A sharp drop in rubber prices on the global market since mid-year suggests Sri Trang's revenues and net earnings will decline quarter on quarter in the three months to September.

The broker also expects Sri Trang's gross margin to decline quarter on quarter, due to the company's "long" strategy of inventory management, in which it accumulates stocks of raw rubber about one month before selling its processed products to customers.

The broker forecasts that the company will post a net profit of Bt123 million - or earnings per share of 62 satang - for the third quarter, compared with a net loss of Bt326 million in the same period last year.

However,  margin erosion due to lower rubber prices and delays in orders should cause its net profit to fall 58.8 per cent quarter on quarter.

Although the broker's estimated net profit of Bt596 million for the first nine months represents 90 per cent of its full-year forecast, it has decided to leave its net-profit estimates for 2006-07 unchanged at Bt662 million and Bt549 million, respectively.