Kasikorn Securities Maintains Buy on STA with 26 Baht Target, Citing EUDR Tailwinds for Rising Rubber Prices

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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.

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⛏Natural Rubber (RSS)
RUBBER
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Shrinking Thai and Indonesian output leaves regional natural rubber supply significantly lower, with ASPs forecast to rise to USD 2.3-2.5/kg.

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