TRIS Rating assigned the company rating of A-, with a stable outlook to Sri Trang Gloves (Thailand) Public Company Limited (STGT). The rating on STGT is capped by the rating on Sri Trang Agro-Industry Public Company Limited (STA) as STGT is a core subsidiary of STA.
TRIS Rating assessed STGT’s stand-alone credit profile at an “A” level. The stand-alone credit profile reflects STGT’s demonstrating strong revenue growth and cash generation with stable working capital management.
The company remains one of the world’s leading glove manufacturers with a diversified customer base, sharply improved credit metrics, as well as an experienced and professional management team. However, STGTs business profile is constrained by the cyclical and volatile nature of raw material prices, fluctuations in foreign exchange rates, and competition from major industry players.
For the rating outlook, the stable outlook reflects the rating outlook on STA. TRIS Rating expects STGT will maintain its competitive position in the rubber glove industry, with prudent management on NR and NBR price risks, foreign exchange risk, as well as sufficient liquidity to cushion the effects of volatile NR and NBR prices. TRIS Rating also expects STGT’s status as a core subsidiary of STA will remain unchanged in the foreseeable future.
The rating on STGT will move in tandem with the rating on STA, although its stand-alone credit profile could further strengthen if the company stabilizes cash generation and profitability while maintaining a strong balance sheet on a sustained basis.