STGT Q2 profit hits 4-year high; broker sets target at 13 baht
Earnings
Kasikorn Securities said Sri Trang Gloves Thailand Public Company Limited, or STGT, posted second-quarter 2569 net profit of 566 million baht, the highest in four years, up 6.4 times year-on-year and 48 percent quarter-on-quarter, supported by higher selling prices and gross margin that more than offset weaker sales volume. Excluding a foreign exchange gain of 15 million baht, core profit was 551 million baht, up 5.2 times year-on-year and 4.7 times quarter-on-quarter. First-half core profit accounted for 43 percent of the broker's full-year estimate of 1.5 billion baht. Revenue rose 2 percent year-on-year and 12 percent quarter-on-quarter to 6.1 billion baht, while sales volume fell 6 percent year-on-year and 7 percent quarter-on-quarter to 8.551 billion pieces as some customers delayed orders amid price uncertainty. Average selling price rose 14 percent year-on-year and 18 percent quarter-on-quarter to 22.4 US dollars per 1,000 pieces, reflecting price pass-through of higher latex costs and freight costs. Gross margin increased to 17 percent, up 8.4 percentage points year-on-year and 6.7 percentage points quarter-on-quarter. Selling and administrative expenses rose 10.3 percent year-on-year and 14.4 percent quarter-on-quarter to 479 million baht, mainly due to the reclassification of some machinery depreciation from cost of goods sold to selling and administrative expenses after capacity utilization declined, as well as higher transport and freight costs. The company announced a first-half dividend of 0.25 baht per share, representing a payout ratio of 76 percent and a dividend yield of 2.3 percent, with the ex-dividend date on 27 August and payment on 11 September. The broker maintained a buy rating with a target price of 13.00 baht, based on a target EV/EBITDA of 9.4 times, equal to one standard deviation above the five-year average trading range.
