Stars Microelectronics (Thailand) PCL

Electronics stocks rallied sharply yesterday after second-quarter 2026 earnings came in better than expected, led by HANA Microelectronics, which jumped 22.01% to 48.50 baht on turnover of 5.46 billion baht. CCET rose 5.14% to close at 9.20 baht, while Delta Electronics Thailand gained 2.59% to close at 277 baht. Analysts at Bualuang Securities said HANA's core profit beat market expectations by 20-40% at around 270-280 million baht, while KCE Electronics beat by 15-20% and CCET beat by 10%. Yuanta Securities sees the sector's earnings still in an upcycle, favouring Stars Microelectronics Thailand most as a laggard with a target price of 7.60 baht, and CCET with a target of 10 baht. It also set target prices of 48.50 baht per share for both HANA and KCE.

Yuanta Securities stated that Stars Microelectronics Thailand, or SMT, is seeing a continued recovery in its operating performance in the second half of 2026, with the Optics business as the main driver due to rising demand from AI and data center investments. Normalized profit in the second quarter of 2026 was 34 million baht, reflecting a recovery across all business segments, especially Optics, which has long-term orders from several global customers worth hundreds of millions of baht. The company plans to expand production capacity in the fourth quarter of 2026 to accommodate increasing orders and targets revenue growth of more than 20 percent per year in the medium term. The research team maintains a preliminary fair value range at the end of 2027 of 7.60 to 8.20 baht per share, based on a price-to-earnings ratio of 25 to 27 times, and forecasts normalized profit of 149 million baht in 2026, rising to 256 million baht in 2027.

Stars Microelectronics Thailand Public Company Limited, or SMT, expects profit in the second half of 2026 to roughly double from the first half, with full-year revenue potentially reaching around 2.6 billion baht, up about 29 percent from the previous year, driven by still-strong orders across all business segments, especially Optics and IC/OSAT. Management said demand continues to grow in every segment, and the company is increasingly benefiting from the expansion of the AI industry, with Photonics currently the standout business. The medium- to long-term target for 2027 to 2029 is average revenue growth of more than 10 percent CAGR, while management has an internal goal of 20 to 30 percent growth. The main risk factor remains raw material shortages, particularly wafers, which affect the entire industry. The company has therefore increased raw material reserves, which may cause cash at the end of the second quarter of 2026 to drop to around 46 million baht. However, management said that as of July, cash had returned to about 150 million baht after receiving customer payments, and they remain confident that liquidity is at a good level. Regarding higher raw material costs, the company said it can fully pass the cost burden on to customers, as customers understand the industry-wide raw material shortage situation. Meanwhile, consignment sales in the OSAT and Optics segments may be partially affected by wafer shortages where customers supply the wafers, causing some revenue to be deferred to the second half of 2026. The PCBA business remains turnkey, with the company sourcing all raw materials itself. The company expects gross margins to gradually recover from higher capacity utilization and a weaker baht, targeting a return to around 20 percent, a level achieved in the past. On investment plans, SMT disclosed a total budget of about 550 to 620 million baht for 2026 to 2028, split into roughly 100 to 120 million baht for upgrading existing machinery and about 450 to 500 million baht for new capacity expansion, with potential support from the Board of Investment. In the fourth quarter of 2026, the company will install additional machinery for the Optics business to support rising orders. The company also unveiled its technological roadmap: in 2026, it will focus on advanced packaging such as high-speed chip assembly, expanding Photonics wafer processing capacity, and wafer-level testing systems, before moving to 2.5D hybrid photonics in 2027 and advanced integration technologies including co-packaged optics and wafer-level integration from 2028 onward, to support long-term growth in AI and data centers. In summary, management still sees second-half 2026 profit trends recovering from the first half, with potential for further growth in the third and fourth quarters from strong orders and AI-related business expansion, despite risks from raw material shortages, especially wafers. Meanwhile, SMT shares have been placed under cash balance measures by the stock exchange from August 10 to 28, 2026.

The Trade Policy and Strategy Office of the Ministry of Commerce reported that Thai exports in June 2026 reached 34.66 billion dollars, up 20.8 percent from the same month last year, extending growth for a 24th consecutive month and exceeding market expectations of 13.7 to 15.2 percent. Meanwhile, imports totaled 41.19 billion dollars, rising 50.3 percent, resulting in a June trade deficit of 6.53 billion dollars. For the first half of the year, exports amounted to 196.74 billion dollars, up 17.6 percent, and imports reached 228.49 billion dollars, up 38.0 percent, leading to a cumulative trade deficit of 31.74 billion dollars. Analysts at Yuanta Securities noted that the stronger-than-expected exports and the deficit are factors weighing on the currency, and highlighted five stock groups poised to benefit: rubber, which returned to growth of 12.5 percent after 14 months, supporting STA, NER, and TEGH; processed chicken, supporting GFPT, TFG, and CPF; pet food, which continued to grow 22.3 percent for a tenth straight month, supporting ITC and AAI; canned seafood, which resumed expansion at 17.5 percent, supporting TU; and electronic components, which accelerated growth, supporting SMT, CCET, KCE, and HANA.

Electronics stocks moved higher across the board this morning, supported by a weaker baht and the technology and AI investment trend. At 10:41 a.m., DELTA was at 306.00 baht, up 0.66 percent; KCE at 42.00 baht, up 0.60 percent; HANA at 39.25 baht, up 0.64 percent; SMT at 4.80 baht, up 1.69 percent; and CCET at 9.10 baht, up 0.55 percent. Yuanta Securities noted that the persistently weaker baht is positive for exporters, and the electronic components industry is showing signs of recovery. HANA is supported by Texas Instruments' better-than-expected earnings, while DELTA benefits from Google increasing its AI investment budget. Meanwhile, KCE's target price has been raised to 48.50 baht on expectations that earnings have passed their trough, and SMT remains a stock of interest due to its earnings turnaround potential.

Dao Securities Thailand expects the SET index to move sideways today, with resistance at 1,658 to 1,663 points and support at 1,642 to 1,648 points. Although foreign fund flows may slow after 13 consecutive trading days of net buying, the positive mood from a global tech stock recovery and rising crude oil prices will support the energy sector and cushion the index. Second-quarter 2026 earnings for the banking sector were strong, with combined profit reaching 55 billion baht, led by Kiatnakin Phatra Bank which posted standout profit growth, while Kasikornbank and TMBThanachart Bank delivered stable results and attractive dividend policies. The investment strategy focuses on selective buying in bank stocks, upstream energy, and construction and industrial estate plays, with PLANB and SMT highlighted as top technical picks.

Asia Plus Securities research reports that four major Chinese technology and automotive companies are preparing to expand investments in Thailand worth a combined 70 billion baht this year, focusing on two future industries: AI and data center technology, where Innolight Technology and Eoptolink Technology will expand production bases for optical transceivers to support AI and cloud data center growth, and the electric vehicle industry, where Xiaomi Corporation is considering setting up an EV production base and research and development center in Thailand, while Changan Automobile is moving ahead with expanding production capacity from 100,000 to 200,000 units per year by 2030, along with establishing a regional headquarters and an EV R&D center. Stocks expected to benefit include industrial estate groups such as AMATA, WHA, ROJNA, and PIN; automotive groups such as AH, SAT, and STANLY; parts groups such as HANA, DELTA, KCE, and SMT; and energy groups such as GULF.

Four major technology and automotive companies from China are preparing to expand their investments in Thailand, totaling 70 billion baht within this year, focusing on the electric vehicle industry and AI and data center technology, according to a report by Asia Plus Securities. In the EV sector, Xiaomi Corporation is considering expanding its EV production base and establishing a research and development center in Thailand, while Changan Automobile is moving forward with expanding production capacity from 100,000 to 200,000 units per year by 2030, along with setting up a regional headquarters and an EV R&D center. In the AI and data center group, Innolight Technology is preparing to build a third factory in Saraburi province to expand production of optical modules, and Eoptolink Technology is preparing to expand production capacity at its factories in Chonburi and Rayong. Stocks expected to benefit include industrial estate groups such as Amata, WHA, Rojana, and Pin, automotive groups such as AAPICO Hitech, Somboon Advance Technology, and Stanley Electric, component groups such as Hana Microelectronics, Delta Electronics, KCE Electronics, and Stars Microelectronics, and energy groups such as Gulf Energy Development.