The share price of Sri Trang Gloves (Thailand) Public Company Limited (STGT) jumped ฿2.50/share or 6.29% to ฿42.25/share with a trading value of 4,509 million baht after reported a record high profit in 30 years.
KTBST Securities maintained a “BUY” recommendation on STGT and a target price of ฿54.00/share, which is pegged to 2021E PER of 10x, an equivalent to the mean of Top Glove’s 3-yr historical level (the world’s largest rubber glove producer in Malaysia).
STGT reported the outstanding 4Q20 earnings results, net profit skyrocketed +4,606% YoY, +94% QoQ to 8.52 billion baht as 1) total revenue jumped +335% YoY, +68% QoQ to 13.65 billion baht, hitting a record high, on the back of an increased revenue from nitrile gloves to 40% of the total from 23% in 3Q20 and 2) gross profit margin widened to a new high of 71.6% from 60.3%.
KTBST upgraded STGT’s 2021-22E net profit forecast to reflect a stronger-than expected gross profit margin in 2020.
STGT’s share price gained in three months but underperformed the SET Index by 7% in the same period. The stock currently trades at 7x 2021E PER. KTBST forecasted 2021E net profit to continue to grow given a still-strong demand for rubber gloves despite a widening coverage of COVID-19 vaccinations in Europe and the US.