Sri Trang Gloves (Thailand) Plc. 2Q25 Financial Review: Navigating Tariffs and Competition
Sri Trang Gloves (Thailand) Plc. (STGT), a SET100 Index company and global leader in sustainable glove manufacturing, released its 2Q25 financial results amid challenging macroeconomic and competitive environments. This article analyzes the latest quarterly performance, highlights key financial metrics, and provides actionable insights for investors.
Key Financial Metrics: 2Q25 vs. 1Q25 and 2Q24
| Metric |
2Q25 |
1Q25 |
2Q24 |
YoY Change |
QoQ Change |
| Sales Volume (mil pcs.) |
9,091.1 |
9,191.2 |
8,429.2 |
+7.9% |
-1.1% |
| Sales Revenue (THB mil) |
5,997.2 |
6,545.8 |
5,735.6 |
+4.6% |
-8.4% |
| Gross Profit (THB mil) |
518.0 |
849.3 |
773.6 |
-33.0% |
-39.0% |
| Net Profit (THB mil) |
77.1 |
424.2 |
378.4 |
-79.6% |
-81.8% |
| Gross Profit Margin (%) |
8.6 |
13.0 |
13.5 |
-4.9% |
-33.4% |
| EBITDA (THB mil) |
752.8 |
1,093.2 |
985.4 |
-23.6% |
-31.1% |
| Net Profit Margin (%) |
1.3 |
6.5 |
6.6 |
-5.3% |
-80.2% |
No dividend information was disclosed in the report, so this section is omitted.
Performance Trends and Notable Events
- Margins Compressing: Gross profit margin declined sharply to 8.6% from 13.0% in 1Q25 and 13.5% in 2Q24, driven by intense competition, lower average selling prices (ASP), and THB appreciation offsetting cost declines.
- Sales Volume Resilience: Despite US tariff uncertainty, sales volume fell only 1.1% QoQ but rose 7.9% YoY, showing underlying global demand recovery. Revenue was up YoY (+4.6%) though down QoQ (-8.4%) due to cautious US demand and ASP pressure.
- Net Profit Impacted: Net profit fell sharply (-81.8% QoQ and -79.6% YoY). The drop is attributed to US reciprocal tariffs, which led to a wait-and-see approach from US customers while the final tariff rate is pending.
- Financial Strength: STGT maintains a healthy balance sheet with Net Interest-Bearing Debt/Equity at 0.06x, current ratio at 2.07x, and interest coverage at 11.7x. EBITDA margin remains positive (12.6%), supporting robust cash flow generation (+23.6% YoY).
- Tax and Financing: Effective tax rate was 18.3%, benefiting from BOI tax incentives (5-8 years tax-free status for new investments). About 46% of financing is under a government interest subsidy scheme, supporting lower finance costs.
- Strategic Positioning: STGT’s geographic revenue mix is well diversified, with Asia contributing 30-40%, and the US/EU/Latin America each less than 20%. Production facilities are resilient and interchangeable, allowing flexibility amid potential geopolitical risks.
- Leadership Initiatives: The company is expanding specialty glove lines, optimizing production, entering new markets (e.g., Haiti, Sierra Leone), and accelerating adoption of automation and AI in operations.
Chairman’s Statement
No Chairman’s statement was disclosed in the report.
Outlook and Forecasted Risks
- US Tariff Uncertainty: Temporary drop in profit and margin is directly linked to reciprocal US tariffs on Thai gloves. Customers are cautious while waiting for clarity on future tariff rates.
- Global Demand Recovery: Sales volume growth (+7.9% YoY) signals global demand normalization.
- Competitive Pressure: Price competition remains fierce, impacting ASP and margins.
- Operational Efficiency: Investment in automation and AI is expected to support long-term margin recovery and product quality.
Conclusion: Investor Recommendations
Overall Performance and Outlook: STGT’s 2Q25 results reflect a challenging environment, with significant profit and margin compression due to external tariff events and competitive pricing. However, the company maintains solid financial health, resilient sales volume, and is actively investing in strategic initiatives for future growth. The outlook appears neutral-to-cautiously positive, contingent upon resolution of US tariff uncertainty and margin recovery.
- If you are currently holding STGT stock: Consider maintaining your position if you have a medium-to-long term horizon. The company has a strong balance sheet and operational flexibility, and demand normalization is underway. Monitor tariff developments and margin trends closely.
- If you are not currently holding STGT stock: It may be prudent to wait for clarity on US tariff outcomes and improvement in margin trends before initiating a position. Watch for signals of margin recovery and sustained demand growth.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Financial markets are subject to risks, and investors should conduct their own due diligence or consult with a qualified financial advisor before making investment decisions.
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