Khon Kaen Sugar Industry PCL

Global sugar prices remain elevated, most recently around 18.74 cents per pound based on futures contract figures at the end of September 2026, prompting analysts at CGS International Securities (Thailand) to take a positive view of sugar stocks. They said the recovery in sugar prices is clearly gaining momentum because of an El Niño phenomenon that has been more severe and prolonged than expected, hurting sugarcane cultivation and reducing sugar output in many countries. Brazil, the world's major sugar producer, is beginning to show signs of lower production, running counter to fairly strong demand growth in India and elsewhere. In addition, the baht's continued weakening, most recently moving in a range of 33.45 to 33.70 baht per dollar on 30 September 2026, is another supporting factor, since most revenue for sugar operators comes from exporting sugar abroad. The research team therefore sees an opportunity to invest in this group of stocks, mainly Buriram Sugar Public Company Limited, or BRR, Khon Kaen Sugar Industry Public Company Limited, or KSL, Khonburi Sugar Public Company Limited, or KBS, and Kaset Thai International Sugar Corporation Public Company Limited, or KTIS. Issara Thawiltermsap, managing director of Khonburi Sugar Public Company Limited, or KBS, said the upward trend in global sugar prices should be a positive factor for KBS's operations, because sugar and related businesses account for as much as about 80% of its revenue. But the benefit will become clear only from next year's sugarcane crushing period onward, since most of this year's sugar has already been sold and priced forward under contracts. The weaker baht also helps drive up revenue from sugar exports, because exports currently account for nearly 80% of revenue in the sugar group.

Krungsri Securities said the government is considering cutting excise taxes on specific fuels, namely E20 and B20, to directly help farmers growing sugarcane, cassava, and oil palm. The government will avoid cutting taxes on all fuel types in order to maintain fiscal discipline given limited resources and to prevent risks to the country's fiscal position. The research team assesses this measure as a small positive for the Thai economy and a positive sentiment for the SET. The policy will benefit ethanol and biodiesel producers and fuel service stations, namely BBGI, KSL, PTG, and OR, on rising demand for E20 and B20, and will also indirectly benefit grassroots retail groups such as CPALL and CPAXT, which stand to gain from recovering purchasing power among farmers.

El Niño is likely to persist into early 2027, with NOAA data indicating an 81% chance of it developing into a VERY STRONG EL NIÑO during October-December 2026, leading to drought in Thailand and Asia. Meanwhile, the Thai stock market is less affected than other regions due to its index structure, where commodity-linked and banking stocks together account for more than half of the market. According to Mr. Pharadorn Teanprasert, Director of Research at Asia Plus Securities, beneficiary stocks include agricultural, food, and vegetable oil sectors such as KSL, KTIS, BRR, CPF, TFG, GFPT, and TVO, as well as energy and refinery groups like TOP, SPRC, IRPC, and BCP, due to potentially higher refining margins. Commercial banks also benefit from inflation and interest rate spreads. The SET Index has a 30% weight in commodities and 20% in banks, making Thailand an attractive haven during global supply shocks.

World sugar prices have recovered to over 17 cents per pound, up from a low of around 13 cents per pound in April 2026, due to tight supply from El Niño drought and India's plan to consider reducing or abolishing its 100% sugar import tax to increase domestic supply. Analysts at Innovest X Securities are positive on sugar stocks, especially KSL, KBS, and KTIS, which will benefit from higher selling prices. Meanwhile, BRR expects cane crushing volume for 2026/27 to increase to 2.5-2.6 million tons from 2.2 million tons last year, and expects the second half of the year to continue growing from the first half, supported by expanding demand and a weaker baht.

Sugar stocks moved higher across the board this morning, with KTIS up 5.35 percent to 1.97 baht, KSL up 4.21 percent to 1.98 baht, and KBS up 2.40 percent to 6.40 baht, after India prepared to cut its 100 percent sugar import duty to curb record-high domestic prices. Meanwhile, global sugar supply is tight and faces drought risk from El Nino, supporting a higher outlook for world sugar prices. Innovest X Securities is positive on the shares of all three sugar producers.

Khon Kaen Sugar, or KSL, expects its cane crush for the 2026/27 production season to rise to 8.5 to 9 million tonnes, up from 8.3 to 8.4 million tonnes in the current season, supported by improved mill efficiency, particularly at the Sa Kaeo plant which has a capacity of around 1 million tonnes. CEO Chalush Chinthammit said the company is beginning to see positive signals from global sugar prices, which have risen to 16 cents per pound with a chance of moving to 17 cents per pound, prompting it to defer some sales to next year. The benefits are expected to clearly boost profits from the fourth quarter of 2026 onwards. Meanwhile, KSL is in talks with new partners in industries that use sugar as a key raw material, such as ice cream and sweetened condensed milk, to extend its business and generate growth from existing resources and by-products.