- 2024-10-22T00:00:00
- Company Research
- STK released its Q3 2024 results, showing a 19% YoY decline in revenue but a 392% surge in NPAT.
- For 9M 2024, revenue and NPAT fulfilled 47% and 49% of our respective 2024 full-year forecasts. These results align with our expectation that STK would return to positive earnings in Q3 2024, with further improvements anticipated in Q4 2024. As a result, we foresee minimal changes to our forecast, pending a fuller review.
- In Q3 2024, ongoing issues with the company’s automatic quality control system continued constraining sales volume to 5,655 tonnes (-5% QoQ; -24% YoY). To temporarily address this, STK has hired additional labor for manual quality control. Per management, these workers are paid per unit, thus potentially raising labor costs by around VND100mn/year (<1% of 2023 labor costs).
- The contribution of recycled yarn to total sales volume fell to 31%, down from 37% in Q2 2024. For 9M 2024, the contribution was 33%, below our full-year projection of 40%. We attribute this to the fact that recycled yarn, as a mid-to-high-end product, has seen a slower recovery compared to virgin yarn.
- GPM improved to 16.9% in Q3 2024, up from 3.2% in Q2 2024, supported by a 10% QoQ decrease in the average input PET chip price and a reduction in idle machine costs. Additionally, the blended price gap (selling price – input PET chip price) improved by 31% QoQ.
- Notably, STK reversed FX losses by VND41bn, benefiting from a 3% depreciation of the USD against the VND in Q3 2024. This reversal is equivalent to 50% of the company’s Q3 2024 NPAT.
- Unitex: Machinery installation was completed in September, and trial runs are currently underway, with full completion expected in October. According to management, given weak demand, STK is considering offering lower prices to customers to prioritize fulfilling this factory’s capacity. We anticipate lower GPM in Q4 2024 and 2025.
STK’s 9M 2024 results
VND bn | Q3 2023 | Q2 2024 | Q3 2024 | QoQ | YoY | 9M 2023 | 9M 2024 | YoY | 9M 2024 as % of 2024F | 2024F |
Sales volume (tonnes)* | 7,462 | 5,931 | 5,655 | -5% | -24% | 20,786 | 16,901 | -19% | 48% | 35,091 |
Revenue | 378 | 303 | 307 | 1% | -19% | 1,073 | 876 | -18% | 47% | 1,852 |
Virgin yarn | 220 | 157 | 180 | 15% | -18% | 519 | 496 | -4% | 54% | 911 |
Recycled yarn | 157 | 146 | 127 | -13% | -19% | 553 | 380 | -31% | 40% | 941 |
Gross profit | 56 | 10 | 52 | 432% | -7% | 134 | 94 | -30% | 45% | 209 |
Virgin yarn | 18 | -13 | 21 | N/M | 16% | 10 | 14 | N.M | N/M | 19 |
Recycled yarn | 38 | 23 | 31 | 36% | -17% | 124 | 81 | -35% | 42% | 190 |
Selling expenses | -7 | -2 | -2 | 20% | -65% | -14 | -10 | -27% | 29% | -35 |
G&A expenses | -15 | -14 | -14 | 5% | -5% | -46 | -42 | -8% | 80% | -53 |
EBIT | 34 | -6 | 35 | N/M | 4% | 74 | 42 | -43% | 35% | 121 |
Financial income | 7 | 8 | 11 | 41% | 60% | 16 | 26 | 61% | 92% | 28 |
Financial expenses | -23 | -58 | 37 | N/M | -257% | -35 | -39 | 11% | 43% | -91 |
Other non-ops | 0 | 0 | 0 | N/M | N/M | 0 | 0 | N/M | N/M | 0 |
PBT | 18 | -55 | 83 | N/M | 362% | 57 | 29 | -49% | 49% | 59 |
NPAT | 17 | -56 | 82 | N/M | 392% | 56 | 27 | -52% | 49% | 55 |
Margins |
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Blended GPM | 14.8% | 3.2% | 16.9% |
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| 12.5% | 10.7% |
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| 11.3% |
Virgin yarn GPM | 8.1% | -8.5% | 11.5% |
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| 1.9% | 2.7% |
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| 2.0% |
Recycled yarn GPM | 23.9% | 15.8% | 24.7% |
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| 22.4% | 21.2% |
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| 20.2% |
SG&A/sales | 5.8% | 5.1% | 5.4% |
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| 5.5% | 5.9% |
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| 4.7% |
EBIT margin | 9.0% | -1.9% | 11.5% |
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| 6.9% | 4.8% |
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| 6.5% |
EBITDA margin | 10.7% | 11.6% | 0.0% |
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| 13.3% | 12.7% |
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| 13.8% |
NPAT margin | 4.4% | -18.3% | 26.6% |
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| 5.2% | 3.1% |
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| 2.9% |
Source: STK, Vietcap
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