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PR Newswire
12-04-2016, 12:03 PM
Extract of Chairman letter in AR 2015
Our ongoing strategy remains on providing customised solutions to our customers rather than a player focused on mass production. For example, we have developed new cleanroom gloves suitable for the mobile, tablet and LCD manufacturing segments. These gloves demand different physical properties such as its focus on corrosion as compared to the gloves for use in industries such as HDDs and semiconductors. This new line of gloves has been gaining traction globally and allows us to enhance our market leading position in the cleanroom glove segment. In line with this approach, we are pleased to share that we have been making significant progress in penetrating new niche glove markets, particularly in the US. Supported by our strength in product customization and the flexibility of our manufacturing facilities, we have successfully gained momentum within the region.
Anticipating industry trends for a sustainable outlook. Encouraged by the positive market feedback for both our cleanroom and healthcare gloves, we have begun construction of Phase 3 which will add another one billion gloves to an annual production capacity of 6.2 billion glove pieces by 2016. We target commissioning the first production line by the third quarter of 2016 and complete the entire phase by the end of 2016. As a result of our strong balance sheet and ability to generate positive operating cash flows, all three expansion phases are internally funded. In addition to our ongoing expansion plans, we also acquired a new piece of land measuring 9.4 acres located at Kamunting Raya Industrial Estate, which is beside our existing plant in Taiping, Malaysia. This land will house a workers hostel and a potential new factory to support further business expansion beyond FY2018. Despite the positive developments during FY2015, the global glove industry remains challenging as we face rising costs stemming from areas such as operations, labour and energy. Tight competition is also expected for the coming years. In order to tackle the economic uncertainties, we strive for continuous innovation within our dual engines of growth in cleanroom and healthcare gloves while ensuring optimal efficiency of our manufacturing processes.
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My thoughts -
1. Interesting to me that the chairman make special mention of significant progress in US market penetration. For the Year 2015, the key revenue driver is Europe (65%), Malaysia (72%) and Other parts of Asia (23%). Seems to suggest that Rest of World (which house US) with sales contribution of 12% will gain traction and importance in the coming years.
2. At the end of Phase 5, Riverstone will be looking at 8.2 billion glove capacity in Year 2018, with this 9.4 acres new land, potentially add another 1 billion beyond 2018.
3. A review of last 3 years of chairman letter, the same challenges are being highlighted, that of more intense competition, cost pressure (labour+utilities), raw material cost and currency exposure, but management has been able to deliver improving GM%. Moving forward, growth will be less subtle (given its bigger base), but is it still good enough for the shareholders at the current price?
vested
Our ongoing strategy remains on providing customised solutions to our customers rather than a player focused on mass production. For example, we have developed new cleanroom gloves suitable for the mobile, tablet and LCD manufacturing segments. These gloves demand different physical properties such as its focus on corrosion as compared to the gloves for use in industries such as HDDs and semiconductors. This new line of gloves has been gaining traction globally and allows us to enhance our market leading position in the cleanroom glove segment. In line with this approach, we are pleased to share that we have been making significant progress in penetrating new niche glove markets, particularly in the US. Supported by our strength in product customization and the flexibility of our manufacturing facilities, we have successfully gained momentum within the region.
Anticipating industry trends for a sustainable outlook. Encouraged by the positive market feedback for both our cleanroom and healthcare gloves, we have begun construction of Phase 3 which will add another one billion gloves to an annual production capacity of 6.2 billion glove pieces by 2016. We target commissioning the first production line by the third quarter of 2016 and complete the entire phase by the end of 2016. As a result of our strong balance sheet and ability to generate positive operating cash flows, all three expansion phases are internally funded. In addition to our ongoing expansion plans, we also acquired a new piece of land measuring 9.4 acres located at Kamunting Raya Industrial Estate, which is beside our existing plant in Taiping, Malaysia. This land will house a workers hostel and a potential new factory to support further business expansion beyond FY2018. Despite the positive developments during FY2015, the global glove industry remains challenging as we face rising costs stemming from areas such as operations, labour and energy. Tight competition is also expected for the coming years. In order to tackle the economic uncertainties, we strive for continuous innovation within our dual engines of growth in cleanroom and healthcare gloves while ensuring optimal efficiency of our manufacturing processes.
------------------------------------
My thoughts -
1. Interesting to me that the chairman make special mention of significant progress in US market penetration. For the Year 2015, the key revenue driver is Europe (65%), Malaysia (72%) and Other parts of Asia (23%). Seems to suggest that Rest of World (which house US) with sales contribution of 12% will gain traction and importance in the coming years.
2. At the end of Phase 5, Riverstone will be looking at 8.2 billion glove capacity in Year 2018, with this 9.4 acres new land, potentially add another 1 billion beyond 2018.
3. A review of last 3 years of chairman letter, the same challenges are being highlighted, that of more intense competition, cost pressure (labour+utilities), raw material cost and currency exposure, but management has been able to deliver improving GM%. Moving forward, growth will be less subtle (given its bigger base), but is it still good enough for the shareholders at the current price?
vested