STK – On a bumpy track
- Q3/2023 business results are expected to have negative growth QoQ and YoY. According to STK, the actual order placement is still slow in 3Q23, and recovery is expected to be in 4Q23. According to our update, the muted growth of sportswear brands will continue in the short run (until around March 2024), especially the US and EMEA markets where promotions continue to ramp up, but demand remains weak. Our forecast for Q3 revenue and NPAT-MI will reach about VND 360 bn (-12% QoQ, -30% YoY) and VND 25 bn (-20% QoQ, -40% YoY), respectively.
- For FY23, we lower our forecast for business (adjusting down 17% of profit compared to the previous forecast), with expected revenue and NPAT-MI of VND 1,635 bn (-22.7% YoY) and VND 135 bn, respectively, reflecting slow recovery prospects for the second half of the year. The equivalent EPS in 2023 is 1,591 VND.
- Neutral rating on STK stock. We arrive at our one-year target price of VND 31,700/share, based on a blend of the DCF method and P/E multiple (a target PER of 8.7x). STK’s stock price is currently trading at a TTM P/E of 20.8x. Accordingly, we downgrade our recommendation to NEUTRAL. Besides, STK’s stock price has done well YTD. Our rating reflects the view that the recovery expectation has been priced in
Century Synthetic Fiber Corporation (STK) is a Vietnam-based company operating in the textile industry. The Company is mainly engaged in the manufacture and commerce of synthetic yarns, with major products as draw textured yarns (DTY) and fully drawn yarns (FDY) made from polyester chips. The Company does not only distribute its products to local textile firms, but also supplied them to overseas clothing companies, such as Nike, Adidas, Uniqlo, Columbus and Guess, among others.
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