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Real-time news about COVID vaccine  Broke pointed out that rubber gloves business is good for  Plus natural rubber recovery  Chinese tire customers began to return to 70% production in the third quarter, expected to turn rubber profits.  1.6 billion baht  From the original loss of 728 million baht and adjust the net profit this year, an increase of 18%, colliding 4.6 billion baht, knocking a basic 41 baht.

 

KTB Securities (Thailand) Company Limited specifies the company  Sri Trang Agro-Industry Public Company Limited (STA) has a positive view, despite the news of the vaccine against COVID-19, but the rubber glove company Sri Trang Gloves (Thailand) Public Company Limited ) Or STGT has not been affected.  Because the customer does not cancel the order  And still book the full production line until the end of 2021, the backlog that the company has accounted for 88-90% of the production capacity.  While Chinese tire customers started to resume production of about 70% in 3Q2020 boosted demand for tires.

 

* Adjust year 63 profit by 18%

 

Adjusted STA' s net profit in 2020 up 18% to 4.6 billion baht, better from the previous year' s loss.  And adjusted earnings in 2021 up 19% to 4.8 billion baht due to the improvement in our rubber gloves business that still has a better trend from  1. Adjusted the average selling price in 2020-2021 to  0.90 baht per piece instead of 0.80 baht per piece

2. Adjusted the Gross Profit Margin to 29% from the original 25% due to the increase in selling prices.  While the cost is still low.  The company is expected to recognize a profit share from the rubber glove business in 2020 of approximately Baht 2.9 billion, based on the profit of STGT subsidiary of approximately 5.8 billion baht.

 

* Smooth rubber business

 

While the rubber business  Rubber prices are more stable, resulting in smoother management of costs and raw materials.  The profit from rubber this year is expected to be around 1.6 billion baht, compared with a loss of 728 million baht last year.  Because in this year some entrepreneurs of the natural rubber business have gone out of the market.  As a result, competition, including the purchase of raw materials, is greatly reduced, as well as customers in China begin to recover and return to production.

 

Recommend to buy target price of 41.00, based on a PER of 14 times, equivalent to a 5-year average, increased from 35.00 baht from the above profit adjustment, with Key Catalyst is the severe COVID-19 situation abroad.  While the risk is  Delays in the recovery of various manufacturing sectors  Of customers, including invention of the vaccine against COVID

 

* Knock on the target for 43 baht

 

Kasikorn Securities Co., Ltd. indicated that STA expects 3Q20 earnings to double from the previous quarter.  And there are some positive issues, including greater market share and higher demand from China.  And revise the annual net profit forecast  This will reflect the average selling price and higher glove sales, but expect the baht to appreciate.

 

Maintain a &ldquo BUY&rdquo recommendation with a target price of mid-2021 at 43 baht divided into the value of the rubber glove business at 34 baht and the natural rubber business at 9 baht.