STA Gains 2% after TRIS Upgrades Rating to “A-” and Covid Resurgence Buoys STGT Profits

Sri Trang Agro-Industry Public Company Limited (STA) gained ฿0.75/share or 2.34% to close the morning session on Tuesday at ฿32.75/share after TRIS Rating upgraded the company’s rating to “A-” and revised the rating outlook to “Stable,” while the increase in the coronavirus infections could drive STGT’s revenue further.

 

Yesterday, TRIS Rating upgraded the company rating on STA and the rating on STA’s senior unsecured debenture to “A-” from “BBB+” and revised the rating outlook to “stable” from “negative”.

The upgrade reflects STA’s strengthened financial profile following the initial public offering (IPO) of Sri Trang Gloves (Thailand) Public Company Limited (STGT) on the Stock Exchange of Thailand (SET) in July 2020, and Tris Rating’s expectation of an improvement in the company’s operating performance in the next few years.

The ratings continue to reflect STA’s leading position in the natural rubber (NR) industry, its competitive edge in vertical integration, and the strong track record of the management team. However, STA’s business profile is constrained by the cyclical and volatile nature of NR prices as well as the challenges the NR industry is facing amid a weak and highly uncertain global economy.

 

Meanwhile, STGT, as a rubber gloves producer, will continue to recognize more income during the coronavirus outbreak and afterward for precautionary measures. The resurgence of the coronavirus infections in the U.S. and Europe reflected the positive potential for STGT’s business and STA as a parent company and a major shareholder.