STA/STGT highest dividend paying Thai stocks.

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STA/STGT highest dividend paying Thai stocks and likely to remain so in 2022.

STA (30.50) and STGT (27.25)  are 2 model portfolio selections which I refused to give up on due to my strongest conviction on continued very high dividends!  While their stock prices dropped sharply since (for many reasons including some not so rational ones, I may have more to say on this later) their just late yesterday declared 1.25 Baht per share interim dividend announcements re-affirmed my belief.  For STGT it is a Q. dividend and for STA it was the final interim dividend.  I so can see, even if earnings drop off a bit into 2022 a continuation of a total of say 4 Baht in annual dividends -which on a 27.25 to 30.50 Baht current share price represents a substantial current annual yield of around 13-14%!  Here is the official announcement, the same for both companies.

“The Board of Directors has fixed 22 November 2021 as the record date for determining the shareholders entitled to receive an interim dividend.  Shareholders who hold shares in the Company through direct securities accounts with the Central Depository (Pte) Limited (“CDP”) (“Depositors”) or persons with shares standing to the credit of their securities accounts with the Depository Agents at 5.00 p.m. (Singapore time) on 22 November 2021 will be entitled to receive the interim dividend. The interim dividend will be paid on 8 December 2021”

Remember, STA owns 50.6% of STGT shares, hence a big chunk of their earnings come from STGT.  Both their 3 Q earnings reports was released yesterday and as expected it shows some softening compared to the explosive 2Q.  The key reason was the price per gloves’ has dropped as well as some present problems with this global shipping-container shortages. Yet, global glove demand remains very high and far from saturated, this is attested by STGT firm statement yesterday on it continuation of capacity expansion.

TopGlove of Malaysia is the number one global producer of such gloves and STGT is number 3, worldwide. Yet there are some substantial qualitative differences between these two.  For one STGT does not use much natural gas for its furnaces (producing gloves is very energy intensive), vs. TopGlove.   And as we know nat. gas prices have gone through the roof lately. STGT company also has better overall employee relations.  STGT in its factories is much more flexible in changing production of different kinds of gloves, as the market demand changes. Bref,  here is how they described this in their mgt. report published yesterday:

"On environmental issues (E), we utilize wood chips, which are considered biomass and have 3 times lower the emission factor than LPG, as fuel for boilers in production. On social issues (S), our labor practices are well known as the “best-in-class workforce treatment” and have received the top A rating in the Business Social Compliance Initiative (BSCI) audit by Amfori, a well-regarded trade organization in Europe, for our plants in Hat Yai and Trang. We take responsibility for visa fees and work permits for all of our foreign workers. All of our employees are provided with appropriate accommodations to ensure good living conditions. To protect the health of our employees, we have secured Sinopharm vaccines for all-local and foreign daily wage and salaried employees-who are now fully vaccinated. Additionally, we have organized the “Sri Trang Group.

Due to the drop of new Covit infections (especially in Thailand), market sentiment is not to kind of glove manufacturers. But this is a bit silly as STGT exports to over 170 countries worldwide -and the global market is far from saturated. It also benefits from Baht vs. US$ weakness.  I will likely have more to say on all this as time goes by -but today just wanted to share the above news on these two companies delivery of highest SET dividends and how this is likely to continue at least at similar levels, or even if a bit less still likely to remain at double digit.  Hence my buy view on both continue for those seeking very high current dividend income, the highest of any SET/MAI listed company here!

Best Regards,

Paul A. Renaud.