• We hosted a non-deal roadshow (NDR) for Riverstone Holdings (RSTON) in Kuala Lumpur (KL), where we saw investors displaying a keen interest in the company.
• Highlights include the competitive strengths that have kept the company as the leader in the premium cleanroom gloves segment and ability to pass on costs.
• Riverstone is on track to expand annual glove capacity by 18% to 9.0bn by end-FY19F.
• We view Riverstone as a laggard play, as it is now trading at a 30% discount to Malaysian peers’ (ex-Hartalega) CY19F P/E average of 20.5x.
• Maintain ADD with a slightly higher Target Price of S$1.30.

Robust Demand Growth Outlook Affirmed

We hosted an NDR for Riverstone in KL on 13 Aug 2018, during which investors displayed a keen interest in the company. We stay positive on its earnings growth outlook as Riverstone is on track to raise annual production capacity by 18% to 9.0bn gloves by end-FY18F and subsequently, to 10.4bn by end-FY19F. 

Utilisation remains at optimal 90% and is likely to be sustained with the capacity expansion, prompted by huge order backlog and robust demand growth outlook for its cleanroom and healthcare gloves.

Source: CGS-CIMB Research - 17 Aug 2018