Tipco Asphalt Public Company Limited

Kasikorn Securities said the construction materials group reported combined normalised profit of 2.2 billion baht in the second quarter of 2026, up 11 percent from a year earlier, supported by a higher gross margin despite weak sales. Profit fell 11 percent from the previous quarter due to seasonal demand and more holidays. Combined normalised profit for the first half of 2026 was 4.8 billion baht, up 28 percent from a year earlier, representing 61 percent of the full-year estimate of 7.9 billion baht. Combined revenue in the second quarter of 2026 was 24 billion baht, up 6 percent from a year earlier and 1 percent from the previous quarter. Gross profit margin rose to 28.2 percent, up 0.7 percentage point from a year earlier and 0.3 percentage point from the previous quarter, as higher selling prices fully offset higher oil-linked raw material costs. Such raw materials account for 35 to 45 percent of cost of sales. The selling, general and administrative expense to revenue ratio rose to 17.9 percent, up 0.2 percentage point from a year earlier and 1.8 percentage points from the previous quarter, due to higher logistics costs. As a result, the normalised profit margin rose 0.4 percentage point from a year earlier to 9.4 percent, but fell 1.3 percentage points from the previous quarter. Ceramic tile sales at Dynasty Ceramic and SCG Decor fell 6 percent and 7 percent from a year earlier respectively, because they have a high proportion of revenue from the private sector where demand is weak, while normalised profit fell 4 percent and 5 percent respectively. Tipco Asphalt revenue rose 20 percent from a year earlier on higher asphalt prices following the war between the United States and Iran, lifting normalised profit by 22 percent. TOA Paint sales rose 4 percent on higher market share and inventory stocking, but normalised profit rose only 3 percent because of higher selling, general and administrative expenses and Myanmar-related costs. Eastern Polymer Group delivered the strongest performance, with sales up 9 percent and normalised profit up as much as 43 percent on demand for insulation products in the United States. Kasikorn Securities maintained a neutral view on the sector, focusing on stock selection. It picked Eastern Polymer Group as a top pick with a buy rating and a target price of 6.70 baht, and TOA Paint with a buy rating and a target price of 19.0 baht, because they have stronger demand than other companies. Eastern Polymer Group benefits from strong demand for insulation products in the United States, while TOA Paint's market leadership supports stable paint demand.

Kasikorn Securities raised its target price for TASCO to 18.50 baht from 14.20 baht, while maintaining a buy rating, after the company regained access to Venezuelan crude oil. The broker expects this to support higher refinery utilization and sales volumes, although the benefit is likely to be smaller than before sanctions were imposed. Kasikorn Securities lifted its 2027 and 2028 profit forecasts by 27 percent on higher sales volumes, but kept its 2026 estimate unchanged because the benefit is unlikely to be significant this year. Third-quarter 2026 profit is expected to ease from the peak seen in the first half of 2026, as asphalt spreads remain above normal levels but are narrowing. TASCO offers a dividend yield of 6.3 percent, and further upside could come from favorable terms for Venezuelan crude procurement, which would support a re-rating toward the ten-year average price-to-book ratio of 2.2 times.

TASCO shares closed the morning session at 16.00 baht, up 1.30 baht or 8.84%, driven by two key supportive factors. The company disclosed progress on a spot contract to purchase about 600,000 barrels of crude oil from Venezuela, which yields roughly 70% asphalt compared with only about 50% from other sources, helping lower production costs and supporting a significant recovery in gross margin. Several brokers, including Krungsri Securities and Yuanta Securities, raised their earnings forecasts and new target prices to a range of 18.90 to 20.00 baht after second-quarter 2026 results and the Venezuelan oil issue provided support. They expect second-half performance to enter the high season, helped by accelerated government budget disbursement and road construction work in Thailand and Indonesia, while global asphalt prices remain elevated.

Yuanta Securities Thailand maintains a buy recommendation on Tipco Asphalt Public Company Limited, or TASCO, and has raised its end-2027 target price to 19.40 baht, reflecting higher earnings estimates and gross margin assumptions. The research team sees upside of about 25.2 percent. TASCO, which was previously a major customer of PDVSA, has a chance to resume importing crude oil from Venezuela after reports that PDVSA has begun signing direct crude purchase agreements with refiners and oil producers in the United States and other regions. Most recently, Phillips 66 and Reliance Industries reportedly resumed buying crude from PDVSA in May 2026 after a seven-year pause, while TASCO and Valero Energy are expected to potentially return to direct crude purchases in the coming months, although neither company has confirmed this. Yuanta Securities views that if TASCO can import Venezuelan crude within 2026, it would be a key support for gross margins in 2027, because Venezuelan crude has an asphalt yield of around 70 percent, higher than the average of only about 50 percent from other sources, which would significantly improve cost efficiency and production rates. The research team estimates that every 50 basis point increase in gross margin would add about 112 million baht to profit. It has therefore raised its 2027 gross margin assumption to 12.1 percent and increased its 2027 asphalt sales estimate by 4.8 percent to 28 billion baht, in line with the public infrastructure investment trend. As a result, the 2027 normalized profit estimate has been raised by 18.9 percent to 1.9 billion baht, representing growth of 23.8 percent from the previous year. In addition, Yuanta Securities expects TASCO to pay a 2026 dividend of 1.00 baht per share, implying a dividend yield of about 6.5 percent, which remains high compared with peers. Although the research team expects second-quarter 2026 sales and earnings may not yet stand out, it forecasts that third-quarter 2026 will return to growth both quarter-on-quarter and year-on-year, driven by accelerated government budget disbursement and the long-term support from the potential resumption of Venezuelan crude imports. It therefore maintains a positive view on TASCO's earnings outlook.

Tipco Asphalt Public Company Limited, or TASCO, reported second-quarter 2026 results with total revenue of 7.76 billion baht and net profit of 420 million baht, an improvement from the same period last year due to higher asphalt selling prices caused by asphalt shortages from Middle East conflicts, and higher construction business revenue from a larger backlog. However, compared with the first quarter of the same year, profit fell by 39 million baht because asphalt sales declined, as most road maintenance projects in Thailand were completed early in the quarter and foreign contractors slowed purchases due to high prices. For the first six months of 2026, the company posted total revenue of 15.244 billion baht and net profit of 879 million baht, up from the previous year, driven by higher selling prices for asphalt and petroleum products, a reversal of inventory allowances, and growth in construction business revenue, partially offset by increased losses from petroleum product price hedging contracts. In addition, after the United States allowed purchases of crude oil from Venezuela in the first quarter, the company bought Venezuelan crude and imported it for refining in Malaysia last week, and plans to continue sourcing Venezuelan crude with its partners.

TASCO shares rose more than 5% after brokers assessed the possibility that the company could resume importing crude oil from Venezuela, supporting better gross margins and production yields. At 10:12 a.m., the stock was up 5.71% at 14.80 baht, with trading value of 246.52 million baht. Yuanta Securities Thailand noted that TASCO was once a key customer of PDVSA before US sanctions in 2019, and Venezuela is now exporting an average of 1.0 to 1.2 million barrels per day, with South Korean refineries already importing Venezuelan oil for quality testing, a positive signal for TASCO. The broker expects that if imports resume, they would likely start in 2027 or at the earliest by late fourth quarter of 2026, helping boost 2026 profit forecast of 1.56 billion baht, up 57.3% from the previous year, with a fair value of 17.40 baht and a chance to raise the target to 19 to 20 baht.