$SGX-AP4 RIVERSTONE - Takeaway from Q3 2023 Briefing

Before $HARTA / 5168 (HARTALEGA HOLDINGS BERHAD) posted a result that was back in black yesterday, RIVERSTONE posted a strong number as well last Friday. This means that 2 of the historically strongest and well run glove manufacturers posted a QoQ improvement. So is the worst over for the industry? Or strong result was mainly driven by USDMYR?

Here's my takeaway for Riverstone, as well as sharing CIMB's takeaway.

- Volume / Revenue / GP contribution for the company for the quarter between cleanroom v medical:
Volume: 20/80, Revenue: 45/55, Gross Profit: 75/25
- For Riverstone, margin is better mainly due to favourable raw material cost, favourable FX and favorable mix of healthcare / medical glove... For context, Riverstone sells more customised / thicker medical glove than the generic medical glove (3.2-3.4g thickness) over the quarter
- Margin improvement also come from the company ability to secure new customers
- Blended ASP for the company during the quarter was USD26-27 for medical glove, compared to USD25 last quarter. However it's to be noted that generic medical glove price sold by most Malaysian players are still hovering at USD19, while competitors from China are still selling at USD16.
- For cleanroom glove, ASP remains the same but looking at a slight reduction in ASP for class 1000 and below in the next revision. The future trend for cleanroom glove is positive for next year, coming from pharmaceutical client. For semicon clients, seeing improvement but whether it translates to real order remains to be seen.
- Currently Riverstone is at 55% utilisation
- Average FX during quarter was RM4.61
- Management reckons the worst is over, which was in 1H of 2023, but they're not sure how fast the pick up will be. Some factors that contribute to this is the fact that much smaller glove players have stopped operations.
- Going forward, performance will be dependant on once again volume pick up for both medical and cleanroom, FX (above or below 4.60), raw mat price (above USD700-800?), man power.
- Riverstone also plans to payout all earnings this year. They still have cash in the bank. Thus far they had paid 23c ringgit or 6.7c sgd or above 10% dividend yield for 2023. Remarkable.

All in all, we are closing in the 4th year of boom and bust cycle of the industry, and to me, Riverstone comes out of it as the only glove manufacturer globally that remains profitable the entire duration, and of whom had showcased time and again, it's the best run company in the industry.

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