Which Is The Cheaper Rubber Glove Making Stock: Top Glove Or Riverstone Holdings Limited?

Credit: Rvierstone Holdings Limited

There are at least three rubber glove manufacturers listed in Singapore’s stock market. The two largest ones are Top Glove (SGX: BVA)(KLSE: 7113.KL) and Riverstone Holdings Limited (SGX: AP4).

As a quick introduction, Top Glove is the largest rubber gloves maker in the world with a market share of around 25%. It is dual-listed in both Singapore (since June 2016) and Malaysia (since March 2001). Meanwhile, Riverstone was listed in November 2006 and produces both cleanroom rubber gloves and medical rubber gloves.

The rubber gloves industry is a growing one. According to Top Glove, demand for rubber gloves has nearly doubled from 103 billion pieces in 2007 to 190 billion in 2016. Growth in the years ahead is estimated to be around 6% to 8% per year.

Given that both Top Glove and Riverstone are glove manufacturing companies (both are also based in Malaysia), investors may be wondering which is the better buy.

In such decisions, valuation is one of the important factors to consider. So, let’s have a look at the valuation of the two glove makers. The valuation metrics I’m concerned with here are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. This is how the two companies’ valuation metrics stack up right now:

Source: S&P Global Market Intelligence

We can see that Top Glove is the company with the higher PB and PE ratios. Based on the valuation metrics we’ve studied here, Riverstone is actually the cheaper stock. This does not mean that Riverstone is necessarily the better buy.

As I mentioned earlier, valuation is just one of the important factors to consider when making an investing decision. Other areas of the two companies – such as their growth prospects, and the quality of their management team – would also need to be investigated.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and 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. The Motley Fool Singapore has recommended shares of Riverstone. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.