EPG gained over 5% as the rubber insulation business in Thailand and the US are recovering well after COVID-19 eased.
The share price of Eastern Polymer Group Public Company Limited (SET: EPG) rose THB0.60/share or 5.36% to THB11.80/share as of 12.30 hrs. local time in Thailand, with a trading value of THB293 million.
Maybank Securities (Thailand) (MST) stated on its Jan 4, 2021’s research that EPG’s 3Q21/22 earnings will improve to THB443 million (+8% QoQ, +3%YoY) after COVID-19 eases and ship shortages improve. The 2021/22 outlook will grow and set a record driven by growth in all three core businesses, AeroFlex, AeroKlas and EPP. Recommend “BUY” with a target price of THB15.
3Q21/22 earnings are likely to improve, driven by the rubber insulation business (AeroFlex) as Thailand and the US are recovering well after Covid-19 eased and the US was driven by new production capacity and the price increase. The plastic packaging business (EPP) returned to growth after Thailand reopened borders. Although the auto parts and accessories business (AeroKlas) slowed down slightly due to issues with Australia and a shortage of microchip, overall, sales should increase to THB3.034 billion (+2% QoQ, +17% YoY) and gross margins are expected to improve to 31.9% from 30.7% last quarter, driven by EPP’s gross margins returned to normal, but decreased from 33.2% last year from the previous year with higher costs.
In addition, there will be additional support from the share of profit from investments in overseas subsidiaries with improved performance of THB68 million (+10% QoQ, +67% YoY).
