Riverstone Holdings

[Zip113]

looking to accumulate during this retracement period

[CityFarmer]

More analyst reports, after the company factory visit to Taiping, Perak. Here the AmFraser report. Glove making business is boring, but boring is good for value investor

(not vested)

---------
We went up to Taiping, Perak, last Friday to visit Riverstone’s new
producƟon plant. Riverstone is a smallish glove maker, that uses
nitrile latex (as opposed to rubber latex) to make gloves for
customers that require more customizaƟon. Riverstone makes both
clean room gloves for the tech sector and also gloves used in the
health care industry.
...
http://remisiers.org/cms_images/research...rstone.pdf

[LLS]

at PE 11 along with a ROE of 17% and being debt-free
this looks like a gem!

thanks for sharing

[CityFarmer]

at PE 11 along with a ROE of 17% and being debt-free
this looks like a gem!

thanks for sharing

Just in case you have mistaken. The PE 11 is based on forward earning. The historical earning PE is around 15 @ current price

(not vested)

[LLS]

thanks for pointing that out
I misread

[CityFarmer]

The company's share price stayed during the recent bearish market. I am hoping for a cheap sale, but disappointed.

The company closest competitor's, Bursa listed Hartalega's share price also pretty stable. The outlook for nitrile glove market is pretty promising, and able to withstand the market pressure.

(not vested in both)

[BlueKelah]

The company's share price stayed during the recent bearish market. I am hoping for a cheap sale, but disappointed.

The company closest competitor's, Bursa listed Hartalega's share price also pretty stable. The outlook for nitrile glove market is pretty promising, and able to withstand the market pressure.

(not vested in both)

dun worry, can't go up forever, someday will be down just like how Apple slid from 700 to 500 last year Can buy in then...

[whatamidoing]

I'm not very positive on the outlook for nitrile gloves. Disclaimer: I do not know if Riverstone competes in a different market. But if we look at their competitors, they are increasing production capacity at a huge rate. Brokers will never bring up the negative points in their reports.

Top Glove - increase by 22%
Supermax - increase by 128%
Kossan - increase by 59%
Hartalega - 15% annually, to increase from 14bn now to 35bn by 2020

The figures are all publicly available, easily googled. Demand for gloves is expected to grow by 15-20% a year according to some articles.

Already, Top Glove (although they do more rubber than nitrile) has seen competition cutting into earnings:
- http://www.themalaysianinsider.com/busin...ompetition
- http://www.themalaysianinsider.com/busin...-top-glove

Caveat emptor

[Tiggerbee]

That's was what happened to China's sports wear and apparel sector in 2011. The industry was growing at double digit pace for many years and everyone expanding their production capacity and opening hundreds of new stores every quarter. When supply far outstripped demand, their revenue plunged double digit, their margins shrunk and they closed down stores by the hundreds every quarter. Anta stock price tanked from more than 18 HKD to almost 4 HKD in less than a year. It had since rebounded to a high of 18 HKD before retracing to 15+ after major shareholders pared stake. The previous number 1, Li Ning, had fallen deeply into the red and is still spilling more red ink than ever.

The same thing can happen to the nitrile glove industry in the next 1-2 years.

[CityFarmer]

That's was what happened to China's sports wear and apparel sector in 2011. The industry was growing at double digit pace for many years and everyone expanding their production capacity and opening hundreds of new stores every quarter. When supply far outstripped demand, their revenue plunged double digit, their margins shrunk and they closed down stores by the hundreds every quarter. Anta stock price tanked from more than 18 HKD to almost 4 HKD in less than a year. It had since rebounded to a high of 18 HKD before retracing to 15+ after major shareholders pared stake. The previous number 1, Li Ning, had fallen deeply into the red and is still spilling more red ink than ever.

The same thing can happen to the nitrile glove industry in the next 1-2 years.

Will the nitrile glove behave as the sport wear in China i.e. over-capacity issue? This is very important question, as we aware the expansion plans of major nitrile producers in Malaysia, the largest exporter of nitrile glove.

Nitrile glove has a unique characteristic over latex glove, which is critical for the targeted industries, e.g. ESD sensitivity, puncture resistant and long shelf time etc. The trend of moving from latex to nitrile has started years ago, and the trend is continue and accelerating as observed.

IMO, there are sufficient motivation to sustain the trend. The next logical question, has the company sufficiently wide moat amid the competition? I am convinced that the company is well-placed for the challenge, with HDD glove market as a stabilizer, while extending to healthcare sector, where the nitrile glove is definitely a preferred glove, and more so after the nitrile's price goes below latex's.

(not vested)