Riverstone

Riverstone: impressive set of 3QFY13 results, in line with DMG's expectations. Net profit rose 49.3% y-o-y to RM15.69m on the back of a 18.9% increase in revenue to RM93.99m. Key drivers were the ramped-up production of its nitrile gloves and strong demand especially for its healthcare gloves. The group is now on track to deliver record performance for FY13E (+40% net profit) and beyond. The recent delisting offer from Top Glove values Catalist competitor, Medi-Flex, at 14.5x FY13 P/E. Comparatively, Riverstone is trading at a lower FY13 P/E of 12.6x while generating twice as much profits and holding a significantly larger cash pile. The essential nitrile manufacturing knowhow especially in the cleanroom space coupled with the growth potential in the sector puts Riverstone as another potential M&A target. The house reiterates BUY with TP $1.05, based on the 16.3x industry average blended forward FY13/14 P/E.