- We downgrade our rating from BUY to MARKET PERFORM as we cut our target price by 15% mainly due to our lower sales volume forecasts and increased house risk-free rate. STK’s share price has increased 15% over the past three months.

- We cut our aggregate 2022F-2024F NPAT by 10% as we lower our aggregate sales volume assumption by 8% because (1) developed countries’ customer demand is weakening, and (2) we assume the first phase of the Unitex project will come online in late-2023 vs previously mid-2023 as the final approval for STK’s factory is taking longer than we expected. These factors are partly offset by lower projected SG&A expenses, which have been better than we expected.

- We maintain our belief that over the medium term, STK will continue to be a major beneficiary of Vietnam’s growing role as an apparel hub amid shifting demand toward recycled polyester yarn.

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