ASL Securities wrote that Sri Trang Agro-Industry Public Company Limited (SET: STA) reported total revenue from sales and services of THB 26,841.8 million in the first quarter of 2026, an increase of 0.6% quarter-on-quarter but a decrease of 21.9% year-on-year.
The quarter-on-quarter recovery in revenue was driven primarily by a 5.5% rise in the average selling price of natural rubber, despite a decline in sales volume. The company’s rubber glove business also showed initial signs of recovery, with revenue increasing by 4.7% from the previous quarter.
A key highlight for this period was the improvement in gross profit margin, which rose to 9.6%, up from 6.4% in the previous quarter. Specifically, the gross profit margin for the natural rubber business increased to 8.7%, while the glove segment recovered to 10.4%. This improvement led to an EBITDA margin increase to 8.8%.
Selling, general, and administrative (SG&A) expenses as a percentage of revenue decreased significantly to 6.4% from 9.4%, supported by the absence of one-off flood-related expenses present in the previous quarter.
As a result, STA returned to profitability with a net profit of THB 645.4 million, compared to a net loss of THB 325.7 million in the fourth quarter of 2025. The financial results for the first quarter were also bolstered by approximately THB 343 million in insurance compensation related to flood damages. Financially, the company’s liquidity remains robust, with a current ratio of 1.93x and a net debt-to-equity ratio of only 0.63x.
Looking ahead, management expects natural rubber prices to be increasingly driven by underlying fundamentals for the remainder of the year. However, global economic risks, geopolitical volatility, and climate-related factors such as the potential impacts of El Niño toward the end of the year will need to be closely monitored.
The International Rubber Study Group (IRSG) continues to forecast a global natural rubber market deficit—where demand outpaces supply—for the fifth consecutive year. This is largely attributed to decreased incentive for farmers to cultivate rubber amid years of low prices, leading many to turn to alternative cash crops.
Additionally, geopolitical conflicts in the Middle East have pushed up petrochemical feedstock costs, causing synthetic rubber prices to surge and encouraging manufacturers to substitute with natural rubber. The growing electric vehicle (EV) sector, which demands high-load bearing tires, is also expected to support rubber prices going forward.
STA remains committed to expanding its natural rubber production capacity to 3.72 million tons per year, alongside aligning with its ESG goals and the ‘Zero Waste to Landfill by 2030’ initiative.
Sentiment has been further supported by the significant rally in SICOM natural rubber prices on the Singapore market. In mid-May 2026, rubber prices reached a new nine-year high of 232 US cents per kilogram, a 15.3% quarter-to-date and 26.3% year-on-year increase. These elevated price levels are expected to persist throughout the current quarter due to ongoing structural supply shortages in the agricultural sector.
For the remainder of 2026 (2Q-4Q26), revenue growth is expected to continue alongside sustained high margins, which should help offset relatively stable sales volumes. Key factors to monitor moving forward include rainfall levels in Southern Thailand and additional economic stimulus measures aimed at the automotive sector in China.
Notably, ASL Securities sets a strategic target price for STA at THB 20.50 per share.
