Riverstone - CGS-CIMB Research 2023-11-06: Emerging Stronger; Upgrade To ADD

• Riverstone (SGX:AP4)’s 3Q23 net profit of RM59m (+26% q-o-q, -7% y-o-y) was above expectations, with 9M23 net profit forming 85% of our FY23F.
• Riverstone declared a 5 sen dividend in 3Q23, bringing year-to-date payout to 10 sen (4.8% dividend yield), which translates into a 97% dividend payout ratio. See Riverstone's dividend dates.

3Q23 a beat on stronger gross profit margin

• - Read this at SGinvestors.io -
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• weaker RM against US$.

Strategy to focus on customised gloves pays off

• While selling prices for generic healthcare gloves remained flattish q-o-q in 3Q23, Riverstone was able to lift its segment ASP and gross profit margin via its emphasis on growing its customised glove offerings.
• Catered to laboratory use or corrosion-resistant applications, such products can command gross profit margin of up to ~30% (compared to less than 5% for generic gloves). Riverstone notes that there is limited competition for this niche market currently, and it was able to capture this opportunity as its dipping lines was designed to cater to more flexible manufacturing originally intended for cleanroom glove production.
• Riverstone is currently reconfiguring one of its plants (previously decommissioned) to cater to production of customised gloves and expects new capacity to come onstream from 2Q24F onwards.

Cleanroom segment hopeful for a better FY24F

• Read more at SGinvestors.io.

ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2023-11-06 SGinvestors.io

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