STK - 392% surge in NPAT fueled by GPM improvement, FX reversal - Earnings Flash
  • 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

 

 

 

 

 

 

 

 

 

 

Blended GPM

14.8%

3.2%

16.9%

 

 

12.5%

10.7%

 

 

11.3%

Virgin yarn GPM

8.1%

-8.5%

11.5%

 

 

1.9%

2.7%

 

 

2.0%

Recycled yarn GPM

23.9%

15.8%

24.7%

 

 

22.4%

21.2%

 

 

20.2%

SG&A/sales

5.8%

5.1%

5.4%

 

 

5.5%

5.9%

 

 

4.7%

EBIT margin

9.0%

-1.9%

11.5%

 

 

6.9%

4.8%

 

 

6.5%

EBITDA margin

10.7%

11.6%

0.0%

 

 

13.3%

12.7%

 

 

13.8%

NPAT margin

4.4%

-18.3%

26.6%

 

 

5.2%

3.1%

 

 

2.9%

Source: STK, Vietcap

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