Riverstone (RSTON SP) BUY
9M15: Keeps on delivering. Maintain BUY
Analyst: Andrew Chow Tel: (65) 6590 6633
| Company | Share price(S$) | Recommendation | Our Target Price(S$) | Within Expectation (Y/N) | 3QFY15 EPS (RM cents) | 3QFY16 yoy | Highlights of Results |
| RSTON | 2.09 | BUY | 2.27 | Y | 9.52 | +114% | See comments below |
9MFY15 results highlights
- Solid 9MFY15. Excluding exceptional items (mainly from forex), underlying 9MFY15 net profits grew 64% yoy to RM82.5m. This accounts for 73% of our full year forecast and looks to be in line with our and market expectations.
- Firing on all cycliners. 9MFY15 turnover grew 42% yoy, helped by its capacity expansion. A 5.1ppt rise in net margin to 22% led to a 84% rise in net profit to RM89.3m. However, if we strip out the net foreign exchange gain of RM6.8m, 9M15 recurrent net profit would have grew a solid 64% yoy.
- Cash machine. The group's cash generation capabilities remain strong, with operating cashflow of RM108.4m, which is enough to fund its capacity expansion in FY15. Despite a capex of RM44m YTD, the group remains in a net cash position of RM136.5m (S$0.12/share).
- Maintaining earnings pending analyst briefing on Friday. No change in our earnings estimates pending a briefing.
- A solid company that is delivering; BUY. We continue to have a BUY rating (with a target price of S$2.27) on Riverstone and see the potential for an expansion in its valuation due to management's solid execution. We project a 3 year net profit CAGR of 30% (FY14-17) on the back of: a) strong take-up of its cleanroom gloves in the tablet and mobile segments, b) resilient demand from the healthcare sector, and c) production capacity expansion from 4.2b pieces in 2014 to 8.2b pieces in 2018.
Regards
Andrew Chow, CFA
UOB Kay Hian Research
DID: +65-6590 6633
Email: andrewchow@uobkayhian.com
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