Sri Trang Gloves sees tepid net profit growth amid increased supply

SRI Trang Gloves Thailand (STGT) recorded a net profit of 4.53 billion baht (S$185.2 million) for the third quarter ended Sep 30, 2021, up 3 per cent from the 4.40 billion baht the company posted in the same period a year ago.

Earnings per share rose to 0.0158 baht for the quarter, up from 0.0154 a year ago.

Revenue grew by a further 32.6 per cent to 10.86 billion baht in the third quarter, up from 8.19 billion baht the year before.

However, quarter-on-quarter, revenue declined by 16.2 per cent from 12.96 billion baht.

The company attributed the year-on-year growth in revenue to increase in average selling prices (ASP), while the quarter-on-quarter decline in revenue resulted in ASP that fell 32.5 per cent to 1,531 baht per 1,000 pieces because of increased supply in the market.

Despite the reopening of its Surat Thani and Trang manufacturing plants after they were temporarily suspended due to Covid-19 in Q2, STGT noted that the persistent global container shortage and shipping congestion led the company to miss its export sales volume targets. Its sales volume was 7.08 billion pieces in the third quarter, down 0.9 per cent year-on-year but up 23.8 per cent quarter-on-quarter.

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The company's latex powdered gloves contributed the highest proportion of revenue at 38.4 per cent, followed by nitrile gloves at 38.2 per cent of total sales revenue. Latex powder-free gloves accounted for 23.4 per cent of total sales revenue.

STGT said that its strategy would be to have flexibility of production lines that can interchange between manufacturing latex and nitrile gloves to respond to market demand.

It will also expand its capacity to reach 50 billion pieces by 2022 and 80 billion pieces by 2024. Production efficiency will be improved, from the current 2.17 persons by 1 million pieces to 1.65 persons in 2024 and 1 person in 2026.

Furthermore, the company aims to increase market share from its current 170 countries to reach over 190 countries within the next 3 years. It will also develop new types of biodegradable latex gloves to respond to customer demand. It noted that its recent Clean World Clean Glove received various test certificates from labs in Europe and the US.

The company's board of directors has approved the payment of interim dividends at 1.25 baht per share to shareholders. The ex-dividend date will be Nov 19 to Nov 22 and dividends will be paid on Dec 7.

Shares of STGT fell 1.7 per cent or S$0.02 to S$1.18 on Monday before the results were released.