STK [OUTPERFORM +10.4%] - Orders recovering but remain weaker than expected - Update
  • 2023-06-13T00:00:00
  • Company Research

- We downgrade our rating for STK from BUY to OUTPERFORM as we trim our target price (TP) by 6% and as the company’s share price has recovered 9% over the last two months. 

- We believe STK will be an early beneficiary of restocking in the short term and of recycled polyester consumption in the medium term. However, STK’s recovery of orders has been slower than we expected. As such, we cut our 2023F/24F/25F NPAT by 54%/44%/44%, respectively.

- The impact of our earnings forecast cut on our DCF valuation is partly offset by 1) a 40% reduction in aggregate 2023F-2027F capex for capacity expansion (our 2027F capacity utilization increases from 64% previously to 71%) and rebasing our P/E valuation on 2024F vs average 23/24F EPS.

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