STK Reports Improved Revenue and Gross Profit in Q1 2024, Aims for Record Net Profit in Full Year
In the first quarter of 2024, STK witnessed a gradual market recovery, leading to increased sales volume. To mitigate the impact of order shortages, the company strategically pursued value-added orders, focusing on smaller batches with higher selling prices and margins, such as recycled yarn orders from Japanese customers.
As a result, STK secured eight new customers in the quarter. Net revenue reached nearly 266 billion VND, a modest 8% decline year-over-year, and achieved approximately 10% of the annual target. Recycled yarn contributed over 40% to total revenue.
Source: STK
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After deducting cost of goods sold, the company’s gross profit surged by 81% year-over-year to over 32 billion VND. The gross profit margin doubled to 12%, primarily attributed to higher average selling prices resulting from inventory reductions compared to the same period last year.
However, net profit declined by 56% to slightly over 700 million VND due to a high base effect from the previous quarter’s financial income and increased financial expenses driven by exchange rate fluctuations.
For 2024, STK has set an ambitious target of achieving record net profit of over 300 billion VND, a significant 242% increase from 2023. As of the end of Q1, the company has only realized approximately 2% of this target, indicating the challenges ahead to meet shareholder expectations.
Order Outlook
STK’s management team anticipates improved order flow in the second quarter of 2024, estimating a 10-20% increase compared to Q1. This optimism stems from decreasing inventory levels among brands and gradual market recovery in the latter half of the year.
Speaking at the 2024 Annual General Meeting of Shareholders, STK’s CEO, Mr. Dang Trieu Hoa, shared that the company is actively engaging with brands and customers to secure orders for the Spring/Summer 2025 season, which will be delivered in the second half of 2024. Quarterly sales volumes for Q3 and Q4 2024 are projected to reach 10,500 tons and 12,000 tons, respectively.
Surge in Financial Debt
STK’s balance sheet at March 31, 2024, revealed total assets of nearly 3,447 billion VND, a substantial increase of 473 billion VND compared to the beginning of the year. The increase is primarily attributed to a rise in construction in progress from 783 billion VND at the start of the year to approximately 1,610 billion VND. Conversely, cash and bank deposits declined slightly to 159 billion VND, while inventory value decreased by 58 billion VND to approximately 557 billion VND.
On the liabilities side, total debt increased by 472 billion VND year-over-year to nearly 1,817 billion VND. Total financial debt surged by 444 billion VND to 1,463 billion VND, accounting for approximately 81% of total debt. Long-term borrowings exceeded 1,000 billion VND, primarily used to fund STK’s Unitex project with CTBC Bank.
Unitex Project Update
STK’s management provided an update on the progress of the Unitex project, stating that the company is in the early stages of importing key machinery for POY and DTY. The project is on schedule and aims to complete machine imports in Q1 2024 and construction by the end of Q1 2024. Phase 1 of the Unitex factory, with an annual capacity of 36,000 tons, is expected to commence operations in July 2024.
Source: STK prioritizes price cuts to secure orders, Unitex factory as a beacon of hope
Author: The Manh
