MBKET Affirms NER’s Strong Fundamentals, Expecting a Record High for 3Q21 Net Profit

The share price of North East Rubber Public Company Limited (NER) closed at ฿6.85/share, decreased ฿0.25/share or 3.52% with a trading value of 480 million baht on November 4, 2021, its fifth-straight day of plummet.


Maybank Kim Eng Securities (Thailand) (MBKET) wrote in its Company Update, stating the decline was due to overly concerns of external factors; 1) China economic slowdown as manufacturing PMI was down seven months straight and 2) dispute between the State Railway of Thailand and the Department of Land over a plot of land in Buriram Province.

According to the update from NER, MBKET stated that the current order from Chinese clients is at a normal level and the future contract as well. Meanwhile, new customer groups from India also signed the agreement for production in 2022, and more are cueing as the company is currently running at 100% production capacity and in a process of expanding for 10% (50,000 tonnes) next year. Moreover, NER asserted that the dispute between the State Railway of Thailand and the Department of Land was not related to the company.

MBKET looked up rubber prices and saw that the price was up 9% from September, which was a positive momentum to the company for pricing.

In addition, MBKET saw a positive outlook on NER and expected performance to be in line with its estimate, seeing 3Q21 earnings to increase 1% QoQ and 190% YoY to 441 million baht, a record high for NER. MBKET recommended “BUY” with a target price at ฿9.00/share.