6 Interesting Things You Must Know About this Market Beating Company – Part 1

I managed to attend an investor relations event for Riverstone Holdings Limited (SGX: AP4) recently and was able to gain new insight on this market-beating company.

For readers who are unfamiliar, Riverstone is primarily a manufacturer of disposable nitrile gloves for the clean room and healthcare industry.

Since the start of 2010, the glove-making outfit’s shares have gained 125%, far outpacing the SPDR STI ETF‘s (SGX: ES3) 13% return over the same timeframe. The SPDR STI ETF is a proxy for Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

Here’re six interesting things I learned about Riverstone at the event:

1. Where Riverstone stands in its industry

Riverstone sees itself as the market leader in the cleanroom glove industry and is targeting the premium end of the higher volume healthcare glove industry.

According to information shared by the company, the global healthcare glove market is estimated to be at 165 billion gloves and is growing by 8% to 10% per annum. To put this in context, Riverstone’s total manufacturing capacity was 4.2 billion gloves as of end-2014.

2. How Riverstone differentiates itself

The manufacturing process for Riverstone includes the compounding of special formulations. Riverstone considers the recipe for the compound a trade secret. Furthermore, additional processes like surface treatment and deionized water treatment allow Riverstone to provide customization for its customers, thus serving to differentiate its gloves from that of its competitors.

It’s also notable that no one customer makes up more than 5% of Riverstone’s total revenue.

3. Where growth comes from

The two most visible growth paths for Riverstone appears to be clean room gloves for the mobile and tablet industry and healthcare gloves mainly for the Scandinavian market.

Riverstone entered the healthcare glove segment in 2009 and has seen significant revenue contribution from the segment as a result. This may be evident from the growth in customer location revenue as seen below:

Riverstone chart 1

Source: Riverstone’s earnings report; Europe revenue was split from rest of the world from FY2012 onwards

The move into the higher volume (but lower gross margin) healthcare glove industry was in part due to management’s appreciation of the resilient nature of that segment of the glove market. For 2014, approximately half of Riverstone’s sales came from the cleanroom glove segment with the other half coming from healthcare gloves.

I hope you enjoyed reading this so far, hop on here for the second part!

For more stock analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

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