of 2027 and estimates total pre-tax charges of between $55M and $75M, of which approximately $30M is expected to be cash charges primarily for plant decommissioning and associate-related and other exit costs, with the remainder expected to be non-cash charges mainly for accelerated depreciation and other asset-related charges. The company also expects to record approximately $35M of pre-tax charges in Q3 and approximately $15M during the remainder of 2026, with most cash outflows occurring by the end of 2027. The actions are expected to improve Americas segment operating income by approximately $15M to $20M annually beginning in 2027.

Bridgestone Corporation has announced an official partnership as the sole tyre supplier for the ABB FIA Formula E World Championship 2026/27 season. The announcement was made at the Bridgestone Formula E World Premiere on 30 September in Rome, Italy. The event unveiled the GEN 4 race car, the fastest and most powerful car in Formula E history. Bridgestone has also developed the new POTENZA GEN 4 tyre, focused on high grip and durability throughout the race, as well as a wet-weather tyre, the POTENZA GEN 4 for TYPHOON TYRE, specifically for racing in heavy rain. On sustainability, Bridgestone uses recycled and renewable materials in the production of the POTENZA GEN 4 tyre at a proportion of up to 65%, certified under the ISCC PLUS standard. It is also the first partner of an FIA World Championship to use DHL GoGreen Plus transport services and to support the FIA Girls on Track programme. For the 2026/27 season, Bridgestone will supply tyres to every race and serve as an official sponsor at four rounds: Round 3 on 16 January 2027 in Mexico City, Mexico; Rounds 10-11 on 8-9 May 2027 in Berlin, Germany; Rounds 18-19 on 10-11 July 2027 in Shanghai, China; and Rounds 20-21, the season finale, on 24-25 July 2027 in Tokyo, Japan. Bridgestone has been involved in motorsport for more than 60 years, while Formula E has held races under FIA governance since 2014 and is the world's first sport to be certified as a Certified B Corporation and to meet the BSI Net Zero Pathway.

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.

Kasikorn Securities has maintained its buy rating on STA shares with a target price of 26.00 baht, based on a sum-of-the-parts valuation using a target PER of 8.5 times for the natural rubber business and a target price of 13.00 baht for STGT. It noted that STA management remains positive on the upcycle in natural rubber and expects global rubber supply to remain tight through 2027-28, as shrinking supply will outweigh demand growth. STA expects Thailand's natural rubber output to fall about 5-12% year on year this year, due to heavy rain affecting tapping and some farmers switching to oil palm cultivation. Indonesia's output is expected to decline by about 500,000 tons, or 25% year on year, while additional supply from Ivory Coast amounts to only about 200,000 tons, leaving net regional supply still significantly lower. On selling prices, 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 of 2026, from USD 2.1 per kilogram in the first half of 2026. It maintained 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%. For EUDR-compliant rubber sales, STA expects more than 40,000 tons in the third quarter of 2026 and more than 60,000 tons in the fourth quarter of 2026, compared with only 17,000 tons in the second quarter of 2026, although uncertainty remains over whether EUDR enforcement could be delayed again from the end of 2026. Meanwhile, the outlook for STGT remains unclear, as rubber glove production costs are expected to rise in the second half of 2026 on higher latex prices, and some customers are delaying orders.

Land and Houses Securities issued an analysis recommending the purchase of two stocks, DELTA and STA, giving DELTA a strategic target price of 320 baht, equivalent to a FY69F P/E of 117x, with resistance estimated at 279 baht, support at 258 baht, and a stop loss at 250 baht. It expects Q3/69F profit to recover both quarter on quarter and year on year after the raw material shortage in Q2/69 eased, while a product mix shift toward higher-margin AI and data center and liquid cooling products supports gross profit margin recovering to around 30%, and it expects profit momentum to accelerate further in Q4/69. For STA, it gives a strategic target price of 23.9 baht, equivalent to a FY69F P/E of 11.3x, with resistance estimated at 23.5 baht, support at 21.6 baht, and a stop loss at 20.7 baht. It expects normal profit in Q3/69F to rise year on year even as it softens quarter on quarter from a high base in Q2/69, helped by a rise in SICOM TSR20 rubber prices in Q3/69, and it expects sales volume to increase to around 30,000 tonnes in Q3/69 from 17,214 tonnes in Q2/69 and to more than 60,000 tonnes in Q4/69, supporting both average selling price and gross profit margin, while global rubber supply remains tight due to limited output from Indonesia and Ivory Coast.

September earnings estimates for the SET were revised up a further 0.7% month on month and 15.6% since the start of the year, driven mainly by sectors benefiting from higher energy and commodity prices. Petrochemicals led the way with a 6.2% month-on-month increase, as PTTGC rose 13% and IVL gained 7%. The energy sector rose 1.8%, led by refiners BCP up 26%, TOP up 10% and SPRC up 9%, which lifted the estimate for sector heavyweight PTT by a further 2%. The agricultural sector rose 2.1% on higher rubber prices, with STA's earnings estimate revised up 26%. However, the upward revisions are no longer as broad-based as before: fuel station operators PTG fell 26% and OR dropped 4%, while power plant groups SPP, BGRIM and GPSC slipped 2% and 1% respectively. In real estate, LH fell 1% and ORI dropped 13%, reflecting a growing divergence in earnings estimate trends between sectors and individual companies. Stocks still seeing upward revisions included AWC up 8%, CENTEL up 5%, BJC up 4%, CRC up 3%, AMATA up 8% and GUNKUL up 2%.

Bridgestone's first half of the fiscal year ending December 2026 saw revenue rise 9.7% year on year to 2.3216 trillion yen, operating profit rise 70.4% to 280.2 billion yen, and net profit rise 78.5% to 206.2 billion yen. The sharp growth in operating profit was largely a rebound effect from business and plant restructuring costs of 70.2 billion yen booked in the same period a year earlier shrinking to 11 billion yen in the current period, and adjusted operating profit came to 280.8 billion yen, an increase of just under 20% from 234.6 billion yen a year earlier. Operating cash flow in the first half was 341.8 billion yen, of which 109.2 billion yen was used to buy back shares and 73.3 billion yen for dividend payments to owners of the parent, while a further 268.5 billion yen of treasury shares were cancelled. The full-year forecast remains modest, at 4.5 trillion yen in revenue, up 1.6% from the previous year, and 340 billion yen in net profit, up 3.9%.

Sri Trang Agro-Industry Public Company Limited, or STA, is benefiting from rising natural rubber prices after heavy rain in growing areas tightened supply, pushing rubber prices on both the Tokyo and Singapore futures markets to high levels. An investor relations officer at STA told Than Hoon that if the EUDR regulation is not postponed from taking effect at the end of this year, the company is ready to immediately ramp up EUDR rubber production. The company expects sales of 30,000 to 40,000 tonnes in the third quarter of 2026, with the fourth quarter of 2026 doubling again to return to its historical average of about 60,000 tonnes per quarter, after sales of this type of rubber fell to about 17,000 tonnes in the second quarter of 2026, down from roughly 233,000 tonnes for all of 2025. Analysts at Bualuang Securities Public Company Limited estimate that third-quarter 2026 profit could soften compared with the second quarter of 2026 due to lower sales volume and gross profit from a high base, but they raised their SICOM TSR20 range for the second half of 2026 to 215 to 235 cents per kilogram from 190 to 220 cents per kilogram. Meanwhile, Finansia Syrus Securities Public Company Limited noted that the SICOM rubber price surged past 240 cents per kilogram, hitting its highest level in nearly 10 years, and recommended trading for profit with a target price of 23 baht.

Sri Trang Agro-Industry Public Company Limited, or STA, received an honorary declaration at the closing event of Phase 3 of the Industrial Sector Greenhouse Gas Emission Target Setting Promotion Project, aimed at achieving Net Zero through the Science Based Target approach. The event was organised by the Thailand Greenhouse Gas Management Organization, or TGO, together with the Centre of Excellence in Ecological-Economic Energy, Faculty of Engineering, Thammasat University. Dr. Saranthinee Mongkolrat, Sustainability Division Manager of STA, represented the organisation in receiving the honorary declaration. The event was held at the Thailand Institute of Justice recently. STA is one of 16 industrial organisations that jointly planned and set a Net Zero Pathway in line with TGO's net-zero greenhouse gas emission certification guidelines, targeting a 23% reduction in Scope 1 and 2 greenhouse gas emissions by 2030 and aiming for Net Zero in 2050. This will be achieved through improving energy efficiency, increasing the share of renewable energy, and developing greenhouse gas reduction plans at both the factory and group levels, alongside applying digital technology and AI to carbon data analysis, in order to drive a sustainable, low-carbon natural rubber supply chain at the global level.

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.

Zhongce Rubber announced in a voluntary disclosure after market close on September 10 that its 245/55R19PR ARISUN 1 Star 107V tire product has been selected as the original equipment tire for Xiaomi Auto's Pengcheng N70 model, which was recently launched. As of the announcement date, the company's cumulative shipment value for this model was approximately 3.8 million yuan, accounting for 0.0085 percent of its 2025 annual sales revenue. Zhongce Rubber stated that this supply arrangement reflects the customer's recognition of the company's research and development capabilities, product quality, and response systems, but the subsequent manufacturing and sales volume of this model remains uncertain, and actual supply volume is subject to uncertainty. The company expects that this single supply project will not have a material impact on its operating results for this year or future years. Zhongce Rubber is a leading player in China's tire industry. In the first half of 2026, it achieved operating revenue of 23.474 billion yuan, up 7.41 percent year on year. The company previously broke through in the mid-to-high-end mainstream vehicle segment for domestic tires through cooperation with HarmonyOS Intelligent Mobility and by supplying tires for the Aito M6 model.

Sailun Tire released its 2026 interim report. Total operating revenue was 20.027 billion yuan, net profit attributable to the parent company was 2.16 billion yuan, and net cash inflow from operating activities was 1.033 billion yuan. The latest asset-liability ratio was 52.46 percent, up 1.22 percentage points from the previous quarter and up 2.03 percentage points from the same period last year. Gross margin was 26.99 percent, return on equity was 9.53 percent, and diluted earnings per share was 0.66 yuan. Total asset turnover was flat year on year. Inventory turnover was 1.91 times, down 0.05 times year on year. The number of shareholders was 73,400, and the top ten shareholders held 35.20 percent of total share capital.

Sailun Tire released its 2026 interim report. First-half net profit attributable to the parent was 2.16 billion yuan, up 18% year on year. Operating revenue was 20.03 billion yuan, up 13.9% year on year. Net profit attributable to the parent excluding non-recurring items was 2.06 billion yuan, up 12.7% year on year. Net operating cash flow was 1.033 billion yuan, up 16.9% year on year. In the second quarter, operating revenue was 10.57 billion yuan, up 15.2% year on year, and net profit attributable to the parent was 1.1 billion yuan, up 39.3% year on year. As of the end of the second quarter, total assets were 51.359 billion yuan, up 9.8% from the end of the previous year, and net assets attributable to the parent were 22.662 billion yuan, up 4.9% from the end of the previous year. The company said there were no major changes in its business operations and it continued to focus on its core tire business.

Sailun Tire announced on August 30 that it plans to distribute a cash dividend of 0.15 yuan per share, tax included, to all shareholders. The total payout is expected to be 493 million yuan, accounting for 22.84% of the semi-annual net profit attributable to the parent company.

Sailun Tire disclosed its semi-annual report on August 30. In the first half of 2026, it achieved operating revenue of 20.027 billion yuan, up 13.88% year on year. Net profit attributable to shareholders of the listed company was 2.16 billion yuan, up 17.97% year on year. Basic earnings per share were 0.66 yuan. The company plans to distribute a cash dividend of 1.5 yuan, tax included, for every 10 shares. During the reporting period, as global capacity release and market expansion continued to deepen, the company's tire production and sales volumes, along with domestic and overseas operating revenue, rose in tandem, all reaching their best levels for the same period in history.

Guizhou Tyre released its 2026 interim report. Total operating revenue was 5.739 billion yuan, an increase of 546 million yuan from the same period last year, up 10.51% year on year, marking five consecutive years of growth. Net profit attributable to the parent company was 358 million yuan, an increase of 110 million yuan from the same period last year, up 44.23% year on year. Net cash inflow from operating activities was 628 million yuan, up 621.59% year on year, marking two consecutive years of growth. The company's latest asset-liability ratio was 51.38%, gross margin was 19.42%, return on equity was 3.89%, and diluted earnings per share was 0.23 yuan. The number of shareholders was 54,700, and the top ten shareholders held 28.25% of the total share capital.

Aeolus Tyre has released its 2026 interim report. Total operating revenue was 3.8 billion yuan, up 8.02% year on year, and net profit attributable to the parent company was 106 million yuan, up 3.30% year on year. Net cash flow from operating activities was negative 52.58 million yuan, an improvement of 73.01 million yuan compared with the same period last year. The company's asset-liability ratio was 48.97%, down 4.91 percentage points year on year. Gross margin was 14.28%, return on equity was 2.29%, and diluted earnings per share were 0.12 yuan. Total asset turnover was 0.45 times, and inventory turnover was 2.49 times, up 10.83% year on year. The number of shareholders was 21,500, and the top ten shareholders held 61.42% of total share capital.

Aeolus Tyre published its 2026 interim report on August 28. First-half operating revenue was 3.8 billion yuan, up 8.0% year on year; attributable net profit was 106 million yuan, up 3.3% year on year; attributable net profit excluding non-recurring items was 105 million yuan, up 14.5% year on year; net operating cash flow was negative 52.58 million yuan, an improvement of 58.1% year on year; earnings per share were 0.1195 yuan. In the second quarter, operating revenue was 2.01 billion yuan, up 6.5% year on year, while attributable net profit was 55.44 million yuan, down 25.8% year on year. As of the end of the second quarter, total assets were 9.105 billion yuan, up 14.3% from the end of the previous year, and attributable net assets were 4.646 billion yuan, up 32.0% from the end of the previous year. The company said it actively advanced product mix upgrades and market optimization in the first half. Domestic market operating revenue grew 5.44%, overseas market operating revenue rose 12.58% year on year, and it achieved a landmark breakthrough in giant engineering radial tires. Management also noted that the company completed a private placement during the reporting period. Although earnings per share and the weighted average return on equity declined, overall strategic positioning and technological innovation made significant progress, which is expected to lay a foundation for performance growth in the second half of the year.

General Technology released its 2026 interim report. Total operating revenue was 4.448 billion yuan, up 11.20% year on year. Net profit attributable to the parent company was 138 million yuan, up 114.84% year on year. Net cash inflow from operating activities was 841 million yuan, up 3,964.30% year on year. The company's asset-liability ratio was 57.71%, gross margin was 15.29%, ROE was 2.30%, and diluted earnings per share was 0.09 yuan, up 125.00% year on year. Total asset turnover was 0.30 times, and inventory turnover was 1.74 times. The number of shareholders was 52,400, and the top ten shareholders held 53.20% of the total share capital.

S Giti Tire released its 2026 interim report. First-half net profit attributable to the parent company was 70.63 million yuan, up 24.4% year on year. Operating revenue was 2.23 billion yuan, down 2.7% year on year. Net profit attributable to the parent after deducting non-recurring items was 68.75 million yuan, up 22.0% year on year. Net operating cash flow was 353 million yuan, up 52.4% year on year. Earnings per share were 0.2077 yuan. In the second quarter, operating revenue was 1.12 billion yuan, down 3.4% year on year, and net profit attributable to the parent was 23.2 million yuan, down 29.9% year on year. As of the end of the second quarter, total assets were 4.508 billion yuan, up 0.4% from the end of the previous year, and net assets attributable to the parent were 1.08 billion yuan, down 2.5% from the end of the previous year. The company mainly produces and sells automotive tires. During the reporting period, export sales and gross margin came under pressure due to rising international crude oil prices and intensifying market competition, but growth in the new energy vehicle market brought incremental demand to the tire replacement market.

Krungsri Securities has upgraded its recommendation for STA to "Buy" and raised its 2027 target price to 24.00 baht from 22.00 baht, reflecting upward revisions to normal profit estimates for 2026-2027 by 16% and 12%, to 2,940 million baht and 3,233 million baht, respectively. This is supported by higher-than-expected rubber prices and good cost control. Although the company has lowered its 2026 sales volume target to 1.45-1.50 million tons and expects a capacity utilization rate of 55%, the research house sees downside risks from first-half sales volume of only 0.70 million tons, representing 48% of the target. Meanwhile, the trend for Q3 2026 is expected to slow due to weak demand. However, the enforcement of the EUDR regulation in 2027 is seen as an upside not yet included in estimates, with the company aiming to sell about 30,000 tons of EUDR rubber per month, accounting for roughly 25% of the total projected sales volume.

General Science Technology released its 2026 interim report, showing first-half net profit attributable to the parent rose 114.8% year on year to 138 million yuan, while operating revenue reached 4.45 billion yuan, up 11.2% from a year earlier. In the second quarter, operating revenue was 2.31 billion yuan, up 23.0% year on year, and net profit attributable to the parent swung from a loss of 38.38 million yuan in the same period last year to a profit of 11.58 million yuan. As of the end of the second quarter, total assets stood at 14.347 billion yuan, down 5.1% from the end of the previous year, and net assets attributable to the parent were 6.011 billion yuan, down 3.5% from the end of the previous year. The company said that during the reporting period it accelerated its international expansion, steadily released high-quality production capacity at overseas manufacturing bases, achieved substantial growth in tire production and sales, improved gross margin, and saw net operating cash flow rise significantly to 841 million yuan, up 3964.3% year on year.

General Science Technology released its 2026 half-year report. In the first half, it achieved operating revenue of 4.448 billion yuan, up 11.2% year on year. Net profit attributable to shareholders of the listed company was 138 million yuan, up 114.84% year on year. Non-GAAP net profit was 137 million yuan, up 176.79% year on year. Facing a complex and challenging industry environment, the company advanced its international expansion, steadily released capacity at the second-phase project of its overseas base, and maintained strong production and sales. At the same time, it optimized the operating model of its domestic base, focused on demand for new energy vehicles, launched the Super Eucommia Tire series, released the Dual-Effect Wujin technology achievement, deepened digital and intelligent transformation, and carried out industry-academia-research cooperation with Tsinghua University and Lenovo Group.

Trinity Securities has raised its target price for Sri Trang Agro-Industry (STA) shares to 24.60 baht from 23.00 baht, while maintaining a speculative buy recommendation. The firm expects the company to return to profitability in 2026, driven by higher natural rubber prices. The research department forecasts 2026 profit to increase to 2.6 billion baht from 1.9 billion baht, after raising gross margin assumptions on higher average selling prices. Sales volume for 2026 is projected at 1.45-1.50 million tonnes, down from 1.6 million tonnes, due to reduced supply from heavy rainfall, particularly in Thailand where output may decline by 5% and Indonesia by up to 25%. Meanwhile, natural rubber prices remain 20% cheaper than synthetic rubber, attracting glove and tire manufacturers to use more natural rubber, despite overall tire demand growing only 1-3%. The company also announced an interim dividend of 0.50 baht per share, with the XD date on August 27, 2026, representing a dividend yield of 2.8%.