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Riverstone Holdings Limited

I added 10 lots of Riverstone Holdings Limited today at 47c to my SRS account. I decided not to wait any more.

Riverstone is engaged in the production of cleanroom and healthcare gloves as well as other healthcare consumables. 

Financial Performance (Sourced from Capital IQ)

Revenue has bee increasing steadily over the last 5 years and the net income margin has maintained above 10%. The Company is trading at a historical PE multiple of around 9.9x and has an implied yield of around 5.1%. The Company is financing its growth internally and currently has a huge pile of cash with zero debt. 

What I like about the Company
  • Zero debt and healthy cash balance.
  • Expanded its capacity due to increased is demand for its products (Please refer to announcements made by company)
  • Recurring income as the items are consumables in the healthcare sector. 
  • Probably this counter will act as a good hedge against any outbreak of SARs-like disease.
  • Low cost base in Malaysia.
  • Good dividend yield of > 5%. (I have been waiting for the price to drop for quite a while)
Potential Concerns
  • Entry of new competitors or a price war (There are quite a few competitors in Malaysia).
  • Low liquidity and institutional following. (but this may change after being featured in my blog :-P)
  • Small cap status.
Long Term Chart

The weekly chart looks pretty interesting as it breaks the neckline at 46c. A simple projection will bring it to around 54-58c if fundamentals continue to improve in the coming quarters.

Happy SRSing.

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