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10 Quick Things That Investors Should Know About Riverstone Holdings Limited’s Latest Results

Earlier this month, Riverstone Holdings Limited (SGX: AP4) announced its 2018 first-quarter (1Q FY18) earnings update. As a quick introduction, Riverstone is a Malaysia-based company operating in two key areas of the rubber gloves industry: cleanroom gloves and medical gloves.

Here, we will look at 10 things that investors should know from its latest earnings update:

1. Revenue for the reporting quarter improved 2.0% year-on-year to RM 209.8 million.

2. Gross margin for the latest quarter was 22.4%, down from 25.2% in the same period last year, mainly due to the US dollar depreciating against the Malaysian ringgit and a 23% rise in gas input price.

3. Operating profit for the quarter declined by 8.8% year-on-year to RM 35.9 million.

4. Net profit for the reporting quarter fell 7.6% year-on-year to RM 31.1 million.

5. Similarly, earnings per share for the quarter was down by 7.7% to 4.19 sen.

6. In the quarter, Riverstone generated operating cash flow of RM 43.5 million, up from RM 40.4 million a year ago.

7. As of 31 March 2018, Riverstone’s borrowings stood at RM 23.5 million while its cash and bank balances stood at RM 135.1 million, giving it a net cash position of RM111.6 million.

8. The phase 5 expansion is now underway with an additional 1.4 billion pieces to ramp up total annual production capacity to 9.0 billion pieces by end of 2018.

9. The company did not recommend any dividend for the quarter.

10. In its earnings release, Mr Wong Teck Son, the executive chairman and CEO, commented on Riverstone’s growth ahead:

“Following the successful commissioning of the seven new production lines under Phase 4 of our expansion plans, we are pleased to report that Phase 5 is currently in full swing and is poised to lift our total annual capacity from 7.6 billion pieces of gloves as at 31 December 2017 to 9.0 billion by the end of FY2018. Subsequently, Phase 6 is projected to raise this figure to 10.4 billion pieces of gloves per annum by end FY2019, representing a growth rate of 36.8% over the next two years.

With this added capacity in the pipeline, we continue to extend our marketing efforts toward existing and new customers from newer geographies such as the US to capture the region’s burgeoning demand for our products. Given that our existing production lines continue to perform at close to full capacity utilisation, we are confident that our persevering efforts to drive growth in both the cleanroom and healthcare glove segment will allow us to maintain our growth trajectory as we progress into the remainder of FY2018.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has a recommendation for Riverstone Holdings Limited.