DBS Group Research analyst Ling Lee Keng has maintained her “buy” call on Riverstone Holdings, albeit with a lower target price of $1.28 from $1.77 previously.

The new target price is still pegged to Riverstone’s four-year average price-to-earnings (P/E) of 10 times on blended FY2022 and FY2023 earnings to reflect a more “normalised environment”, writes Ling in an Oct 4 report.


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With an estimated 50% market share in the high-end cleanroom (CR) gloves segment, Riverstone stands out among its peers due to the recent plunge in average selling prices (ASPs) for the healthcare (HC) gloves.

On this, Ling has cut her earnings estimates for the FY2021, FY2022 and FY2023 by 16%, 22% and 10% respectively to account for her lower ASP assumptions.

On the other hand, prices for CR gloves have remained relatively stable, notes Ling, although she estimates that the company will see a higher contribution from its CR segment, where ASP is more stable due to the tight supply and higher barriers of entry.

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“We remain positive that Riverstone would be able to increase its market share from new and existing players for CR gloves, given its dominant position in the industry,” writes Ling.

That said, Ling expects earnings contribution from the CR segment to normalise to over 50% of Riverstone’s total earnings from FY2022 onwards.


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The CR segment is currently accounting for 20% of Riverstone’s earnings in the 1HFY2021, while it made up around 70% of the company’s total earnings pre-Covid.

To this end, the current drop of around 20% in Riverstone’s share price over the past two weeks presents a buying opportunity, according to Ling.

Shares in Riverstone closed flat at 88 cents on Oct 5, or an FY2021 P/B of 1.8 times and dividend yield of 11.6%.

Photo: Bloomberg