Riverstone

Riverstone: During a DMG roadshow held recently, Riverstone’s management cite that the renovation of the new plant is on track with trial production starting in 3QFY14 and full production to be ready in 4QFY14. Utilisation rate for the existing production capacity remain high at over 90%, indicating strong performance and margins are likely to remain healthy in the short-run but is expected to be under pressure in the long run in view of the change in sales mix towards lower margin healthcare gloves. Management is also concerned about the intensifying competition in the long run. DMG maintains its BUY rating with TP of $1.15, based on 16.3x FY14 P/E (peer average).