Riverstone Holdings - DBS Research 2015-10-01: Initiate coverage with BUY call

RIVERSTONE HOLDINGS LIMITED AP4.SI

Riverstone Holdings - Initiate coverage with BUY call

We initiate coverage on Riverstone Holdings with BUY call and target price of S$2.15, offering potential upside of c. 34% to current price.
Both short and long-term trends indicate favourable demand growth prospects. The global market for healthcare gloves is estimated to grow at 8-12% p.a. between now and 2020. As a relatively new entrant in the healthcare gloves industry, we project Riverstone’s healthcare glove output to grow 133% from FY14-17 as it intends to grow revenue from this segment quickly to drive its earnings.
In the longer term, Riverstone could also potentially benefit from the substitution of nitrile for latex gloves, which made up c. 53% of the global supply in 2014, from c. 74% 5 years ago.

Riverstone is a beneficiary of strong US$ vs Ringgit and low commodity prices while capacity expansion is expected to underpin growth.

Yeo Kee Yan DBS Vickers | Ling Lee Keng DBS Vickers | http://www.dbsvickers.com/ 2015-10-01

DBS Vickers Analyst Report BUY Initiate BUY 2.15 Same 2.15