15-03-2015, 08:38 AM
if we are talking about margins, then it is important to distinguish the large variation between cleanroom and healthcare gloves. if you look at some of the analyst reports, gross margin for cleanroom gloves are much higher (30-35%) compared to healthcare gloves (15-20%). as of FY2014, the revenue contributions are even, hence resulting in the sustainable blended gross margins (FY2014: 27.2% vs FY2013: 27.3%). in terms of absolute ASPs, it was reported by some of the analysts that ASP for cleanroom gloves is about 2.5-3.0 times higher than that of healthcare gloves. one of the key differentiating factor is that Riverstone is a clear leader for the higher specification Class 10/100 cleanroom gloves where they control about 60% of the world's market share, supplying mainly to HDD and semi-conductor manufacturers. this first mover advantage clearly sets them apart from their industry peers.
Riverstone also sell directly to customers for their cleanroom gloves while they sell to distributors for the healthcare gloves.
it is also noteworthy that the raw material for nitrile gloves (which contribute to 90% of Riverstone's revenue as of FY2014) is actually butadiene instead of natural rubber (latex). prices for this commodity seem to have stabilised though at 5-year low according to data found on MREPC.
while some of the industry peers have seen margin compression, Riverstone has maintained it while growing their top and bottomline figures. apart from a two-prong growth approach in both cleanroom and healthcare gloves, the high utilisation rate of 90% (essentially at full capacity) sets them apart from some of the larger peers who are at 70% utilisation rate.
Riverstone also sell directly to customers for their cleanroom gloves while they sell to distributors for the healthcare gloves.
it is also noteworthy that the raw material for nitrile gloves (which contribute to 90% of Riverstone's revenue as of FY2014) is actually butadiene instead of natural rubber (latex). prices for this commodity seem to have stabilised though at 5-year low according to data found on MREPC.
while some of the industry peers have seen margin compression, Riverstone has maintained it while growing their top and bottomline figures. apart from a two-prong growth approach in both cleanroom and healthcare gloves, the high utilisation rate of 90% (essentially at full capacity) sets them apart from some of the larger peers who are at 70% utilisation rate.