Riverstone Holdings

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(06-11-2015, 03:26 PM)Jacmar Wrote: core holdings since 2011... this year cover up all my sins in the other counters!

Haha! I feel you buddy.
Time to roll!!!
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At the latest price level, Riverstone rolling P/E is on-par with its Malaysia counterparts now. All are around 20, base on shareinvestor.com

(not vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(06-11-2015, 02:48 PM)CityFarmer Wrote:
(06-11-2015, 11:42 AM)valuebuddies Wrote: Oil price/MYR weakness actually good for their export isn't it?

The point is, oil price/MYR weaknesses, wouldn't last forever, not even in mid-term, IMO.

Oil yes, but MYR is definitely not.[Image: 0j0Tvol.png]
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declining oil prices will be positive for RS since they use largely butadiene which is a by-product of crude oil for their nitrile gloves.

there was a FX gain of about RM4.8m in 3Q2015 set of results and almost RM10m ytd for 9M2015. this has obviously boosted the bottomline nicely as with the other glove manufacturers such as Hartalega, Kossan and Top Glove. most of the glove manufacturers, RS included, have their sales denominated in USD while bulk of their cost components are in local currency (MYR) and the sharp depreciation of MYR/USD contributed to the boost in FX gains.

while strengthening USD has in their favour, it is also worth considering the valuation of the company at present price (P/E, P/B and EV/EBITDA). if I am not wrong, it has even surpassed Top Glove and presently trails behind Hartalega and Kossan with Supermax being the laggard. most of the brokerages have rolled over to FY2016 or even FY2017's earnings to support their buy-rating.
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Too pricey @ $2.47, even for a company with great financials, management and strong growth prospects.

Maybe worthwhile to wait for the price to halve....the bulls will have to get tired sometime
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(06-11-2015, 05:25 PM)valuebuddies Wrote: Oil yes, but MYR is definitely not.

Actually come of think of it, oil and ringgit somehow is tied together and not as decoupled as you think. Due to the reason Malaysia is the oil producing country. When oil rise, ringgit might rise a little bit too. Although the current Malaysia government and politics is another big factor.

So when oil rise it might be a double whammy.
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1 for 1 bonus issue.

On 24 December 2015, SGX-ST has given its in-principle approval for the Proposed Bonus Issue and the listing of and quotation for an aggregate of 371,226,025 Bonus Shares on the basis of one (1) Bonus Share for every one (1) existing ordinary share in the capital of the Company held by Shareholders.
Specuvestor: Asset - Business - Structure.
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The Malaysia foreign labor levy has been doubled, which affected manufacturing sector, including Riverstone.

The tailwinds for glove maker are
- lower MYR vs US$, with sales in US$, and cost in MYR.
- lower oil and rubber prices, thus lower material cost
- high demand on glove globally

The headwinds for glove maker are
- lower ASP due to competition
- Gas price hike in Malaysia
- Labor cost hike in Malaysia, due to higher levy

At the moment, the tailwind wins over the headwinds, with revenue/profit growth on almost all glove makers. Those companies with higher automation, and productivity will prevail once the tailwinds ceased

What your opinion?

(not vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(04-02-2016, 10:16 AM)CityFarmer Wrote: The Malaysia foreign labor levy has been doubled, which affected manufacturing sector, including Riverstone.

The tailwinds for glove maker are
- lower MYR vs US$, with sales in US$, and cost in MYR.
- lower oil and rubber prices, thus lower material cost
- high demand on glove globally

The headwinds for glove maker are
- lower ASP due to competition
- Gas price hike in Malaysia
- Labor cost hike in Malaysia, due to higher levy

At the moment, the tailwind wins over the headwinds, with revenue/profit growth on almost all glove makers. Those companies with higher automation, and productivity will prevail once the tailwinds ceased

What your opinion?

(not vested)

Right now there are 2 strong headwinds facing the industry. What was a tailwind of weaker RM before has become a headwind as RM has appreciated a bit lately. The RM like the oil price seems to have found a near bottom and downside is low vs the upside. This is by far the biggest factor. all the other factors have already been price in earlier except the worker levy. The worker levy impact is not as much as what the share price drop suggest.
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Based on the readings on analyst reports, here are few common views on the sector.

1) The ASP (Average Selling Price) down-trend, is due to passing of the lower material cost and favorable exchange rate to customers. Glove maker will able to increase the ASP, once the trends reversed (?)

2) The increased levy, will be passed to foreign labor, with minimum cost to glove maker (?)

My views on the two are

1) Glove makers are gained by the lower material cost, and favorable exchange rate now. The down-trend of ASP, is mostly due to competition. I am doubting, glove makers are able to increase ASP, amid the competition, and ever expanding capacities, for whatever valid reason(s).

2) I am confidence the statement is true for other sectors, when biz is slow. Manufacturer has more bargaining power over labor cost. I am doubting glove makers are having the power, when everyone is expanding, and labor are in high demand.

What is your view?

(not vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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