SAT is one if not the highest reliable dividend payers here.

PaulRen's picture
Submitted by PaulRen on Sun, 05/02/2023 - 11:38am
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SAT (21.30) is just one of the more reliable besides highest dividend yielding stocks here.

Here is a picture of a visit I did to SAT (21.30) factory some years ago. I believe SAT is one if not the highest reliable dividend paying stocks on the SET currently... a 60 year old company and been SET listed for 18 years with a current market cap. just below 300 mill. US$, so not small.   SAT reported a 20% increase in profits and revenues for its last 3 Q. '22 and will likely show continued solid performance in now post Covit-19 recovering Thailand.  I expect its 4Q. and full 2022 results to be announced around Feb 22 '23, and shortly thereafter to declare 1 to 1.10 Baht per share dividend, or a touch above 5% on the current stock price.  One analyst recently wrote the 4Q may be touch weak: "We expect SAT’s core earnings in 4Q22 at THB204m (-4% q-q, +7% y-y) due to a slowdown in revenue and higher costs".  However this same analyst still sees a 7% growth in net profits this year.  (Feb 2 2023 by Finansia Syrus Securities Public Company Limited)

Note, SAT pays dividends twice per year and I can see/estimate another 0.40 Baht dividend late next August '23, or for say for a total of 1.40 Baht during this year 2023.  This comes to a 7%+ tax favored yearly yield on SAT, vs. 0.5% cash held in Thai Banks.   SAT has a stated book value of 18.22 per share and its trailing p/e is shown at 9.9, or about half the SET average!  In time SAT stock should increase in price to the mid 20's for a total return of say 25%, by next year, or before I think.  Far, far above the inflation rate here and with lower then market risk due to its low p/e valuation along a very high dividend yield.   

Here is SAT's web site:  https://www.satpcl.co.th/en

A major raw material cost for SAT are steel prices. However the company recently stated:  "SAT believes that it has finally caught up with rising steel prices and will be able to pass the increased costs through to its customers in 2Q23 after bearing it for over a year, now that the price of the steel that SAT uses has finally stabilized at the beginning of this year."

Checking on insiders buy/sales, there have not been any significant transactions reported by SAT over the past year.  SAT is expanding into EV tuck tucks and is a major player in Thailand, its main businesses which are to manufacture automotive parts and agriculture machinery. (see below for more).   In early January '23, Thai Biz news reported that "SAT to get Bt500m revenue boost from new orders, pushing revenue growth this year to up 10%".   
Also note:  "STRON has started its operation but should have no impact yet STRON, a subsidiary in which SAT holds a 60% share, partnered with Tron Energy Technology, a Taiwanese company with a high-tech system for assembling electric vehicles and automation, has started producing etuk-tuks and minibuses. However, the current production volumes remain small and have not generated a profit for the company. This could result in a hiccup for SAT’s performance in 1H23 as STRON could record a small loss during the early stage of production".   This is not worry some as its small and yet shows the company is thinking of the future.
SAT is the largest producer of axle shafts (76% market share), which are used in the manufacture of 1-tonne pickup trucks and large commercial cars. SAT is the safest company in the automotive sector, as it has no debt and holds some THB2.5b in cash, equal to 6 Baht per share.  The company has a solid long term earnings outlook as Thailand’s automobile manufacturing industry is one of the largest drivers of the country’s economy.  The demand for new cars in Thailand has consistently remained at 0.8m-1m units per year, according to historical data.  Therefore, when the economy returns to some kind of normal, I would expect Thailand’s automobile production volume to also return to its normal level in 2023, which would directly benefit SAT. 
 
SAT is just one of 7 quality high dividend stocks I like -and identified to our members recently.  As a prudent value investor with a medium term investor objective, I always view to diversify one's stock portfolio to at least 7 favorable choices.
 
Best Regards,
Paul A. Renaud.
  

From its Web site:  "SAT is a Thailand-based company engaged in the manufacture and distribution of motor vehicle parts for passenger cars, pickup trucks, trucks and agricultural machinery. The Company's products include axel shafts, disc brakes, drum brakes, exhaust manifolds, leaf springs, stabilizer bars, hot coil springs, among others.

The main customers are the original equipment manufacturers (OEMs) with the long-term purchase contract and the replacement equipment manufacturers (REMs). It operates production plants in Samutprakan province and in Rayong province. The Company's subsidiaries include Somboon Malleable Iron Industrial Company Limited, Bangkok Spring Industrial Company Limited, International Casting Products Company Limited, and Somboon Forging Technology Company Limited."