The Motley Fool

3 Things Investors Should Know About Riverstone Holdings Limited’s Growth Prospects

Riverstone Holdings Limited (SGX: AP4) is a Malaysia-based company operating in two key areas of the rubber-gloves industry: cleanroom gloves and medical gloves.

The company recently published its annual report for the year ending 31 December 2018. 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 recently.

I want to focus specifically on management’s thoughts on its future growth prospects.

To start with, management is generally optimistic about the prospects of both the cleanroom gloves and healthcare gloves segments.

On the cleanroom gloves segment, management shared the following:

“For our cleanroom glove segment, we continue to maintain our leadership position with 60.0% of the global market share of Class 10 and 100 customised cleanroom gloves. While growth in demand from hard-disk drive manufacturers have tapered, we continue to procure new customers from pharmaceutical and high-tech electronics industries that manufacture products such as mobile phones, tablets, lenses and sensors. Supported by a diversified customer base, we are optimistic that the cleanroom segment will continue to grow.”

And on the healthcare gloves segment, management added:

“On the other hand, we also continue to enhance our value proposition to customers in the commoditized healthcare glove business with products that contain lesser chemical residues. These product enhancements have already garnered increasing interest from food industries, and should potentially allow us to grow our market share in these untapped markets.”

Moreover, management provided an update on its capacity expansion plan in the letter.

“Looking ahead, phase 6 of our capacity expansion plans is well underway to add 1.4 billion pieces to amass a total of 10.4 billion pieces by the end of the year, representing a healthy growth rate of 15.6%. Having consistently maintained an utilisation rate of 90.0%, the new lines coming on board will allow us to capitalize on strengthening global demand.

With the market for healthcare gloves expected to grow at approximately 8.0% per annum on a large base of 268 billion pieces of gloves in 2018, we have also begun mapping the blueprint for further expansion plans beyond 2019. In November 2018, we paved the way with the acquisition of 14.64 acres of land in Taiping, Malaysia which will house our new production facilities in due time.”

The Foolish bottom line

Riverstone’s long-term growth prospects remain positive, and the company’s capacity expansion plans are on track.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.  

The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.

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 Group Ltd.