On Thursday, the share price of Smothong Group Public Company Limited (SET: SMO) at the morning session closed at THB 4.62, a THB 0.48 or 11.59% increase with a total trading value of THB 113.48 million.
Kittipong Puangmala, CEO of SMO, revealed during a recent Opportunity Day event that Middle East tensions in early 2026 have spurred global demand for palm oil, not just for edible purposes but also as a critical input for biodiesel.
This geopolitical shift, combined with rising energy prices, is expected to prompt the Thai government to boost biodiesel blend requirements from B3/B5 up to B7 or B10, supporting alternative energy and reducing reliance on imported diesel. If the biodiesel mix increases as projected, demand for palm oil could see a significant jump from the current 800,000 tons used for biodiesel.
SMO’s net profit for the previous year surged to nearly THB 700 million, almost tripling the THB 260 million posted in 2024. This growth was primarily driven by effective cost management during peak quarters, increased production capacity from an inorganic plant acquisition, and a greater export proportion—now accounting for 50-60% of total revenue.
Funds raised from the IPO were used to retire debt, for working capital, and to prepare for the construction of a new plant in Nakhon Si Thammarat. With land purchases and permits in progress, the company expects construction to start this year and commercial operations (COD) to begin by late 2027 or early 2028. SMO is also set to double its production capacity in Phanom District in April 2026, boosting annual output by 75 million tons—expected to drive continued performance gains.
SMO’s business model centers on acting as an intermediary, purchasing crops from farmers, processing them into crude palm oil (CPO) for both local refiners and export. The company maintains a risk management strategy of “buy and sell” (selling the products at a similar price to the material cost) to preserve margins, and managing risks without speculative inventory or FX practices. The company hedges currency within two to three days of each transaction to minimize currency fluctuation exposure.
Somsak Sirichainarumitr, CEO of Asset Pro Management, affirmed the positive outlook for the palm oil industry in 2026, predicting that output could rise to 22-23 million tons amid favorable weather and expanded cultivation, as demand for higher biodiesel blends continues to grow.
Beyond its main business, SMO also monetizes by-products by supplying palm kernels for biomass power and producing biogas from wastewater, sold to the Provincial Electricity Authority—adding stability and diversified revenue streams. The company is committed to further R&D for future expansion.
With a dividend policy of at least 50% of net profit and a current P/E ratio of about 6x (well below the industry’s 20x average), SMO stands out as a value stock benefiting from continued capacity expansion and favorable industry dynamics through 2028.
