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Asian Century Stocks reader Christopher alerted me to the fact that Riverstone’s (RSTON SP — US$779 million) CEO recently bought 1 million shares on the open market.
That caught my attention. Insider buying after a decline in the share price is usually a positive sign. I also knew that Riverstone had been one of the best-performing stocks on the Singapore Stock Exchange, compounding earnings per share at a +15% annual rate since its IPO in 2006.
The company manufactures disposable nitrile gloves for customers worldwide. But unlike its larger peer, Hartalega, Riverstone focuses on customized gloves sold directly to the end-users. And unlike Hartalega, Riverstone has a significant focus on cleanroom gloves used in semiconductor fabs and other electronics-related industries.
These gloves are made-to-order and high-spec, specifically designed to minimize contamination, corrosion, and the risk of electrostatic discharge. They’re sold to Class 10 and Class 100 cleanrooms, which have exacting standards regarding the amount of airborne particles allowed in the air. Disposable gloves used in such settings should not shed particles.
Since the gloves are high-spec, Riverstone can charge US$88 per 1,000 pieces — far above the US$20 typically charged for medical gloves. These high prices have also enabled Riverstone to earn decent operating margins of 20-30%.
The company is run by the two co-founders, Teek Son (“TS”) Wong and Lee Wai Keong. Both were chemistry majors working in the R&D department of a Malaysian electronics firm. When it was shut down, the two of them managed to take over a manufacturing line for disposable gloves. That business eventually grew into what is today known as Riverstone Holdings.
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