November 29, 2021

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Riverstone Holdings Ltd Results Update (Q3 FY21 )

Pix Source : The Edge

Riverstone results is out for Q3 of the year. For Q3 FY 21 which spans (July-August) the revenue is RM 652 million. This is impressive considering this was the quarter where they were shut down due to EMCO and MCO which resulted in production loss of close to 1.5 months. QoQ it is down compared to Q2 at RM 987 million lesser (34%). Net Profit for this quarter came in at RM 266.4 million which is lower compared Q2 PAT which stood at RM 518 million. This is down around 51%.


To put things into perspective, the 9 months performance of Riverstone in FY 21 is at record levels at RM 2.67 Billion and Net profit at RM 1.267 Billion. In contrast, the full year FY 20 (Revenue was RM1.83 Billion & Net Profit was RM 647.3 million) by 60%. The profit margin for this QR is 53.6% for PBT and 40.8% for PAT.


Riverstone remains net cash has ballooned to a staggering RM 1.74 billion after paying out special dividend in the early part of the year Q. In the context of cash to market capitalisation, Riverstone net cash position stands at 50% of current market cap at RM 3.6 billion (converted from SGD). Operating cashflow was impressive at RM 450 million.

Such result is a testament to the small but efficient glove maker. In FY 20, the full year dividend was 22 sens (inclusive of special dividend bringing total payout to 50%). In the early part of this year, it also declared 10 sens dividend (3.2 sens SGD). I believe with such a strong results at 9 months of the year, Riverstone dividend this year will far exceed last year. At this rate, it would exceed 10% DY at current price of 80 sens SGD.

at 9 Nov 2021

The expansion plan remains on track and Riverstone capacity have no risk of non-takers. It will also be easily be taken up in full especially with their healthy balance with cleanroom glove which is still commanding premium pricing due to semiconductor industry growth. With the 3 years expansion in place, Riverstone will likely reach 12 billion capacity in 2021 and 13.5 billion capacity by FY2022/2023.

Despite a dampener quarter due to closure and production loss as well ASP normalisation, this result still shows resilience. More importantly, the current valuation is deeply attractive. If not for close to 1.5 months pf production loss impact, it would have performed at least 30% better. 

Although Riverstone share price has retraced in tandem with the glove sector due to irrational fears towards the performance of the sector and it losing the flavour of the day with institutions, I firmly believe in the long term value of Riverstone and its future due to it meeting all metrics of the M.O.N.E.Y equation. I have no concern with the stocks fundamental at all.

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

John Lim, CEO of AcePremier.com & renown publisher
【灼见】民粹主义 误国误民
 

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