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Excerpts from UOB Kay Hian report
Analysts: Shaina Kamlesh Mahtani & Tang Kai Jie
Riverstone Holdings (RSTON SP)
Highlights
• The cleanroom glove segment, which contributes around 70% of earnings should remain robust, helped by ongoing orders from AI-related data centre and memory storage customers. |
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Analysis
| Stronger US dollar provides near-term earnings tailwind |
The recent strengthening of the US dollar against the Malaysian ringgit should be positive for Riverstone Holdings (Riverstone), reversing some of the forex headwinds seen earlier in the year.
USD/MYR has moved to around 4.08 in early-Oct 26, compared with the stronger ringgit environment that weighed on Riverstone’s 1H26 earnings.
With a significant portion of sales denominated in US dollars while a large part of its core base is in ringgit, a stronger US dollar should support revenue translations and margins in the near term.
• Chinese glovemakers’ ASP hikes improve pricing environment. Recent price increases by Chinese glove manufacturers are positive for the broader glove pricing environment. Chinese generic nitrile glove ASPs have risen, narrowing their discount to Malaysian producers to around US$0.50/1,000 pieces from US$1.50-2.00 previously.
This gives Malaysian glovemakers greater room to raise ASPs without materially widening the price differential and should support Riverstone’s healthcare glove pricing and margins.
However, we expect Riverstone to remain selective in competing for generic volumes, given its focus on higher-value customised products.
• Cleanroom remains the key growth engine with demand boost from AI. Cleanroom glove demand has been rising since 2Q26, helped by ongoing orders from AI-related data centre and memory storage customers.
We see the cleanroom segment as Riverstone’s main earnings driver going forward.
Riverstone is also renewing older production lines and moving away from low margin generic output towards higher value cleanroom and customised healthcare products. This should improve product mix and margins over time.
• Robust balance sheet supports dividends. Riverstone continues to hold a sizeable net cash position of around RM576m, which gives it room to keep paying attractive dividends while it upgrades its production lines.
• Healthier demand supports volumes. Global glove demand is growing at about 10% yoy and is expected to exceed 400b pieces in 2026.
Supply and demand are more balanced than in recent years as customers rebuild their stocks.
Malaysian producers have reported stronger orderbooks for October and November even after the recent price increases.
This should help keep utilisation up on Riverstone’s healthcare glove lines.
• Maintain BUY with an unchanged PE-based target price of S$1.21, pegged to 24x 2027F PE (+0.5SD to historical mean).
The premium is justified by Riverstone’s cleanroom moat, net cash balance sheet and consistent dividend track record of above 100% payout ratio. |
 See also: This Multi-Continent Business Delivers Record Revenue, Record Profit, Record Dividends, Record Stock Price |
