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Investors and analysts did not miss out on questions about the impact of the Trump tariffs on Riverstone Holdings.
The Singapore-listed glove manufacturer does sell a lot of gloves to the US.
But as management explained, it's on FOB (Free On Board) basis, which means the buyers sort out the shipping and any extra costs, like tariffs.
Here are excerpts of the Q&A last week with Riverstone's executive chairman Wong Teek Son:
Q: What is the geographical sales breakdown for cleanroom gloves and healthcare gloves?
A: About 15% of our cleanroom gloves are shipped to the US.
We also ship about 8% to 10% to Europe and the rest, the main users are in Asia-Pacific countries, including Japan and Korea, and other Asian countries.
In short, 75% to 80% are used in Asia.
For healthcare, about 70% are to US and 30% is to Japan and Europe.
 Based in Malaysia, Riverstone produces gloves for use in healthcare and electronics environments.
• Gross profit mix was 30% healthcare, 70% cleanroom.
• Gross profit margin for cleanroom gloves is typically above 50%, compared to ~18% for healthcare gloves.
Q: Could you discuss about the impact of US tariff on your business?
A: In fact, there's no impact so far. Shipment is as usual.
All our healthcare gloves are sold under FOB, so the price is fixed based on FOB, and the buyer has to settle the rest.
Q: How did customers respond?
A: Because we are selling FOB, we don't have much discussion with our customers from the healthcare gloves side.
From the cleanroom gloves side, 15% of our volume is shipped to the US, and it's very clear that the tariff should be paid by the buyer because we sell under FOB.
Q: So they didn't come back and negotiate on anything? There was no change?
A: No change because it's very clear the tax is not in our pricing formula.
Q: Did they raise their prices to pass on to their customers?
A: We do not know.
 Cleanroom glove demand is growing, with new clients across electronics, pharma, and other industries.
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Production Ramp Hit by Gas Shortage
The company has ambitious plans to boost production capacity to 10.5 billion gloves a year, with six new cleanroom glove lines ready to go.
However, a shortage of gas supply is holding things back, delaying the ramp-up until at least July.
But management expects things to improve in the second half of the year once the gas issue is sorted out.
For 2025, the company is targeting around 10% volume growth, with capex set at about RM50 million, mainly for facility upgrades
Riverstone's 2H performance is expected to improve if gas supply normalizes.
The company targets about 10% volume growth for 2025. Gross profit margin on a blended basis is expected to remain around 32%, but the US dollar remains a key variable.
Financials and Dividends
The first quarter of 2025 saw a dividend of 3 sen per share, which was a hefty 78% of the quarter’s earnings.
Going forward, blended gross profit margins are expected to stay around 32%, but currency swings between the US dollar and the ringgit remain a key variable.
Riverstone's balance sheet is strong, and the company is expected to keep up a healthy dividend payout.
Analysts project yields at 5–6% over the next few years.
The 1Q2025 dividend was 3 sen/share, which was 78% of the quarter's earnings.
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What UOB Kay Hian analysts Heidi Mo and John Cheong said:
1Q25: Facing Near-term Headwinds; Downgrade To HOLD
 Heidi Mo, analystRiverstone’s 1Q25 earnings of RM56m (-22% yoy, -19% qoq) missed expectations, impacted by higher raw material costs and unfavourable forex fluctuations.
Interim dividend was reduced by 25% yoy to 3.0 sen.
While volume growth remained strong, healthcare ASPs declined by 5-8% qoq.
Operational ramp-up has been delayed to Jul 25 due to gas supply constraints.
Given these headwinds, we downgrade Riverstone to HOLD with a 29% lower target price of S$0.82.
Full report here.
What CGS-International analyst William Tng said:
Downgrade to Hold; lower FY25F earnings offset by dividend yield
 William Tng, CFA, analystFactoring in the 1Q25 earnings miss, the weaker US$ vs. the RM and the impact of competitive pressure on margins, we reduce our FY25-27F revenue forecasts by 8-16% leading to 18-24% decline in our FY25-27F net profit forecasts.
Our TP falls to S$0.84, still based on 16x P/E (RSTON’s 5-year pre-Covid-19 [2015-19] historical mean) on our FY26F EPS forecast.
There is no change in our valuation basis.
We downgrade our rating to Hold in view of its weaker FY25-27F earnings, with its dividend yields providing some support its share price.
Given RSTON’s still strong balance sheet and limited capex needs, we assume that the company will maintain a 100% payout ratio over FY25-27F.
We project 5.21-6.19% dividend yields over FY25-27F.
See CGS's report here
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