STA/STGT -an update on why I am hanging in there.
STA/STGT an update on why I am hanging in there. In few words: very likely extremely high dividend yield while awaiting a rebound.
While their price decrease is concerning/disappointing I remain of the view to hold on, as combined these 2 stocks should dividend yield some 3 times the average SET dividend, going forward while waiting for betterment. At such current low valuations much of the bad news is priced in, as I explain below. Their stock graphs also seem to confirm this.
STA (34) and STGT (33.50) both model portfolio selections (in good part due to my conviction of continued paying high dividends, which indeed they did this year so far) have seen considerable sell offs of late. Both stocks are now trading at trailing 2021 p/e of barely 3 with 2022 year p/e of around 6 for STGT and 4.3 for STA. based on consensus earnings estimates which are meaningful -as these two companies are large cap's and well followed/analyzed the Thai brokers analysts. You can see the various earnings forecasts by analyst at these two links, as given us by SETTRADE.com here:
In STGT case you can see the median and average EPS forecast is around 5.70 Baht per share for next year 2022, so this stock is now trading at a p/e of 5.8 for next year and in my conservative estimation will yield 8.5% in dividends next year. I am here assuming a 2.85 Baht yearly 2022 dividend. As STGT has a stated policy on paying 50% of earnings, in dividends.
In STA's case you can there see the average and medium estimate for this company is right around 8 Baht per share, for next year 2022. STA has a stated dividend policy of paying 30% of net profits, so say 2.4 Baht. As the stock is trading at 34.50, this comes to 7% for next year. STA is more diversified and has some growth plans beyond its core biz, (pending Hemp biz production), also is a major global producer of natural rubber which could benefit if inflation picks up. Natural rubber prices have been dwindling down of late. Vs. STGT is more a direct play on protective gloves of all kinds, exported around the world, in fact its the world 3rd largest producer of such.
I think both companies pay dividends quarterly, or at least semi annually. Due to such very low p/e valuations, very high dividends and besides being large caps', I feel hungry income seeking investors should just hang in there. I also note both are trading near their major price support. i.e. both longer graphs looks compelling...they look bottomed out, i.e. oversold, around current levels. A rominent/seasoned analyst just answered me when I asked why such price drop: "same as STGT peers in Malaysia (world largest rubber glovers producer) due to 1. selling price decline 2. new capacity increased 3. OCIVD-19 around the world looks better leading to demand decreasing. STA outlook remains positive on demand of rubber products but main of its earnings comes from STGT. Thus, STA should declined when STGT declined".
Best Regards,Paul Renaud. www.thaistocks.com