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Riverstone Holdings
11-01-2011, 08:01 AM.
Post: #11
RE: Riverstone Holdings
Jacmar Wrote:I have to go ask them to prove what they claim:

"Riverstone is a leading manufacturer of High-Tech Cleanroom
and Healthcare Gloves
OUR VISIONTo stay as the global leader in the manufacturing of Cleanroomand Healthcare consumables"

Perhaps it's just me that I have seen many companies putting "leading" adjective in their reports but end up not e market leader.

In their reports, they did mention they supply to over 60% of hdd industry. However entire semiconductor industry does not only include hdd industry. There are still wafer base, fabs, assembly & test, EMS which all have respective cleanrooms of different sizes.

Pls share with us when u have justified RS claim.

And a reminder to fellow forumers, most of the discussion points from me are my opinion and not facts unless supplemented by documents which may be doctored as well. Some simple rules like revenue leadership is clearer sometimes.



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11-01-2011, 06:05 PM.
Post: #12
RE: Riverstone Holdings
Many companies may have a mission and vision but it's something they strive to attain, but perhaps have not achieved yet. So we must take such statements with a grain of salt, until we can prove conclusively (through independent market reports) that they do indeed have said market share. Reports can be obtained from market research firms such as Euromonitor or AC Nielsen, at a price of course. Tongue
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11-01-2011, 06:10 PM.
Post: #13
RE: Riverstone Holdings
Personally, it is difficult to ascertain whether the Company truly have a large market share without independent market reports (which may or may not exist). Perhaps, the easiest (and not reliable) way to test it is to see whether the Company's margins remain strong regardless of the economy position.

Another way to look at it is to see whether the total market sales make sense ? If company A claims to have 80% stake in the market which manufactures XYZ and its revenue was $80 million. You may ask yourself whether does it make sense for the market to generate only $100 million worth of sales annually ? Alternatively, speak with people knowledgeable about the industry. I am certain they will be familiar with the manufacturing company if it is the market leader.
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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22-02-2011, 02:08 PM.
Post: #14
RE: Riverstone Holdings
It released its full year briefing presentation slides -

http://info.sgx.com/webcoranncatth.nsf/V...penelement

Judging by its stable 18-20% net profit margins and consecutive increase in net profit, I don't think its gloves are easily replicated and sold in bulk or else it will have commodity margin with volume being the driving force behind growth. Hence, the barriers of entry shouldn't be very low either.

It has raised its dividends to 5.9 RM sen (5th straight year of increase).

(Not Vested)
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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23-02-2011, 08:43 AM.
Post: #15
RE: Riverstone Holdings
Behappyalways Wrote:This glove manufacturer is the APPROVED source for big manufacturing companies so small time contractors working for those big manufacturing plants are asked to buy gloves from them. The gloves are much more expensive than those outside. So the contractors got a way out of this. They bought a little bit from Riverstone and buy the rest from the cheaper sources. They mixed it up and 'claimed' that all their gloves are from the Approved source.....

This assumes that:

1. Riverstone is the approved glove supplier to contractors serving big manufacturing companies; and
2. The contractors can obtain equivalent gloves elsewhere at a lower price

From my understanding of Riverstone's business model:

#1. It does not sell to contractors. It sells directly to the manufacturing plants of big companies and to distributors.

#2. If there are competing gloves of equivalent quality at a lower price, Riverstone would have to lower its prices to match. Its gloves are high-specification commodities. If the customers can get them cheaper elsewhere they will.

The end customers of Riverstone cleanroom gloves are manufacturing HDDs, TFT LCDs, semiconductors etc. Cost is important, but saving money on gloves that cost a few cents each is not a good tradeoff if it results in contamination and loss of a US$50 HDD.

You need to save money on a LOT of gloves to offset the loss of even one HDD. Better to squeeze the suppliers of more expensive items, like the HDD base plate or LCD plastic frame.

Which supplier is being squeezed can probably be deduced by looking at their respective financial statements. Riverstone carries almost no debt but achieved 20% ROE in 2010. Such numbers are not characteristic of a supplier who is being squeezed on price. Either TS Wong is one heck of a manager, or Riverstone's business has a meaningful competitive edge. Maybe both. Or the numbers are fake.

As for the big glove companies, they get 15-20% ROEs too, but they have debt-to-equity ratios of 40-70%. Clearly they are playing a different game from Riverstone.

Is Riverstone for real, then?

So far they have paid out a meaningful proportion of earnings each year. Those who work in companies that use Riverstone gloves can probably make some discreet enquiries as to whether their products are truly up to the mark. Anyone who lives in KL can easily pop by the plants and do his own checks.

To prove a fraud is tough. Red flags are easier to spot and are usually adequate warning signs. In the case of Riverstone, one red flag would be the unusually good profitability compared to other glovemakers. But this can be verified by channel checks on whether their products are indeed high-spec with fewer substitutes.

Another test would be the cash outflow versus the cash inflow. Post-IPO the total cash inflow was 47m (42m IPO + 5m warrants). Capex outflow was 100m. Dividends paid totalled 47m, but 60% went to the 2 insiders, so outflow to minority shareholders was 17m. So we have inflows of 47m against outflows to 3rd parties of 117m.

If the numbers are fake the insiders would have to subsidize up to 70m in order to pay for equipment and dividends. Given that neither insider has sold any shares nor pledged them for borrowing (the shares are held in personal name), it seems unlikely that the insiders are subsidizing the company. Of course, the amounts paid for equipment could be fake too, but that would mean that Riverstone is not actually manufacturing gloves but buying them from elsewhere. The customer audits should spot this if it was occurring. Again, anyone who works in a company that uses Riverstone gloves can check with the person who audits Riverstone's facilities as to how real/fake the facilities are.

As usual, YMMV.

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24-02-2011, 12:55 AM.
Post: #16
RE: Riverstone Holdings
I believe POEM has just stopped coverage on this counter.
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24-02-2011, 03:11 PM.
Post: #17
RE: Riverstone Holdings
I ran a screen tools and came across this company. The numbers in financial statement are good (maybe too good), it reminds me of Unisteel (supplying screws for HDD); HDD manufacturer will not think squeezing supplier on cost of screws (in Riverstone case is the equivalent of glove), not worth the effort, they will focus on big ticket item.

Not familiar with the glove, healthcare and cleanroom industry, but I seem to get the impression that the glove user just use 1 or twice and throw away the glove. Replenish rate should be high. Good recurring biz for glove supplier.

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03-06-2011, 06:19 PM.
Post: #18
RE: Riverstone Holdings
CONSTRUCTION OF 2 NEW PRODUCTION DIPPING LINES

http://info.sgx.com/webcoranncatth.nsf/V...penelement [SGX Announcement]

While Riverstone has historically good revenue and profit growth with stable net margins and net cash gearing between FY 05 to FY 10, the latest 1Q 11 result wasn't very good with net margins dropping to 14.6% (usual 17-19%) due to higher cost of raw materials. The higher capacity may be able to off-set this in FY 11 onwards ? The stock is trading at 5.6% yield with dividends increasing annually for the past 5 years.

(Not Vested)
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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03-06-2011, 10:46 PM.
Post: #19
RE: Riverstone Holdings
(22-02-2011, 02:36 PM)Behappyalways Wrote: Not vested.
can forget about this counter.

Bro, I think you are looking at this perspectives:
- free fall of USD and higher raw material prices, due to inflation

Unless there's some M&A activity in the near term, then otherwise.

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04-08-2011, 03:43 PM. (This post was last modified: 04-08-2011, 03:45 PM by Nick.)
Post: #20
RE: Riverstone Holdings
Riverstone reports 21% rise in 2Q 2011 revenue to RM65.5 million - declares interim dividend of 2.2 sen (RM) per share

http://info.sgx.com/webcoranncatth.nsf/V...penelement [Press Release]

http://info.sgx.com/webcoranncatth.nsf/V...penelement [SGX Announcement]

http://info.sgx.com/webcoranncatth.nsf/V...penelement {Presentation Slides]

There has been a recovery in the 2Q performance due to the growing capacity and the demand for healthcare gloves. Riverstone has reported 6 years of continuous profit growth with ROE exceeding 15% for each of those years. This is pretty good considering that they have maintained a net cash position since listing. Moreover, it has raised its dividends for 5 consecutive years. This year interim dividend is the same as last year. The second phase of the capacity expansion will be completed at the end of the year which will boost its production capacity to 2.3 billion gloves (2010: 1.8 billion gloves).

The key risk will be the USD/MYR rates and MYR/SGD rates. The strong SGD discourages investments in regional companies. Volatile raw material cost is impacting its margins at the moment.

(Not Vested)
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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