KTBST Expects a 210% Earnings Growth from NER in 2Q, Upgrading Target Price to Bt9.0

North East Rubber Public Company Limited (NER) closed 7% higher in yesterday’s trading session as the analyst expected the company to report an outstanding earnings in 2Q21.

 

The share price of NER rose ฿0.50/share or 6.99% to close the trading session on July 13, 2021, at ฿7.65/share with a trading value of 1,211 million baht.

 

KTBST Securities (KTBST) revised up NER’s target price from ฿8.50/share to ฿9.00/share, expecting 2Q21 earnings at 492 million baht, representing an increase by 210% YoY and 19% QoQ.

The surge of net profit is mainly due to higher sales volume of 116,000 tonnes, representing an increase by 84% YoY and 29% QoQ. Meanwhile, gross margin is estimated at 12%, a drop from 12.8% QoQ due to the difference in average rubber price between the quarters.

KTBST increased the 2021-22 earnings forecast by 5% and 2%, respectively, which would result in an increase of earnings by 117% in 2021 and 6% in 2022, following the potential increase in sales volume.

 

In addition, NER’s share price outperformed SET Index by 8% in the past month and 35% in the past three months due to its outstanding performance and limited impact from Covid-19 outbreak, compared to other businesses. KTBST expected earnings to consequently reach a record high in the next 2-3 years, pointing out that there will be an upside in 2022 from a new business.