A matter of Elasticity [Sri Trang Agro SGX: NC2]
Rubber. Its all around us.
In the very heart of our transportation network, it is in the form of tyres.
In the medical industry it is found in gloves.
At events it found in balloons.
And yes the list goes on.
It is an essential raw material in this world and its main producer is Thailand.
The world's leading producer of natural rubber is Thailand. As of 2019, Thailand's natural rubber production amounted to 4.85 million metric tons. In second place is Indonesia, with 2019 production amounting to 3.3 million metric tons.
With that at my core, I started looking for rubber manufacturers or suppliers with their main business operations in Thailand and this lead me to the discovery of SRI TRANG AGRO-INDUSTRY PCL (SGX:NC2) here in known as STA.
Now STA has had a pretty interesting journey but basically they supply rubber and early this year they vertically integrated and expanded into Glove production.
The one thing I love about companies is vertical integration and the sole reason is because they become their own suppliers and retailers. There really couldn't be a more perfect match.
When I bought into STA, it was really more discretionary trading at work as I invested in it based on the logic that it is an essential service. Furthermore with the Covid-19 outbreak, the ASP of gloves went up and with that, I'ld assume that raw material cost would go up too.
It was AFTER buying into STA that I looked into their financial statements. I've come to cut down on such acts of aggression as investors should always do their homework first before buying into the company.
Needless to say, STA has not been performing well of late as their counter has been severely overbought in the past 3 month.
I am relying on their upcoming earnings call as a catalyst this coming Monday and I believe that this investment definitely makes sense. After the market closed on the 14th of August, their earnings was released and you may find it here.
Please listen to the experts from UOB. I'm just doing my best to make sense of stuff but I do depend very much on their research.
Earnings look great so far so lets be sure to collect some well-earned cents on Monday. Have a great weekend everyone.