Riverstone Holdings Limited (SGX: AP4) is a Singapore-listed but Malaysia-based company that produces rubber gloves. Its gloves are used in both the cleanroom as well as healthcare industries.
In early April this year, Riverstone published its 2017 annual report. Given that reading an annual report is one of the best ways to keep up with a company’s developments, I decided to go through Riverstone’s latest annual report to understand the company’s prospects, and how it had performed in 2017.
Generally, when reading an annual report, I will pay close attention to the letter to shareholders that the company’s chairman and/or CEO writes. In a previous article, I had looked at Riverstone management’s thoughts on the company’s performance in 2017, and some of the challenges it’s likely to face in 2018.
In this article, I want to discuss another area that I found interesting: Management’s thoughts on the company’s growth prospects.
The company is optimistic about the long-term growth prospects of the global gloves industry. Straight from the letter:
“Despite the challenges that prevail, we are optimistic of the growth prospects, encouraged by the rising demand for both cleanroom and healthcare gloves worldwide.”
Management then went on to explain the growth plans for Riverstone’s cleanroom and healthcare gloves businesses:
“Our leading technology and knowhow in cleanroom glove together with our ability to provide solution to our cleanroom glove user, provide us a competitive advantage over our competitors. Looking forward, the Group will enhance our volume in this segment by adding more strategic service centers in Asia Pacific.
In the healthcare segment, our products quality and reliability had gained more recognition from customers, which will ensure any new capacity expansion to be supported by our customers.”
It’s important to note that Riverstone is currently in the midst of expanding its glove production capacity. Here’s an update on the matter in the shareholders’ letter:
“Five years on since our initial expansion plan announced in 2013, we are pleased to share that our plans have been extended to end 2019. Phase 5 expansion to add 1.4 billion of new capacity is well underway, bringing our annual total production capacity to 9.0 billion by the end of 2018. We are also on track to grow our capacity further to 10.4 billion by 2019.
Due to the demand for cleanroom gloves, we had purchased a new factory in Bukit Beruntung for expanding our cleanroom capacity. Once the facilities have completed installation, our cleanroom glove capacity will increase from 1.5 billion pieces currently to 2.0 billion pieces per annum.”
In all, Riverstone’s still has positive long-term growth prospects, and its capacity expansion plans are on track.
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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Riverstone Holdings.