Analysts Recomm. “BUY” STGT at Bt48.25 on High Dividend Yield and Rising Glove Demand

Maybank Kim Eng and Trinity Securities have given a positive outlook on Sri Trang Gloves (Thailand) Public Company Limited (STGT) with a “BUY” recommendation and a target price as high as ฿48.25/share on high dividend yield and high rubber-glove demand.

 

Maybank Kim Eng has given a “BUY” recommendation on STGT with a target price at ฿48.25/share, expecting the company to hand out a dividend yield as high as 11.9% in 2021.

Maybank adjusted its target price from THB96.50 to THB48.25 in line with the shareholder resolution to split stock from the par value of THB1.00 to THB0.50/ share. In addition, Maybank raised its dividend forecast after the company shifted to a higher dividend policy for shareholders. This reflects the management’s confidence in the strong 2021-22 earnings outlook. Consequently, the 2021 dividend yield is expected at 11.9%, appealing to dividend lovers with a consistent payout.

 

Trinity Securities has given a “BUY” recommendation on STGT with a target price at ฿47.50/share, based on a P/E ratio at 5.5x, compared to an average of -1.5SD of four major rubber-glove producers in the world.

Trinity estimated that the shortage of rubber gloves will remain until 2022, and an increase in production would not suffice to the spike in demand. Meanwhile, the selling price method was changed from future prices to spot prices, resulting in a higher margin from 40% to 60%. In addition, Trinity estimated 2020-2021E earnings at 10 billion baht and 24 billion baht, respectively, representing an increase of 1500% and 140%, respectively. The growth in net profit would be due to higher selling volume and higher selling prices.