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Profits and Dividends Growing At Riverstone

Riverstone Holdings (SGX: AP4), which is involved in the production of cleanroom and healthcare gloves, fingercots, face masks and packaging bags, released its full year results on Wednesday.

Revenue was lifted by 15.5% year-on-year to RM357.9 million while net profit spiked 46.2% to RM58 million. Correspondingly, the company’s diluted earnings per share (EPS) also grew 36.7% to 16.02 sen.

Riverstone was established in 1989 and its products are widely used in the hard disk drive, semiconductor and healthcare industries. It currently has plants in Thailand, China and Malaysia and has an annual production capacity of 3.1 billion gloves as of 31 Dec 2013.

Revenue for the year increased due to the expansion in the company’s production capacity and increased demand for its product offerings, especially healthcare gloves.

Meanwhile, the company’s gross profits went up much faster at 36.7% to RM97.8 million as the raw material costs for its products increased by only 9.2% to RM260 million. The increase in gross profits eventually trickled down to Riverstone’s bottom-line and resulted in the 46.2% spike in profit.

Riverstone’s balance sheet remains really strong and has even strengthened compared to a year ago. The company ended 2013 with RM57.1 million in cash on its balance sheet with zero debt, an improvement from 2012 when it had RM30.1 million in cash and no debt.

For the full year, the company generated cash flow of RM80.2 million from its business operations, an increase of 34.8%. It spent RM29.5 million in capital expenditures, thus translating to a free cash flow of RM50.7 million.

A final dividend of 4.5 sen per share has been proposed. Including the interim dividend of 2.3 sen, annual dividends for 2013 will be 6.8 sen per ordinary share, an increase of 13.3% from the dividend of 6.0 sen per share paid out in 2012.

The Executive Chairman and Chief Executive Officer of Riverstone, Mr Wong Teek Son, beamed, “We are pleased to announce a strong set of financial results for the year as we continue to focus on enhancing shareholder value through our consistent performance. Our overall strategy in adopting a two-prong approach by venturing into both cleanroom and healthcare gloves to grow our business is testament to our success.”

Shares of the glove maker are currently selling for S$0.775 apiece. Using the latest exchange rate of S$1.00 to RM2.59, the diluted EPS and dividend for the year would be at 6.19 Singapore cents and 2.63 Singapore cents per share respectively. This translates into a historical price-to-earnings ratio of 12.4 and a dividend yield of 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.