September 18, 2021

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Resilient Riverstone Results Update (Q2 FY21 )

Riverstone results is out for Q2 of the year. The results delivered is in half year format as that is how SGX Reporting is done. For 1H2021, the Revenue is RM 2.02 Billion. Which means for Q2 this quarter, it is equivalent to RM 987 million lesser (4.6%) than Q1 which was RM 1.032 Billion. Net Profit for this half is equivalent to RM1.04 Billion, which means Q2 PAT is RM 518 million. It is marginally lesser (0.8%) than RM 522 in Q1.

To put things into perspective, half year performance of Riverstone in FY 21 already exceeded full year FY 20 (Revenue was RM1.83 Billion & Net Profit was RM 647.3 million) by 60%. The profit margin hit 69% for PBT and 52% for PAT.

Riverstone remains net cash at a staggering RM 1.3 billion after paying out special dividend last Q. In the context of cash to market capitalisation, Riverstone net cash position stands at 23% of RM 5.6 billion. Operating cashflow was impressive at RM 1.38 billion.

The war chest keeps growing for this small but efficient glove maker. As such it declared a 10 sens (3.2 sens SG) interim dividend. At current price of SGD 1.21, the yield thus far is 2.6%. In FY 20, the full year dividend was 22 sens (inclusive of special dividend bringing total payout to 50%). I believe with such a strong results where half year already exceeded full year results, Riverstone dividend this year will exceed last year. At this rate, it would exceed 7% DY at minimum.

The expansion plan remains on track and unlike bigger players, Riverstone capacity would easily be taken up in full especially with their healthy balance with cleanroom glove which is still commanding premium pricing due to semiconductor industry boom. With the 3 years expansion in place, Riverstone will likely reach 12 billion capacity in 2021 and 15 billion capacity by 2023.

Although it appears that the current quarter revenue & net profit did not break the earlier quarter, please note due to Covid-19 cases in June, Riverstone was shut for period of more than 1 week where the company estimated a 2% hit to full year revenue (which is a loss of 200 million pieces of gloves sale). However, after that there was the 60% operational capacity restriction for MCO which further reduced its performance. Which means Riverstone in spite of losing more than 200 million pieces of glove sales, it still managed to deliver comparable results. If not for this impact, it would have broken last QR record earnings.

Riverstone is very resilient. They remain confident on their outlook and it shows they know what they are doing. It is a consistent performer despite the minute size, a reliable management indeed.

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"I believe with such a strong results where half year already exceeded full year results, Riverstone dividend this year will definitely exceed last year. At this rate, it would exceed 7% DY at minimum."

The war chest keeps growing for this small but efficient glove maker. As such it declared a 10 sens (3.2 sens SG) interim dividend. At current price of SGD 1.21, the yield thus far is 2.6%. In FY 20, the full year dividend was 22 sens (inclusive of special dividend bringing total payout to 50%). I believe with such a strong results where half year already exceeded full year results, Riverstone dividend this year will exceed last year. At this rate, it would exceed 7% DY at minimum.

The expansion plan remains on track and unlike bigger players, Riverstone capacity would easily be taken up in full especially with their healthy balance with cleanroom glove which is still commanding premium pricing due to semiconductor industry boom. With the 3 years expansion in place, Riverstone will likely reach 12 billion capacity in 2021 and 15 billion capacity by 2023.

Although it appears that the current quarter revenue & net profit did not break the earlier quarter, please note due to Covid-19 cases in June, Riverstone was shut for period of more than 1 week where the company estimated a 2% hit to full year revenue (which is a loss of 200 million pieces of gloves sale). However, after that there was the 60% operational capacity restriction for MCO which further reduced its performance. Which means Riverstone in spite of losing more than 200 million pieces of glove sales, it still managed to deliver comparable results. If not for this impact, it would have broken last QR record earnings.

Riverstone is very resilient. They remain confident on their outlook and it shows they know what they are doing. It is a consistent performer despite the minute size, a reliable management indeed.


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Author of "Once Upon A Time In Bursa", please click MPH Bookstore / Popular Bookstore / Shopee

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This  information should not and cannot be construed as or relied on and (for  all intents and purposes) does not constitute financial, investment or  any other form of advice. Any investment involves the taking of  substantial risks, including (but not limited to) complete loss of  capital. Every investor has different strategies, risk tolerances and  time frames. You are advised to perform your own independent checks,  research or study; and you should contact a licensed professional before  making any investment decisions.

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