Analysts Recommend “BUY” on STGT at a TP of Bt55 with Bright Prospects throughout 2026

The share price of Sri Trang Gloves (Thailand) Public Company Limited (STGT) closed the morning session on March 19, 2021, at ฿40.25/share, increased ฿0.50/share or 1.26% with a trading value of 753 million baht amid lockdown in France and the postponement of AstraZeneca vaccination in Europe.

 

DBS Vickers Securities (DBSVS) has given a “BUY” recommendation on STGT with a target price at ฿55.00/share, seeing that the demand for rubber gloves would continue to maintain at a higher level.

As France announced a 1-month re-lockdown for Paris and other cities to curb the resurgence of the coronavirus outbreak, while the United Kingdom postponed AstraZeneca jabs due to concerns of its side effects that could cause blood clot, coupled with a delay in transportation from India.

Thailand also reported another cluster in Bangkae Area and the upcoming long holiday in April must be monitored closely to see if the coronavirus cases would spike or not.

 

These developments reflected positively on STGT as the company planned to increase its production capacity from 32 billion pieces as of 2020 to 100 billion pieces in 2026. The company also has full orders until 2023.

STGT stated that global demand for rubber gloves is around 585 billion pieces per year, while the supply is only 370 billion pieces per year.

The average selling prices and margin in 2021 are expected to increase YoY. DBSVS estimated STGT’s net profit in 2021 to grow 33%.

 

Meanwhile, Maybank Kim Eng has also given a “BUY” recommendation on STGT as well, but with a target price at ฿49.25/share, stating that even when the market structure has changed, STGT would remain strong.

Maybank stated that it maintained BUY call on STGT even as the global rubber glove industry is still changing with Chinese players playing a much bigger influence in the market. However, STGT would maintain its position as the world’s top 4 producer with strong advantage in raw materials as Thailand is the world’s No 1 exporter of natural rubber. With strong growth in profits and in net cash position STGT offer a high dividend yield of 10.9% with undemanding valuation of only 4.6x P/E21F.