Riverstone Holdings (RSTON SP): Looking past the pandemic

  • BUY Entry – 1.30 Target – 1.50 Stop Loss – 1.22

  • Riverstone Holdings Limited produces, sells, and distributes clean-room products for use in highly controlled and critical environments. The company’s products include nitrite and natural rubber gloves and clean-room packaging materials and finger cots, as well as face masks, face pouches, hoods, caps, jumpsuits, and swabs. 

    RS Glove Stripping

  • Looking past the pandemic. While the pandemic-induced demand for gloves in 2020 helped push Riverstone’s share price to a high of S$2.35 (80% higher than its current share price of S$1.33), the company’s business outlook is likely to be driven by production of cleanroom products, which are more sustainable and typically command higher margins.

    These products are primarily used in semiconductor, pharmaceuticals, biotech, life science, aerospace and military applications. 

  • Consensus estimates are still overall bullish despite recent downgrades. There are 4 BUYS / 2 HOLDS / 0 SELL, and a 12m TP of S$1.62 (+22% upside potential), despite recent downgrades by Nomura (Neutral TPS$1.37) and RHB (Neutral TP$1.30).

    FY2021 EPS is forecasted to surge 118% YoY before declining around 50% YoY in FY2022, with the decline largely attributed to the unsustainably high base of FY2021.

    Riverstone currently trades at 4x / 8x FY2021 / FY2022 PE, which is an attractive valuation.

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