Brokers' take

Riverstone Holdings >Buy May 5 close: S$0.965 Target price: S$1.05 Maybank Kim Eng Research, May 5

Q1 FY17 results beat our expectation. Core earnings met 29 per cent of our FY17 estimate and grew 19 per cent year on year. The outperformance was due to strong volume growth in the high average selling price (ASP), high-margin cleanroom segment, at 20 per cent versus our forecast of 7 per cent. This segment has gained good traction from the mobile, tablet and LCD manufacturing industries, as several new customers were secured.

We raised our FY17 to FY19 estimates by 17 to 18 per cent, for better growth in the cleanroom glove segment and higher margin from improved raw material costs. We rolled forward our valuation base year to FY18 estimate and maintain 16 times price-earnings multiple (+1 standard deviation above mean for its product customisation edge); our target price increases by 27 per cent to S$1.05.