Riverstone Holdings

[cyclone]

As announced by the company. by the end of 2012 the Group’s production capacity is expected to increase by 300 million to 3.1 billion gloves. On a fully diluted basis, the trailling P/E is about 9. ROE / ROA in these several years have been in the high teens. Clean balance sheet. Major holders exercise the warrants like crazy.

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As a reminder, the ex-dividend date for 2.2 cents MYR is 12 Sept 2012.

Vested.

[shn]

Dropped to 48 cents and closed at 48.5 cents. Yield is about 5%. Not a bad deal. Ex date for final dividend of 3.8 sen is early May. Interim was 2.2 sen.

Added some today.

[hongonn]

Just received the Riverstone result, not bad for this quarter. The drop in rubber price and weakness in USD finally show up in the result. The net margin rise to 14.7%, and PE now is 8.8x, also partly thanks to the recent spike of MYR.

NAV is S$0.33 so you are not paying much above the NAV. The dividend yield is good too, around 5% if not mistaken.

This stock is really missed out in the recent bull run. Probably people is concern about the massive amount of warrant exercise. Anyway good to see the result finally improved.

Oh ya, i also a bit concerned about their HDD clean room segment (major client Seagate). As we know the PC sector is declining fast, anyone knows how is the impact to HDD sector? Could their clean room glove sales get affected?

[NTL]

Just received the Riverstone result, not bad for this quarter. The drop in rubber price and weakness in USD finally show up in the result. The net margin rise to 14.7%, and PE now is 8.8x, also partly thanks to the recent spike of MYR.

NAV is S$0.33 so you are not paying much above the NAV. The dividend yield is good too, around 5% if not mistaken.

This stock is really missed out in the recent bull run. Probably people is concern about the massive amount of warrant exercise. Anyway good to see the result finally improved.

Oh ya, i also a bit concerned about their HDD clean room segment (major client Seagate). As we know the PC sector is declining fast, anyone knows how is the impact to HDD sector? Could their clean room glove sales get affected?

Extracted from FY12 Annual Report:
"2012 was a tough year for the electronics industry, especially the Hard Disk Drive sector (“HDD sector”). The recovery in the sector has been slower than expected due to the weak global economic environment.
Last year, I shared that the Group had developed a new cleanroom product to serve a new market segment within the electronics industry. I am pleased that we have been successful in marketing the product to the manufacturers of flat panels and tablets and are seeing increasing market acceptance. Demand for the new product has enabled us to lift overall increase in sales of cleanroom gloves to 10% in 2012, notwithstanding the flat demand from the HDD sector. With this new product, we have managed to carve a new niche for ourselves and reinforce our market position as a leading innovator for cleanroom gloves.
Sales of healthcare gloves continue to be strong, with volume sales up by 23% last year. However, average selling prices were under pressure due to competition as new nitrile capacity came onstream, especially in the second half of the year. Glove manufacturers were also unable to pass on the full impact of cost increases such as the increases in raw materials, fuel and labour costs."

[hongonn]

Last year, I shared that the Group had developed a new cleanroom product to serve a new market segment within the electronics industry. I am pleased that we have been successful in marketing the product to the manufacturers of flat panels and tablets and are seeing increasing market acceptance. Demand for the new product has enabled us to lift overall increase in sales of cleanroom gloves to 10% in 2012, notwithstanding the flat demand from the HDD sector. With this new product, we have managed to carve a new niche for ourselves and reinforce our market position as a leading innovator for cleanroom gloves.

Hi NTL,

Thanks for your info. This really clear the last barrage. Glad they find another segment in clean room. Clean room is their biggest advantage. As for the healthcare glove there are too many much bigger competitors in Malaysia, which i guess Riverstone just ride on the wave which lift every glove players, they don't really have the differential factor in healthcare glove.

I heard those bigger glove makers are also busy ramping up their nitrile capacity aggressively since they have learned a lesson from the rubber price hike. So i afraid Riverstone nitrile advantage is losing fast too.

Hehe during a visit to hospital i do heard doctor complained about Latex his hand get allergy of that.

[Drizzt]

i see they exercise 19 mil worth of warrant as well. i wonder what they will do with the cash, will it use for expansion?

[AlphaQuant]

i see they exercise 19 mil worth of warrant as well. i wonder what they will do with the cash, will it use for expansion?

IIRC, they bought a piece of land in Perak (i think it is the annoucement below) and will be building a new line to ramp up their production.

The Board of Directors of Riverstone Holdings Limited (the “Company” or together with its subsidiaries,
the “Group”) is pleased to announce that the Company’s wholly-owned subsidiary, Sinetimed
Consumables Sdn Bhd (“Sinetimed”) had acquired a piece of land of 30 acres located at Kamunting
Raya Industrial Estate, Taiping, Perak, Malaysia for a purchase price of RM12,414,600.00 (the “Land”)
The Company intends to utilise the Land to support the business expansion of Sinetimed.

[BlueKelah]

in Australia hospitals where I work almost 50% nitrile gloves used now to cater for people with allergy to latex.
Pro for nitrile - no messy powder, non allergic, thicker than latex
Cons - thicker so makes touch feeling less sensitive for procedures

On another note, notice some share buy backs recently, any comments on whether this is good move by management?

Hi NTL,

Thanks for your info. This really clear the last barrage. Glad they find another segment in clean room. Clean room is their biggest advantage. As for the healthcare glove there are too many much bigger competitors in Malaysia, which i guess Riverstone just ride on the wave which lift every glove players, they don't really have the differential factor in healthcare glove.

I heard those bigger glove makers are also busy ramping up their nitrile capacity aggressively since they have learned a lesson from the rubber price hike. So i afraid Riverstone nitrile advantage is losing fast too.

Hehe during a visit to hospital i do heard doctor complained about Latex his hand get allergy of that.

[NTL]

Announced their Q2 result today.

For this Q, Gross Profit increase from RM16M to RM24M, Gross Margin improves from 21.6% to 26.7%. Net Profit increase from RM11M to RM 14M, Net Margin improves from 14% to 16%.

EPS for 1st half is around 4sen, giving a dividend of 2.3sen.

Sounds pretty good to me.

In another annoucement today...

1) Construction of 1 new single former glove production dipping line

The Company’s wholly-owned subsidiary, Protective Technology Co., Ltd (“Protective Technology”) has awarded a contract to a company in Malaysia to construct another new single former glove production dipping line at 208 Moo 7, Tambol Thatoom, Amphur Srimahaphot, Prachinburi 25140, Thailand for a contract sum of approximately RM2,855,000.00 (equivalent to US$892,000 at the exchange rate of RM3.20 to USD1.00).
The construction of the said new single former glove production dipping line is expected to be completed by first quarter of 2014. When completed, the Group’s production capacity is expected to be increased by 90 million gloves to 3.19 billion gloves.


2) Construction of a new rubber glove factory building
The Company refers to the announcement released on 4 April 2013 relating to the acquisition of land located at Kamunting Raya Industrial Estate, Taiping, Perak, Malaysia by Sinetimed Consumables Sdn Bhd (“Sinetimed”), the Company’s wholly-owned subsidiary. Sinetimed had awarded a contract to a company in Malaysia to construct a new rubber glove factory building at the said land for a total contract sum of RM16.28 million. Construction of the new rubber glove factory building is expected to be completed by end of second quarter 2014. The new rubber glove factory building will be constructed to house production facilities. The Company shall release further announcement as and when appropriate.

Look like they are still expanding. Gloves are on high demand!

[csccc]

Apologies to bring up this thread again.

Qualitatively, Riverstone management has demonstrated commitment and ability in creating a niche market for the company and expand production line opportunistically.

-It commissioned 6 new production lines and increased production capacity from 2.5 billion to 3.1 billion gloves annually. This had borne fruits as shown from the increasing revenue.
-Prudently expanding the dipping lines, existing factory building and land acquisition by utilising the proceeds from warrant conversion.
-Expansion without taking on more debts, but instead relying on proceeds from warrants conversion. Although it results in an increase of outstanding shares, EPS has not been compromised as it grew from 3.28 cents in Q2 FY12 to 3.99 cents in Q2 FY13.
-Management has been re-iterating its efforts to develop the cleanroom gloves market that enjoys higher margin and carve out a strong niche market for the company.

Lastly, the management prioritise shareholders' interest, as shown from its track record of increasing dividends payment and a 50% payout ratio on average.

Taken together, it is a well-run company with efficient operations, competent management with clear expansion strategy and vision, with interest aligned to the shareholders.