10 Quick Numbers For Investors To Better Understand Riverstone Holdings Limited

Credit: Rvierstone Holdings Limited

Riverstone Holdings Limited (SGX: AP4)  is a producer of cleanroom as well as medical rubber gloves. It has been a strong performer in Singapore’s stock market over the last five years with its stock price up in excess of 300%.

Investors who are keen to learn more about this company may want to pay attention to the 10 numbers below that will provide an overview of the gloves manufacturer’s business:

1. 10-year revenue growth rate: According to its annual reports, Riverstone’s revenue in 2006 was just RM122 million whereas its revenue in 2015 was RM560 million. This translates into a compound annual growth rate of 18.5%.

2. 10-year net profit growth rate: Over the same period as above, Riverstone has grown its net profit by 21.1% annually from RM22.5 million to RM126.5 million.

3. Future growth in production capacity: From the chart below, we can see that Riverstone is planning to add about 1 billion gloves per year in additional annual capacity from now until 2018.

Source: Company’s presentation

4. Operating margin in relation to peers: Riverstone’s operating margin for 2015 was 25.8%. In comparison, Top Glove Corporation Bhd  (KLSE: 7113.KL)(SGX: BVA), Kossan Rubber Industries Berhad (KLSE: 7153.KL), and Hartalega Holdings Berhad (KLSE: 5168.KL) reported operating margins of 14.5%, 16.9%, and 24.2%, respectively. Top Glove, Kossan Rubber, and Hartalega are competitors of Riverstone in the gloves industry.

5. The return on equity: According to S&P Global Market Intelligence, Riverstone’s return on equity was 29.7% in 2015. Its peers – the trio mentioned above – had returns on equity of 18.7%, 22.9%, and 18.6%, respectively.

6. Gearing: Riverstone’s total debt to equity ratio is currently 0% as it has zero debt. This has consistently been the case since 2011.

7. Dividend track record: Riverstone was listed in November 2006 and first initiated a dividend that year. Since then, the company has consistently paid an annual dividend. The company’s 2015 dividend of 6.45 sen is roughly 37% of its earnings per share for the same year.

8. Gloves industry trend: According to a presentation by Top Glove, demand in the gloves industry is currently 190 billion pairs. This is expected to grow by 6% to 8% per year for the foreseeable future.

9. The price-to-earnings ratio: At its current share price of S$0.865, Riverstone has a P/E ratio of 15.5. This is higher than the SPDR STI ETF’s (SGX: ES3) P/E of 12. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index  (SGX: ^STI).

10. The price-to-book ratio: Riverstone is priced at 3.7 times book value. This is again higher than the SPDR STI ETF’s P/B ratio of 1.2.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Riverstone Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.