STK - Growth prospects for recycled yarn
The positive impact of FTA free trade agreements such as CPTPP, EVFTA and the increasing of orders shifting from China to Vietnam will be a prerequisite for the increasing demand of raw materials. On the domestic side, STK is aiming to upgrade the quality of its existing products, producing lower spinning with higher fineness to increase its production efficiency. In addition, the increase in the proportion of recycled yarn to revenue can meet the demand for sustainable development from high fashion brand names. In turn this will be a springboard for the company in order to increase its competitiveness and improve its profitability.
We combine two valuation methods, FCFF and P/E to evaluate STK’s fair value. The conclusion is that the stock is worth VND 24,300 per share. We anticipate a cash dividend of VND 800 per share in the next 12 months, which results in a 30% total return from the closing price on November 23rd, 2018. Therefore, we have a BUY on this stock.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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