Sri Trang expanding capacity

Sri Trang expanding capacity

Rubber producer to invest 1-2 billion baht

A man drives a forklift to unload rubber sheet at a market in Surat Thani province. Rubber producer Sri Trang is increasing production capacity to take advantage of rising demand. PATIPAT JANTHONG
A man drives a forklift to unload rubber sheet at a market in Surat Thani province. Rubber producer Sri Trang is increasing production capacity to take advantage of rising demand. PATIPAT JANTHONG

SET-listed rubber producer Sri Trang Agro-Industry Plc (STA) will invest 1-2 billion baht this year to increase its midstream rubber capacity by 500,000 tonnes to 2.9 million tonnes annually.

According to executive director Veerasith Sinchareonkul, Sri Trang will increase its production capacity in Thailand and Indonesia by the fourth quarter.

In Thailand, Sri Trang will build a new plant in the Northeast with an annual capacity of 86,400 tonnes. In Indonesia, its production capacity will expand by 60,000 tonnes a year.

The remaining natural rubber capacity will increase in other Sri Trang plants, mainly in Thailand.

"Our expansion is based on the rising global rubber demand, which is projected to grow 3-4% annually during 2017-19 from 12.5 million tonnes last year," Mr Veerasith said.

Founded in April 1987, Songkhla-based Sri Trang is a dual-listed company, on the Stock Exchange of Thailand and in Singapore.

The company is the largest rubber producer in Thailand, covering upstream, midstream and downstream segments.

Sri Trang's upstream segment includes 50,000 rai of rubber plantations.

The midstream unit produces technically specified rubber, ribbed smoked sheets and concentrated latex with an annual capacity of 2.4 million tonnes as of last year, contributing 90% of the company's revenue.

The downstream segment produces examination gloves and high-pressure hydraulic hoses, with an annual capacity of 14 billion pieces, contributing 10% of revenue.

Sri Trang runs 35 plants in Thailand, Indonesia and Myanmar.

Sri Trang posted 77.9 billion baht in revenue last year, up by 22.8%. The company had a net loss of 758 million baht last year, compared with a net profit of 1.12 billion baht a year before.

"I expect the company to bounce back to profit this year, with stable revenue," he said, adding Sri Trang had rubber sales volumes of 1.49 million tonnes last year, up by 33.4% against 3% global rubber demand growth.

"For 2017, we have a volume target of 1.3-1.7 million tonnes while global demand is projected at 13 million tonnes."

China is the largest rubber consumer, contributing 49% of Sri Trang's revenue last year, with Thailand representing 16%.

Sri Trang controls 12% of the global rubber market.

Mr Veerasith yesterday announced Sri Trang's short-term milestone is to gain a 20% market share by 2019 on the prediction that the global rubber demand will increase to 13.9 million tonnes that year.

STA shares closed yesterday on the SET at 16.40 baht, down 80 satang, in trade worth 311 million baht.

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