• Singapore-listed Riverstone Holdings, which produces gloves, is looking attractive as a dividend stock as interest rates stay low. Following the recent 3Q results, CGS International and UOB KH expect its dividend yields to remain high in FY25-FY27 (5.4-7.4% per CGS; 7.4-8.1% per UOB KH), given Riverstone's robust net cash position. • In addition, both CGS and UOB KH highlight the main earnings driver is the cleanroom glove segment, benefitting from AI and data center demand. A comparison of the two reports:
 • Riverstone produces gloves for not just the healthcare sector but also the electronics industry -- where the AI boom is driving growth.• CGS figures the cleanroom segment is a differentiator worth a valuation premium versus generic healthcare gloves, and details Riverstone’s strategy to produce higher-value customised products. • Read excerpts of UOB KH report below ... |
Excerpts from UOB KH report
Analyst: Heidi Mo
3Q25: Good AI Proxy With >7% Yield; Raise Target Price By 7%
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Highlights
• Strong cleanroom demand from AI-related industries underpins earnings recovery. Gross margin recovered to 30.9% on a better mix and lower costs. |
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Analysis
• Strong balance sheet supports dividends. Operating cash flow remained healthy at RM46m in 3Q25, reinforcing its net cash position of RM661m (S$0.13/share).
A third interim dividend of 2.5 sen/share (3Q24: 4.0 sen/share) was declared, translating into a 77% payout.
Despite lower yoy earnings, its debt-free balance sheet and robust cash holdings underpin consistent dividends.
We expect an attractive 7.4% dividend yield for 2025.
Riverstone CEO Wong Teek Son (second from right) with analysts. File photo
• AI and semiconductor demand drives cleanroom momentum into 2026. The cleanroom glove segment benefitted from stronger demand from data centre and semiconductor customers, fuelled by rising AI infrastructure investment and restocking across the electronics supply chain.
Cleanroom utilisation has reached 75%, aided by newly commissioned lines.
Management expects cleanroom volume growth of 10-15% qoq, supported by expanding hard disk drive orders.
ASPs remain stable at US$90/’000s, reflecting resilient demand.
• Healthcare pricing remains challenging but stable. The healthcare glove segment continues to face ASP headwinds (US$26/’000s) amid global oversupply and intense competition from Chinese and Malaysian peers.
Nonetheless, Riverstone’s focus on customised and higher-spec products for niche medical and industrial applications helped maintain 65% utilisation and improve margins.
Management remains selective in customer acquisition, prioritising quality, product differentiation and long-term relationships.
• Competition rising in healthcare, but cleanroom moat intact. While Chinese players are expanding capacity in Southeast Asia, competition could intensify for generic healthcare gloves once these facilities are qualified, potentially leading to a demand pullback in 2H26.
However, the threat remains contained for Riverstone’s high-spec cleanroom segment, where stringent qualification standards and entrenched customer relationships continue to be meaningful barriers to entry.
Rising utilisation of new production lines should also help reduce depreciation expense and improve operating leverage in 2026 as volumes ramp up and demand from AI-linked industries remains firm.
•  Heidi Mo, analystMaintain BUY with a 7% higher PE-based target price of S$1.05 (S$0.98 previously), pegged to a higher 22x 2026F PE (up from 20x previously), or 0.5SD above its long-term historical mean.This reflects Riverstone’s improving earnings visibility from sustained cleanroom demand from AI and semiconductor customers. • The cleanroom segment’s share of total volume rose from 16% in 2Q25 to 20% in 3Q25, highlighting the ongoing shift toward higher-value products. In view of its debt-free balance sheet, robust net cash position and an around 7.4% dividend yield, we believe Riverstone merits a valuation premium over peers. |
Earnings Revision/Risk
• We trim our 2025/26/27 earnings forecasts by 3%/1%/1% respectively, to reflect lower healthcare glove ASP assumptions and a slower-than-expected recovery in USD/MYR.
While cleanroom volumes are expected to expand, healthcare margins remain capped by intense competition and pricing pressure.
Share Price Catalyst
a) Stronger-than-expected demand for cleanroom and healthcare gloves,
b) higher dividend payouts.
→ See UOB KH's full report here and CGS' here.
