NER Expects ฿13.5bn of Revenue Growth From a Higher Chinese Customer Base

North East Rubber Public Company Limited (NER) has revealed that there is a tire manufacturer from China, which is moving its production base to Thailand due to avoiding the trade war between U.S. and China, contacting NER. Recently, NER has visited a group of Zhongce Rubber in China where there is a tire factory in Rayong, Thailand and expected to receive the order which is a long term contract soon.  

In addition to visiting a group of Zhongce Rubber, NER also has an opportunity to meet two groups of tire manufacturer, which are Sān Jiāo (Triangle tire manufacturer) and Silun (tire manufacturer in Shandong of China and Vietnam.) After meeting, both of Sān Jiāo and Silun groups are interested in NER products and they will go to the further step of negotiation.   

Meanwhile, NER has also proceeded the product research and development projects with educational institutions such as Prince of Songkla University and Chiang Mai University to prepare for the development of future products.
The research and development of NER estimate the new product will be done in the period of the year 2020-2022. In this regard, there is a high opportunity that NER will develop rubber compound to further the motorcycle tire with a new technology due to the market of the motorcycle tire is steadily growth in a positive direction.

Mr. Chuwit Jungtanasomboon, President of the Executive Board of NER, has informed about the construction progress of Standard Thai Rubber 20 (STR20) or Block Rubber in Thailand which will start at the end of June until the end of the year 2019. Therefore, in 2020, the production capacity of processed rubber will be increased to 465,600 ton/year which currently, the production capacity is 230,000 ton/year. This is not only driving the revenue growth but in the term of Economy scale, it also provides a good effect to a net profit of the company.

Moreover, the biogas power plant with an installed capacity of 420 MW of NER is on the process of phase 1 construction nearly to commerce the operation and expects to start phase 2 at the beginning of 2020. This will help to reduce the cost of electricity in the factory each year approximately 60 million.

As of the turnover of NER in 2019, NER is confident that the revenue will meet the target at THB13.5 billion, increased from THB10 billion last year, due to a result of an increase in a production capacity of 260,000 ton since 2Q/19 from 210,000 ton YoY. Additionally, a net profit margin of NER expects to not lower than the previous year which is 4.58% due to a higher rubber’s price while having the potential to increase even higher.

Mr. Chuwit stated the effect of synthetic rubber on the natural rubber industry which the natural rubber has special properties itself and cannot be 100% substituted by the synthetic rubber. Therefore, the production has still needed a mixture of natural rubber, however, Mr. Chuwit believes there is no change or development in the near term.