Riverstone Holdings

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What’s New

Upgrade to BUY as valuation becomes attractive again after share price correction on vaccine news

Firm ASP and demand trend in FY21F; order visibility extends till December 2021

Mass availability of vaccines will take time; new COVID-19 strain raises risk

FY20F/21F/22F earnings adjusted by -16%/+19%/+4%

TP: Sin$1.85

Source: DBS

https://researchwise.dbsvresearch.com/R ... =fjgbckhaa
on revision to ASP assumptions

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RSTON 4Q20F net profit: RM275m (+54% qoq, +757% yoy)

We forecast RSTON to report net profit of RM275m (+54% qoq, +757% yoy) in 4Q20.

We estimate its healthcare gloves’ ASP grew 10-15% mom in Dec/Jan, and could likely rise by another 5-10% in Feb to c.US$100 per thousand pcs.

Cleanroom gloves’ ASP were also raised by 10-15% in Jan, and currently stand at c.US$110 per thousand pcs.

We believe margin expansion trend should continue in coming quarters, as ASP hikes continue to outpace raw material cost increases.

Source: CIMB

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Another strong showing

4Q20 net profit of RM331m (+85% qoq, +932% yoy) was above expectations.

Dividend declared for FY20 of 22 sen/share also surprised on the upside.

Fundamentals remain solid with further ASP hikes; RSTON continues to prioritise its cleanroom segment to lift sustainable earnings.

Reiterate Add, with a TP of S$2.30 (15x CY22F P/E).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 185E68D49E

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Riverstone leaving no stone unturned as it beats expectations for 4Q20: Analysts

by Lim Hui Jie

Analysts from CGS-CIMB Research and RHB Group Research have maintained their “buy” and “add” calls on Riverstone Holdings, but with lower target prices of $2.30 and $1.85 respectively.

For CGS-CIMB’s Ong Kang Chuen, the lower target price was due to the group’s elevated average selling prices (ASPs) not being sustainable in the long run despite seeing “strong earnings prospects” for Riverstone in FY2021.

Ong noted that despite some shipment delays, Riverstone’s 4QFY2020 net profit of RM$331 million ($108.7 million) was 85% higher q-o-q and a 932% surge y-o-y due to stronger-than-expected margin expansion, led by stronger ASPs. FY2020 net profit also came in at RM$647 million, 396% above FY2019’s figure.

With the declaration of a special dividend, Riverstone’s FY2020 dividend payout ratio is raised to 50%, compared to FY2019’s 42%. Total FY2020 distribution per share (DPS) amounted to 22 sen per share, implying a 5.3% dividend yield.

Ong said he expects the price hike momentum to continue, amid glove shortages and higher raw material prices.

Riverstone targets healthcare and cleanroom glove ASPs to grow respectively by 40% and 30% qoq to US$95 ($126.50) and US$100 per carton in 1QFY2021.

Furthermore, management notes that inventory levels across the supply chain are likely to remain low, with some distributors requesting for air freight recently to meet glove demand.

Moving forward, Ong said Riverstone plans to raise its volume mix from its cleanroom segment to 20% in FY21F, from FY2020’s figure of 15%.

He noted the cleanroom segment typically contributes higher ASPs and gross profit margin (GPMs), and the customer relationship is usually more long term as Riverstone deals directly with the end-customers.

Separately, RHB’s Singapore Research Team gave a $1.85 target price, down from $2.73 as they increased the risk premium in its discounted cash flow (DCF) methodology.

The team noted that at the current share price of $1.37, share prices have declined 45% from their peak in Jul 2020. Riverstone is trading at 6.4 times FY2021 P/E, which is unprecedentedly low.

Source: The Edge

https://www.theedgesingapore.com/capita ... 0-analysts

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Demand on increasing trend 'in coming years', says glove maker Riverstone

by Adam Aziz

"The compounded growth for healthcare gloves is expected to be at an average of 20% for the next three years".

The group saw Employees Provident Fund emerge as a substantial shareholder with a 7.02% stake in December 2020.

Riverstone's healthcare glove segment saw 16% year-on-year growth in demand in the financial year ended Dec 31, 2020 (FY20) "despite a much larger base", Wong said.

Its three-year expansion plan for the healthcare glove segment will add 1.5 billion units per annum in production capacity for each year between FY21 and FY23 to 15 billion in total.

The group is also a producer of cleanroom gloves and consumables, with sales for the glove segment up 65% year-on-year on robust demand from electronic products manufacturers.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... riverstone

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Riverstone Holdings posts 1,021.7% jump in 1QFY21 earnings

Glovemaker Riverstone Holdings has reported earnings of RM522.7 million for the three months ended March 2021, up 1,021.7% y-o-y.

Revenue in the same period was RM1,032.3 million up 269.5% y-o-y, as demand for protective equipment remains strong.

The company’s production capacity, following a recent expansion, has increased by 1.5 billion pieces per year to 10.5 billion pieces.

Its order book remains full till end of the year.

The company is adding the capacity the make another 1.5 billion pieces per year by end of 2021, and additional capacity to make 15 billion pieces per year by end of 2023.

Source: The Edge Singapore

https://www.theedgesingapore.com/news/r ... 1-earnings

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Riverstone Holdings (RSTON SP)
1Q21: Strong Beat, Strength Of Cleanroom Gloves Underappreciated

1Q21 net profit of RM523m (+1,022% yoy/+58% qoq) beat our estimate by >100%, due to higher-than-expected ASP and net margin, as demand continues to outpace supply.

We believe that Riverstone’s cleanroom gloves stand a good chance of maintaining
favourable ASP beyond the pandemic, given its unique selling points.

Riverstone targets to increase its capacity by 1.5b pieces a year to 15b pieces in 2023. We raise our target price to S$1.75. Maintain BUY.

Source: UOBKH

https://research.uobkayhian.com/content ... 0aea873846

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Starting the year with a bang

1Q21 net profit of RM523m (+58% qoq, 11-fold increase yoy) was above expectations, as RSTON continued to benefit from higher glove ASPs.

RSTON’s prioritisation of cleanroom glove segment during Covid-19 crisis will lift its sustainable earnings profile, even as healthcare glove ASPs normalise.

Higher dividend payout remains a key catalyst – assuming 60% DPR, FY21F div. yield could reach 13.2%. Maintain Add, with a DCF-based TP of S$1.80.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 9FE9E3A943

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Riverstone to continue benefitting from strong glove demand: analysts

by Atiqah Mokhtar

DBS expects ASP for cleanroom to be firmer and less volatile than for healthcare, due to tighter supply and less competition for cleanroom gloves, in addition to downward pressure on healthcare glove ASP following the steep increase during the previous quarter and easing raw material prices.

“Riverstone is a value play for its attractive near-term yield of 11%, low 10 times FY2023 P/E, and strong balance sheet, with net cash of RM641 million”.

Source: The Edge

https://www.theedgesingapore.com/capita ... d-analysts

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Riverstone Holdings: BUY
Last Traded Price: S$1.38; Price Target (12-mth): S$1.86 (Upside 34.8%)

Measures to address COVID-19

Riverstone has detected 75 positive cases out of 1,500 tests conducted on as at 5 June 2021

The tests come after a positive COVID-19 case was detected among Riverstone’s factory workers on 4 June

The affected factory has been temporarily closed with Riverstone’s other factories operating at a workforce capacity of 60% as required by the government

Riverstone estimates that it will lose production capacity of 200 million gloves representing c.2% of its total annual production capacity

Source: DBS