- 2024-04-22T00:00:00
- Company Research
- STK reported its Q1 2024 results with revenue and NPAT retreating 8% and 56% both from low bases, fulfilling 12% and 0% of our respective full-year forecasts.
- Although we previously expected minimal earnings for Q1 2024 due to weak sales volume, actual earnings trail our expectations due to FX losses. We see potential downside risks to our forecasts, pending a fuller review.
- Per STK, Q1 2024 sales volume was flat YoY. However, the contribution from recycled yarn dwindled. Besides having missed the season for Autumn-Winter 2024 apparel, STK also suffered from regulation mismatches, and as such, underperformed the textile industry’s recovery in Q1 2024.
- Vietnam Customs have not resumed issuing certificates of origin (C/O) that allow STK’s customers to qualify for preferential tariffs under FTAs, as such hurting STK’s market share. Previously, in Q4 2023, Customs stopped issuing form X C/O for local exports (i.e., delivering to a factories located in Vietnam per the order of foreign customers).
- Nevertheless, the blended price gap (selling price - input PET chip price) improved 52% YoY from a low base. As the price gap improved, Q1 2024 GPM expanded to 12.2% vs 6.2% in Q1 2023.
- FX losses eat through the small EBIT generated. STK incurred VND9bn (USD360,000) of FX losses as the USD appreciated 5% vs the VND YTD, which hurt STK’s USD loans that fund its new factory. As of end Q1 2024, STK has USD51/VND1.3tn of outstanding USD-denominated debt.
- We maintain our expectation that STK’s sales volume will show significant QoQ recovery in Q2 2024. STK’s order backlog shows a potential QoQ doubling in sales volume, per management.
VND bn | Q1 2023 | Q4 2023 | Q1 2024 | Q1 2024 YoY | Q1 2024/ 2024F | 2024F |
Revenue | 288 | 352 | 266 | -8% | 12% | 2,227 |
Virgin yarn | 122 | 201 | 159 | 31% | 18% | 885 |
Recycled yarn | 166 | 152 | 107 | -36% | 8% | 1,342 |
Gross profit | 18 | 58 | 32 | 81% | 9% | 358 |
Virgin yarn | -12 | 18 | 6 | N.M. | 12% | 51 |
Recycled yarn | 30 | 40 | 26 | -12% | 8% | 306 |
Selling expenses | -3 | -6 | -6 | 72% | 25% | -22 |
G&A expenses | -14 | -15 | -14 | -1% | 22% | -63 |
EBIT | 0 | 37 | 13 | 2,475% | 5% | 272 |
Financial income | 15 | 3 | 6 | -60% | 47% | 13 |
Financial expense | -13 | -7 | -18 | 36% | 38% | -46 |
Others | 0 | 0 | 0 | -40% | N.M | 0 |
PBT | 3 | 34 | 1 | -59% | 0% | 238 |
NPAT | 2 | 32 | 1 | -56% | 0% | 219 |
Margins |
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GPM | 6.2% | 16.4% | 12.2% |
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| 16.1% |
SG&A as % of revenue | 6.0% | 5.8% | 7.4% |
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| 3.9% |
EBIT margin | 0.2% | 10.6% | 4.8% |
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| 12.2% |
EBITDA | 8.1% | 17.2% | 13.4% |
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| 17.8% |
NPAT margin | 0.6% | 9.0% | 0.3% |
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| 9.8% |
Source: STK, Vietcap
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