STGT gets ready to launch IPO New fund earmarked for expansion plan

Sri Trang Gloves (Thailand) Plc (STGT), one of the world's largest rubber glove producers, is to launch an Initial Public Offering (IPO) to raise fund largely to support its expansion plan.

The IPO, involving up to 444.78 million shares, comes as STGT is gearing up to increase its annual production capacity to over 30 billion pieces this year to meet the surging global market demand especially in the medical circle driven by the COVID-19 pandemic.

The IPO fund will go towards increasing output, improving production efficiency, installing SAP business management system and used as a working capital.

STGT is working to raise natural rubber and nitrile rubber gloves production capacity, now from 132 production lines at its three plants in Songkhla, Surat Thani and Trang, to a total of 32 billion pieces by 2020 from 27.15 billion last year, said STGT CEO Jarinya Jirojkul.

With the ramped up capacity, STGT, already Thailand's largest manufacturer of rubber gloves, will rank third in the world's scale.

The company intends to continue to increase the installed production capacity to maintain its leadership of the production and distribution of rubber gloves in the world market in a sustainable manner, she said.

STGT runs its business under the slogan of 'Touch of Life' to underscore the importance of rubber gloves that are the first touch in protecting life.

The company pays attention to every step of the production, from the selection of raw materials, applying modern production technology that meets international standards, and being environmentally friendly to communities surrounding its production facilities.

For instance, STGT's Surat Thani plant is the first to be certified ISO 14001: 2015, while its Hat Yai plant in Songkhla received the CSR-DIW continuous award for two consecutive years.

Furthermore, STGT and the Sri Trang Agro Industry Group (STA) have jointly developed concentrated latex that has been certified by the Forest Stewardship Council (FSC), an internationally accepted forest management organisation.

STGT's operations are divided in two main streams.

The first group involves the production and distribution of latex gloves which come with versions with being powdered and that without.

The other zeroes is on the production and distribution of nitrile gloves which are made from synthetic rubber and used by medical personnel and industrial sectors.

Meanwhile, STA is the world's largest producer and distributor of natural rubber, and is a major shareholder of STGT.

Such connection has therefore ensured stable raw material supplies and quality control for STGT.

With STGT's plants being located in the neighbourhood of Para rubber plantation areas, the company has gained an access to low-cost latex supplies.

The introduction of automation in certain production lines has enabled STGT to deal with the problems of manpower shortage in the future while enhancing efficiency of the production process.

Last year saw STGT's products marketed in Thailand and exported to more than 95 countries around the world under the trademarks of the company, its subsidiaries and the STA Group.

Among those brands are Sri Trang Gloves, Satory, and I'M GLOVES.

The companies have also involved in OEM (original equipment manufacturer) production.

STGT's 2019 revenue was at 12.22 billion baht, up by 10.3% from the previous year, and a net profit of 613.91 million baht.

Miss Jarinya pointed out that there has been a continued growth in global rubber glove industry due to the rising demand from medical sector and hygiene-related product market around the world.

There has been strong demand especially from the emerging markets such as East Asia, South Asia, Africa and South America.

According to the Malaysian Rubber Glove Manufacturers Association (MARGMA), worldwide demand for rubber gloves in 2019 grew by 12% from the year earlier to about 300 billion pieces.

"Aside from the growth in demand from the medical sector, the spread of corona virus (Covid-19) is also raising public's demand for hygiene products which Include rubber gloves," noted Miss Jarinya.

Mr. Varah Sucharitakul, Executive Director of Finansa Securities Co., Ltd., which serves as the financial advisor to STGT, said the company's current registered capital is 1.43 billion baht with 990 million baht paid up.

There are 1.43 billion shares each with a par value of one baht.

A maximum of 444.78 million IPO shares will be available for subscription, representing no more than 31% of the total issued shares and paid up.

The IPO allotment comes in four tranches: 432.78 million shares for the general public, institutional investors and the company's patrons; two million shares for the directors, executives and employees of STA, and subsidiaries; ten million shares for STGT directors, executives and staff (with four million of which are allotted on the IPO launch date and the remaining six million shares will be offered in the first and second years after the IPO launch); and any remaining shares from the second and third allotments (if any) will be offered to the general public, institutional investors and the company's patrons.

STGT is expected to be listed on the Stock Exchange of Thailand (SET) within this year, Mr. Varah said.