Riverstone

Riverstone: (S$1.66) Malaysia NDR: Eye opener
Maybank-KE hosted a non-deal roadshow for Riverstone in Malaysia and fund managers found Riverstone’s dominance in clean-room glove niche appealing.

Investors particularly liked Riverstone's above-average ROEs, margins and less-demanding valuations than local peers. However, liquidity remained an issue, where management is considering options to boost liquidity.

In addition, Riverstone also benefits from the USD/MYR strength, due to low competition in the cleanroom space.

The group is well-prepared in light of the rising competition, with 50% of its gloves customised for customers for whom quality is more important than costs.

Management shared that it should not be difficult to fill up its new capacity in 3Q16, if it is willing to pass on USD benefits. It has been turning down many orders due to capacity constraints.

Maybank-KE maintains its Buy rating and TP of $2.12, pegged to 19x target P/E.