Excerpts from RHB Research report
Analyst: Leng Seng Choon, CFA, PBM
Investment Case
| Capacity expansion to drive future output. As of Dec 2018, Riverstone had total production capacity of 9bn pieces of gloves pa. The next phase of expansion is underway to raise capacity by 1.4bn to a total of 10.4bn pieces by end-2019. Riverstone is mapping the blueprint for further expansion beyond FY19, with a view to acquiring 14.6 acres of land in Taiping, Malaysia. Global demand for gloves is seen to maintain steady growth, on the back of more healthcare needs – eg USP800 guidelines – and cleanroom requirements following strong electronics demand.  Riverstone's plant in Taiping, Malaysia. NextInsight file photo |
Rising inventories as production ramp-up on the way. Riverstone’s balance sheet recorded Dec 2018 inventories of MYR83.6m (up from Dec 17’s MYR71.1m).
|
Stock price |
98 c |
|
52-week range |
96 c – $1.24 |
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Market cap |
S$737 m |
|
PE (ttm) |
17.3x |
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Dividend yield |
2.26% |
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Year-to-date |
-1% |
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Shares outstanding |
741 m |
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Source: Bloomberg |
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The inventories comprise mainly raw materials, work-in-progress and finished goods.
The increase is in line with ramp up in orders secured for the newly-commissioned production facility.
Key risks include higher gas and raw material prices, which could narrow margins.
Full report here.