Can This Company Help Contain Ebola?

The current Ebola pandemic happening in a number of countries around the world might bring back painful memories of Singapore’s own struggles with the Severe Acute Respiratory Syndrome (otherwise known as SARS) back in 2003.

The idea of another outbreak of a serious contagious disease in our region will rightfully make anyone worried. In situations like these, it might provide some comfort to know that medical companies around the world have been working hard to help contain the situation. In fact, there’s even one company listed in Singapore which might have been indirectly helping efforts to fight Ebola.

The proud fighter

Riverstone Holdings Limited (SGX: AP4) is a glove manufacturer based in Malaysia. Although the company’s well-known for its ability to be a leader in the cleanroom gloves space, servicing many electronics manufacturers, 60% of the gloves it produces are actually used in the medical industry.

With the Ebola pandemic starting to appear in North America and Europe, there might be a need for many more medical gloves as healthcare organisations around the world race to contain the virus.

Boosting production

Even way before Ebola had captured media attention, Riverstone was already boosting its production capacity aggressively over the past few years. From a production capacity of ‘just’ 1.1 billion gloves in 2009, Riverstone has steadily increased its production capabilities and has aimed to be able to produce 4.2 billion gloves by the end of this year.

With the growth in number of gloves produced comes an increase in profit. In just the first half of 2014, Riverstone has already achieved a net profit growth of 22%.

With the growth of electronic devices such as smartphones, the demand for cleanroom gloves have been on the rise. Now with the Ebola crisis spreading around the world, the demand for medical gloves would likely also be on the rise. Given the timely (albeit somewhat fortunate, at least for the medical aspect) expansion in its production capacity, it seems that Riverstone would be well positioned to meet demand-increases for gloves over the next few years.

Foolish Summary

Riverstone may be just one of many glove manufacturers in Malaysia. However, it seems to be in a unique position to grow for the next few years. Even though the company still derives most of its revenue from its cleanroom glove business, it may still benefit from the growth in demand for gloves from both the cleanroom and medical categories.

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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 Stanley Lim doesn’t own shares in any companies mentioned.