Analysis of STGT’s Financial Report: Net Profit Growth of 125% YoY

Business Description

Sri Trang Gloves (Thailand) Public Company Limited (STGT) is one of the world’s largest producers of examination gloves. The company offers a wide range of high-quality examination gloves for medical and non-medical purposes, including Natural Rubber Powdered (NRPD), Natural Rubber Powdered-Free (NRPF), and Nitrile Butadiene Rubber (NBR) gloves. STGT distributes its products to 175 countries worldwide and employs around 10,750 people. Its operations are strategically located in Thailand, USA, PRC, Singapore, Vietnam, Indonesia, and the Philippines.

Industry Position and Competitors

STGT is a leading producer and distributor of natural rubber gloves, benefiting from access to high-quality NR latex at lower costs. The company faces competition from other global glove manufacturers but maintains a competitive advantage due to its strategic location and product quality. STGT continues to expand its market reach, aiming to grow its customer base from 175 countries to over 190 countries within the next two years.

Revenue Streams and Customer Base

STGT’s revenue is primarily derived from the sale of examination gloves. The company has a diverse customer base across multiple regions, including Asia, the United States, Europe, and Latin America. This diversification helps mitigate risks associated with market fluctuations in any single region.

Financial Statements Analysis

Income Statement

For the first nine months of 2024, STGT reported a net profit of THB 438.6 million, more than doubling compared to the same period last year. Despite a net loss of THB 86.5 million in Q3/2024 due to the rapid appreciation of THB, the company saw a 35.9% YoY increase in sales revenue to THB 6,443.2 million in Q3/2024. The gross profit margin decreased to 5.1% in Q3/2024 from 13.5% in Q2/2024.

Balance Sheet

As of 30 September 2024, STGT’s total assets stood at THB 46,836.7 million, a slight increase of 0.5% from 31 December 2023. Total liabilities increased by 3.9% to THB 10,129.6 million, mainly due to an increase in accounts payable. Total equity was THB 36,707.2 million, a slight decrease of 0.4% from 31 December 2023.

Cash Flow Statement

Net cash at the end of Q3/2024 was THB 1,556.0 million. The company generated THB 1,076.0 million in cash flow from operations but experienced a significant outflow of THB 2,079.3 million due to investments in financial assets and property, plant, equipment, and intangible assets. Cash flow from financing activities included repayments of long-term loans and dividend payments, resulting in a net outflow of THB 1,439.3 million.

Key Findings

• Net profit for the first nine months of 2024 was THB 438.6 million, more than doubling compared to the same period last year.
• Sales revenue in Q3/2024 increased by 35.9% YoY to THB 6,443.2 million.
• Gross profit margin declined to 5.1% in Q3/2024 from 13.5% in Q2/2024.
• Total assets increased slightly by 0.5% to THB 46,836.7 million as of 30 September 2024.
• STGT is implementing measures to improve production efficiency and reduce costs through automation and advanced technologies.
• The company received several awards for its ESG initiatives, reflecting its commitment to sustainable operations.

Special Activities and Actions

STGT is focusing on reducing production costs through automation and advanced technologies to achieve economies of scale. The company is also exploring the use of Artificial Intelligence (AI) to enhance machinery efficiency and produce high-quality, competitively-priced products sustainably.

Recommendations

For Current Investors

If you are currently holding STGT stock, it is advisable to hold onto your investment. The company’s strong net profit growth, expanding market reach, and commitment to sustainability and technological advancements indicate positive long-term prospects.

For Potential Investors

If you are not currently holding STGT stock, it may be worth considering an investment. The company’s strong financial performance, strategic initiatives to reduce costs, and expanding customer base provide compelling reasons to invest. However, it is important to consider the risks associated with currency fluctuations and the competitive landscape.

Disclaimer

This analysis is based on the financial report provided and is intended for informational purposes only. It does not constitute financial advice. Investors should conduct their own research and consider their financial situation before making any investment decisions.

Report Date and Financial Year

The report is dated 8 November 2024 and covers the financial performance up to 30 September 2024.