STA and STGT shares fell deeper on Thursday as the selling price of rubber gloves continues to decline and it would lead to a smaller profit in 1Q22.
As of 14.30 hrs. local time in Thailand, the share price of Sri Trang Gloves (Thailand) Public Company Limited (SET: STGT) dropped THB1.60/share, or 6.67% to THB22.40/share, with a trading value of THB437 million.
The share price of Sri Trang Agro-Industry Public Company Limited (SET: STA) dropped THB1.30/share, or 5.22% to THB23.60/share, with a trading value of THB299 million.
KTBST Securities reiterated a SELL rating on STGT and cut the target price to THB14.00 from THB19.50 following our earnings forecast downgrade, predicting 1Q22 net profit to slump -92% YoY, -55% QoQ to THB823 million as 1) average selling price appears to have reduced -64% YoY, -25% QoQ to THB0.82 apiece due to additional nitrile glove supplies from China and Malaysia, and 2) gross profit margin may narrow sharply YoY, QoQ to 22%, although sales volume seems to have increased YoY on the back of higher production capacity but remained flat QoQ.
KTBST cut 2022/2023 net profit forecast by 65%/48% to THB2.72 billion (-89% YoY)/THB2.49 billion (-9%) as 1) an average selling price is predicted to drop sharply to THB0.70/THB0.56 apiece compared to THB1.74 in 2021, 2) gross profit margin would decrease to 20%/18% from 59.4% in the same period, and 3) sales volume would be 37.0 billion/50.0 billion pieces.