On 11 November 2024, Riverstone Holdings Limited (“RS”) announced their third quarter results for FY2024. Their financial position remains resilient, with the low gearing and high net cash position. They were able to also generate consistent profits similar to the previous quarters, though their earnings per share seem to be lower than the total dividend paid out in the calendar year 2024. This may be an indication that the final dividend may be cut when announced in 2025.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Third Quarter Results
Website: General Announcement::Corporate Presentation 3Q2024
Financial Highlights
Revenue
| Metrics | Current | Previous |
|---|---|---|
| Revenue | +16.0% | +7.4% |
| Rating | Favorable | Favorable |
Revenue for the 9 months ending 30 September 2024 increased by 16.0% to MYR794 million from MYR685 million for the same period in the previous financial year, primarily driven by increased production volume and higher average selling prices. Overall, the revenue metric is Favorable.
Earnings per share
| Metrics | Current | Previous |
|---|---|---|
| Earnings per share | +41.9% | +54.7% |
| Rating | Favorable | Favorable |
The earnings per share for the 9 months ending 30 September 2024 increased by 41.9% to MYR0.1463 per share as compared to MYR0.1031 per share in the previous financial year. The increase is more than proportionate than the increase in revenue, due to gross profit increasing by 46.8% driven by a better product mix, higher average selling price, and lower cost of sales during the reporting period. This metric remains Favorable and is a good aspect of the dividend stock.
Operating Cash Flows
| Metrics | Current | Previous |
|---|---|---|
| Operating Cash Flows | +44.5% | +42.9% |
| Rating | Favorable | Favorable |
Cash flow generated from operations in the 9 months ending 30 September 2024 amounted to MYR240 million, an increase by 44.5% compared to MYR166 million for the same period in the previous financial year. The increase continues to be mainly supported by their profit generated during the period, therefore the metrics remain Favorable.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing ratio | 10.2% | 9.1% |
| Rating | Favorable | Favorable |
Gearing ratio stands at 10.2% as of 30 September 2024. This metric is computed using total assets of MYR1,795 million and total liabilities of MYR183 million. The metrics remains Favorable as RS is less reliant on external sources to fund operations.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest coverage | 7,409.5x | 6,562.2x |
| Rating | Favorable | Favorable |
The interest coverage stands at 7,409.5 times as of 30 September 2024, using profit before interest and tax of MYR274 million and finance costs of MYR0.037 million. The significantly high interest coverage is due to the Group has no external borrowings, with finance costs arising due to their lease liabilities. The metric remains Favorable.
Price-to-book ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 3.31 | 2.68 |
| Rating | Unfavorable | Unfavorable |
The Net Asset Value (“NAV”) per share of the Group as of 30 September 2024 stands at MYR1.09 per share. This amounts to SGD0.329 per share when translated at the closing exchange rate of SGD1:MYR3.31 as of 3 December 2024. With a closing share price of SGD1.090 as of 4 December 2024, the Price-to-book (“P/B”) ratio for RS is 3.31. This is Unfavorable as you will be paying a significant premium to its book value.
Website: Yahoo Finance SGD to MYR
Worth noting that with cash and cash equivalents of MYR790 million and no borrowings, at total ordinary shares of 1,484 million this represents net cash of SGD0.16 per share.
As of 4 December 2024, the Market Capitalization is approximately SGD1,616 million.
Website: Yahoo Finance: Riverstone Holdings Limited (AP4.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 6.80% | MYR 0.245 |
| 2023 | 7.77% | MYR 0.280 |
| 2022 | 14.98% | MYR 0.540 |
| 2021 | 8.32% | MYR 0.300 |
| 2020 | 2.73% | MYR 0.099 |
The total dividend payout for the calendar year 2024 amounted to MYR0.245 per share as expected earlier. With a closing share price of SGD1.090 as of 4 December 2024 and the closing exchange rate of SGD1:MYR3.31 as of 3 December 2024, this translates to a dividend yield of 6.79%. For my benchmark, a general reasonable yield would be around 5.00%. The dividend yield is thus Favorable.
Website: Reasonable Dividend Yield 2024Q4 – 5.00%
Do note that their dividend has been on a downtrend though it is still at a relative high yield. A more conservative estimate may be to assume that RS pays a dividend of MYR0.040 per quarter. When annualized, this amounts to MYR0.160 which translates to SGD0.048 and a dividend yield of 4.43%. This dividend yield would be lower than my expected yield as the share price has seen an increase recently.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Revenue | +16.0% | Favorable |
| Earnings per share | +41.9% | Favorable |
| Operating Cash Flows | +44.5% | Favorable |
| Gearing ratio | 10.2% | Favorable |
| Interest coverage | 7,409.5x | Favorable |
| Price to Book Ratio | 3.31 | Unfavorable |
| Overall | Favorable |
Overall, it remains Favorable to invest in RS. They are able to maintain their strong competitive advantages and sustain the high dividend payout. This stock remains a good option for those considering adding for its stability while capitalizing on the glove demand from the semi-conductor and healthcare industry.
Background
Riverstone Resources is established in year 1989, and still growing in their industry. With a history spanning close to 30 years, Riverstone has accumulated a huge network of stakeholders and expertise in their making. Being one of the leading manufacturers of cleanroom and medical industry, they manufacture top of the line healthcare gloves, nitrile gloves, finger cots, face masks, packaging bags etc.
Their products are widely qualified and used in the Hard Disk Drive (HDD), semiconductor and healthcare industries in Malaysia. On top of the achievements, Riverstone exports their products to key high technology countries around Asia, Europe and the American region.
Riverstone has been growing extensively, for the amazing recognition for their products around the world. To cope with growing demands, they have increased their capacity by setting up a new manufacturing plant in Thailand in year 2001, and another one in Wu Xi China in year 2004. Later in year 2010, they built a new plant in Taiping, equipped with only state of the art manufacturing facility to keep their promises for premium quality.
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