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ALP STOCK INVESTMENT CLUB
Riverstone Holdings (AP4)
(18April2016) close: S$1.03
Target price: S$1.50
1.) Sector: Glove Manufacturer
2.) Core business structure: “Gloves” & “Others”
3.) Segment that generates the highest revenue: Gloves segment contributes 97.4% while others contribute 2.6% of the group total revenue respectively.
4.) Countries that the business operates:
(Listed in Singapore but based in Malaysia)
5.) Challenges: The overall glove manufacturing landscape remains challenging as the group see increasing competition particularly from the healthcare gloves segment. Hence, this has resulted in a lower average selling price.
6.) Strengths : Riverstone has filled its entire production capacity till year-end and has had to turn down some orders due to capacity constraints. Its expansion is on track, with full utilisation of its new capacity by Oct 2015. In addition, Phase 3 expansion has started and full production could potentially commence by Oct 2016
7.) Significant events: 1st Phase of expansion plan in Taiping, Perak, Malaysia completed in December 2014 with a factory building and 6 production dipping lines and increased total annual production capacity to 4.2 billion gloves.
8.) GTI Ranking(last column): 77
10.) Recommendation: BUY. A healthy balance sheet with consistent strong revenue growth signals strong fundamentals of the companies. Riverstone plans to double its annual capacity from 4.2bn gloves in 2014 to at least 8.2bn gloves by 2018 to support growth in both its cleanroom and healthcare glove segments, which could more than double earnings.
COMPILED BY: Germaine
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.