Background: Sri Trang Agro-Industry (STA) is one of the world’s largest natural rubber processors based and listed in Thailand. It made its debut on Singapore Exchange (SGX) by way of a dual listing in January this year at a price of $1.20 per share. The group sells a variety of rubber products including Ribbed Smoke Sheet (RSS), Technically Specified Rubber (TSR) and latex.
Recent development: Trading volume on the SGX has been disappointing since its debut and the stock has hovered in the same price range despite announcing a strong set of 1Q11 results.
Our view
A significant global player. STA is one of the world’s largest natural rubber processors. In 2010, its sales volume accounted for 8% of global demand and 16% of Thailand, a major rubber-producing country’s production volume. It is also a major exporter to China, making up 12% of the country’s import that year.
Big and becoming bigger. To capitalise on the growth of rubber estates in Northern Thailand, STA is expanding capacity from 860,000 tonnes to 1.5m tonnes per annum. This will increase its global market share from 8% to 15%. Management sees continued demand for TSR rubber which is used to make car tyres. Other than China, it expects India to be a new major market to drive demand growth going forward.
Upstream ambitions. STA currently has about 1,700ha of rubber plantation land with only 2% or 34ha mature for tapping. Another 600ha are under gestation and will be ready for tapping in seven years’ time. The group is aiming to acquire land in Northern Thailand as well as Indonesia, Cambodia and Laos.
Key ratios…
12-month trailing PER: 7.7x
Price-to-book: 1.9x
Dividend per share: na
Net debt/equity: 129%
Share price S$1.23
Issued shares (m) 1,280
Market cap (S$m) 1,574.8
Free float (%) 46.9
Recent fundraising activities Share offering in Singapore @ $1.20/share, 280m shares, raised $336m
Financial YE 31 Dec
Major shareholders Sincharoenkul family including Managing Director – 53.4%
YTD change +2.5%
52-wk price range S$1.03-1.32
No comments:
Post a Comment