Thursday, March 20, 2014

My Evaluation of Riverstone Holding Ltd (AP4) And Why It Is One Of My Picks

As per my earlier post, I've hand-picked two stocks (Riverstone Holdings Ltd and Straco Corporation) to evaluate further for my maiden investment portfolio.
Today, I am going to share a little bit more of my findings so far on Riverstone Holdings Ltd (AP4) and why I think it is viable investment for me.
Disclaimer : I am not a savvy investor and this evaluation of mine is meant to share my thought and research findings. Hence, by no means this evaluation should be taken as a recommendation for you to buy/sell any stocks. The statistics/figures are mainly from SGX, Yahoo! Finance and websites.   
Company   : Riverstone Holding Ltd
SGX Code : AP4
Industry : Rubber & Plastic
Description : Maker of gloves and latex for healthcare and room cleaning industries.
Last Share Price : SGD0.805 (As At 20/03/2014)
A. Business Outlook:
a. Steady increase of Net income (from 2007 to 2013, except for 2011 blip). 45% increase of Net Income in 2013 to RM58 millions (Malaysia Ringgits)
b. Production capacity of 3.1 billions
c. New plant in Taiping, Malaysia will be operational in 3rd Quarter 2014.
B. Financial Strength:
a. Steady and positive cash flow. 2013 : RM57.1 millions (Malaysia Ringgits)
b. Zero debt since 2011
C. Stock Statistics:
a. Strong and steady increase of Earnings Per Share (EPS) :
    2009 : 9.54 (Malaysia Sens)
    2010 : 13.0 (+36%)
    2011 : 12.2 (-6%)
    2012 : 12.2 (0%)
    2013 : 16.0 (+31%)
b. Strong and steady increase of Returns On Equity (ROE):
    2009 : 18.1%
    2010 : 21.7%
    2011 : 18.%
    2012 : 16.6%
    2013 : 20.1%
c. Strong Return Of Assets (ROA) of 12.1 % (which is higher than the benchmark of 7%)
d. Upwards trend of Free Cash Flow Per Share (FCFPS) :
    2009 : 4.4
    2010 : 2.8
    2011 : 3.9
    2012 : 9.6
    2013 : 14.0

    FCFPS is a signal of company's capability to pay debt, buy back share and facilitate growth
e. Reasonable Price/Earning (P/E) Ratio of 13
f. Steady increase of Dividends :
   2009 : 5.3 (Malaysia sens)
   2010 : 5.9
   2011 : 5.9
   2012 : 6.0
   2013 : 6.8

g. Dividend Yield of 3.3% (as a comparison, STI's Dividend Yield is 2.8%)
h. Recent stock price movement are above 20- and 50-Days Moving Average.

D. Overall Assessment:
a. It is a BUY signal (from Value Investing perspective).  

E. My Investment Strategy On This Stock:
a. To BUY   when the price hit SGD0.78 (or lower)
b. To SELL when the price hit SGD0.97 (or higher)

So, stay tuned for my further update on this stock!

Do you folks have any differing view or additional comment about my evaluation? Feel free to share them in the comment section so that we can discuss further.

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