NER Poised for Sequential Recovery in Q2 as Broker Foresees Heightened Rubber Prices

Pi Securities expects North East Rubber Public Company Limited (SET: NER ) to benefit from the continued increase in global rubber prices. The price of ribbed smoked sheet rubber grade 3 in the SICOM market has continuously risen since the beginning of the year, moving from $2.15/kg in December 2025 to $2.70/kg in July 2026. This upward movement reflects higher crude oil prices, concerns about rubber production as more farmers switch to other crops, and the anticipated impact of Super El Niño that many expect will affect rubber output from the second half of 2026 onwards. Although a drop in oil prices in late June temporarily drove rubber prices lower, the short-term outlook suggests rubber prices are likely to remain elevated. The improvement in rubber prices should lift NER’s average selling price from the second quarter of 2026 onward, helping to offset a forecast decline in sales volume due to Super El Niño effects. Management expects total sales volume at 450,000 tons for the year, a 5% decline year-on-year. Global demand for rubber in 2026 is projected to remain strong, particularly supported by the new energy vehicle (NEV) sector as higher oil prices drive demand. In China, NEV sales rose 10% year-on-year in the first half of 2026, in contrast to a 4% year-on-year decline in overall auto production during the same period. For Q2, Pi Securities forecasts NER will post a net profit of THB 361 million, down 35% year-on-year but up 42% quarter-on-quarter. The expected drop from the previous year reflects a lower sales volume of 109,000 tons (-3% YoY) and a 4% decline in average selling price year-on-year. However, compared to the first quarter, the strong 42% profit growth is mainly attributed to an 11% increase in the average selling price, projected at THB 65 per kilogram. Gross profit margin for the quarter is estimated at 10%, slightly below 10.5% in 2Q25 but above 8.6% in the prior quarter. Selling and administrative expenses are projected at THB 175 million (+14% YoY, -4% QoQ), with tax expenses expected at THB 31 million (+39% YoY, +817% QoQ) due to accounting adjustments. Should NER achieve the brokerage’s projected net profit for 2Q26, first-half 2026 earnings are estimated at THB 615 million, accounting for 40% of the full-year forecast of THB 1,555 million. Despite challenges in the first half, Pi Securities maintains its full-year profit estimate, anticipating further benefit from high rubber prices in the second half of the year. Following these, the brokerage continues to recommend ‘Buy,’ with a fair value of THB 5.05 per share (6.2x 2026 estimated PER), supported by recovery in Q2 and a projected full-year dividend yield of 7–8%.