Trading With A View
(Tradeview 2020) Historic Pandemic Glove Rally - Riverstone Holdings Ltd (AP04) Continue Flying Under The Radar
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Publish date: Tue, 26 May 2020, 02:52 PM
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Author of Once Upon A Time In Bursa : The MONEY Equation. A corporate strategist, lawyer & avid investor who has two great passion in life: Financial Markets & Real Estate. A true fundamentalist and financial writer motivated to tip the scale in favour of retail investors. Believe the stock market can be force for good.
Contact for update : tradeview101@gmail.com
Telegram: https://telegram.me/tradeview101
Contact for update : tradeview101@gmail.com
Telegram: https://telegram.me/tradeview101
Dear fellow readers,
Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :
Website / Blog : http://www.tradeview.my/
Facebook : https://www.facebook.com/tradeview101/
or Email me : tradeview101@gmail.com
Telegram channel : https://telegram.me/tradeview101
__________________________________________________________
Many have already been covering glove and related topics. Some writers are very bullish, some are arguing it is highly overvalued and pending a crash. However, this wont be my topic today. I would leave it to others to argue the case of Hartalega, Topglove, Kossan, Supermax or Comfort.
Today, I would just like to focus on Riverstone Holdings Ltd. Even as we speak, Riverstone has broke my initial fair value of SGD $ 2.00. It is now surging towards $2.20.
Many have wrote to me, thanking me for highlighting Riverstone. Indeed, I was among the first to highlight Riverstone many months back when it was trading between SGD 80-95 sens range. But the person investors should be thanking is the professional management under the stewardship of the chairman, Mr. Wong.
Now the questions now appeared to be focused towards asking me anxiously whether I will revise upwards my target price / fair value. This is what happens when a share price is surging in a relief rally. As the stock keep making new highs, investors who are in the money (profiting) whether 20% up / 50% up / 100% up, taking profit seems to be a problem for most investors.
Taking profit and cutting loss are two of the hardest things to do or master for investors. This is especially true for new investors. So in such situation what is my advice?
Be ruthless in cutting losses, be patient when taking profit
One must learn how to sit on profits. This is provided the company is a good company and the results justify so. A multi-bagger means a share or company that can increase in value multiple folds. Those who have invested in such companies know it is very hard to come by and find a gem like that. When you do come across and find one like this, you should hold on until there is a fundamental or structural change to the company.
For us Riverstone fulfils our criteria of a Long Term Value Pick, hence when we called the shares, it wasn't to invest short term but rather to hold it for some time. Of course, when we first spotted Riverstone, the Covid-19 was even declared a pandemic by WHO yet. Fast forward till today, globally the death toll is fast reaching 350k and confirmed cases hit 5.5 million. This is a pandemic of unrivalled scale in recent times hence, under extraordinary circumstances, this sector has performed extraordinarily defying most expectations. I have seen the results of Hartalega, Kossan, Supermax which was announced recently. I will use the announced results (YoY) as roughy guide to show you the strength of Riverstone.
1. Supermax - Revenue Grew 23% & Net Profit Grew 105%
2. Riverstone - Revenue Grew 16% & Net Profit Grew 54%
3. Hartalega - Revenue Grew 14% & Net Profit Grew 27%
4. Kossan - Revenue Grew 9% & Net Profit Grew 10%
5. Topglove - awaiting results
However, I know the true value of Riverstone does not ride only on the industry tailwind but it the management value, philosophy and vision. I can assure you, Riverstone did well not because of pandemic alone that happen to came along. It was very well managed company that was never in most investors radar as it is a humble, low profile, hardworking under the radar company. If you look at the chart below, this is not a company that did well based on stroke of luck / pandemic hitting every alternate years, otherwise the chart will show fluctuation points. The chart can show you that it has been always growing and performing steadily.
There are many factors why we like Riverstone as explained in our earlier article. For those who missed it, you can read it here :
http://www.tradeview.my/2020/05/tradeview-2020-long-term-value-pick-2.html
Now the questions now appeared to be focused towards asking me anxiously whether I will revise upwards my target price / fair value. This is what happens when a share price is surging in a relief rally. As the stock keep making new highs, investors who are in the money (profiting) whether 20% up / 50% up / 100% up, taking profit seems to be a problem for most investors.
Taking profit and cutting loss are two of the hardest things to do or master for investors. This is especially true for new investors. So in such situation what is my advice?
Be ruthless in cutting losses, be patient when taking profit
One must learn how to sit on profits. This is provided the company is a good company and the results justify so. A multi-bagger means a share or company that can increase in value multiple folds. Those who have invested in such companies know it is very hard to come by and find a gem like that. When you do come across and find one like this, you should hold on until there is a fundamental or structural change to the company.
For us Riverstone fulfils our criteria of a Long Term Value Pick, hence when we called the shares, it wasn't to invest short term but rather to hold it for some time. Of course, when we first spotted Riverstone, the Covid-19 was even declared a pandemic by WHO yet. Fast forward till today, globally the death toll is fast reaching 350k and confirmed cases hit 5.5 million. This is a pandemic of unrivalled scale in recent times hence, under extraordinary circumstances, this sector has performed extraordinarily defying most expectations. I have seen the results of Hartalega, Kossan, Supermax which was announced recently. I will use the announced results (YoY) as roughy guide to show you the strength of Riverstone.
1. Supermax - Revenue Grew 23% & Net Profit Grew 105%
2. Riverstone - Revenue Grew 16% & Net Profit Grew 54%
3. Hartalega - Revenue Grew 14% & Net Profit Grew 27%
4. Kossan - Revenue Grew 9% & Net Profit Grew 10%
5. Topglove - awaiting results
However, I know the true value of Riverstone does not ride only on the industry tailwind but it the management value, philosophy and vision. I can assure you, Riverstone did well not because of pandemic alone that happen to came along. It was very well managed company that was never in most investors radar as it is a humble, low profile, hardworking under the radar company. If you look at the chart below, this is not a company that did well based on stroke of luck / pandemic hitting every alternate years, otherwise the chart will show fluctuation points. The chart can show you that it has been always growing and performing steadily.
There are many factors why we like Riverstone as explained in our earlier article. For those who missed it, you can read it here :
http://www.tradeview.my/2020/05/tradeview-2020-long-term-value-pick-2.html
Whilst I set my initial fair value for Riverstone to be $2.00, I noticed CGS-CIMB has increased the TP to $2.50, DBS TP is %2.20, and UOB Kay Hian TP is $2.15. For now, I will not amend my FV until I can see the next quarterly results in early /mid August 2020. I can only say this to those who want my view on Riverstone, to me, Riverstone is a multi bagger and long term stock hence I will continue to hold. That's my personal opinion. For those who are happy with profits, just take it and be happy with your winnings.
_______________________________________________________________
Telegram channel : https://telegram.me/tradeview101
Website / Blog : http://www.tradeview.my/
Facebook : https://www.facebook.com/tradeview101/or
Email me : tradeview101@gmail.com
Food for thought:
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Discussions
1 person likes this. Showing 8 of 8 comments
CGS-CIMB Bank have revised the TP of Riverstone Holdings Ltd to $3.19 and UOB Kay Hian have revised the TP to $3.12. FYI
2020-06-19 11:39
Riverstone share price has hit a new record high of $3.31 today. UOB Kay Hian is first to revise the TP to $3.60. I believe DBS and CGS-CIMB will be revising soon now that it exceeded their TP today. It is my view that Riverstone is one of the best glove company that is still trading at superb value being laggard in the sector as it is the highest net cash in % + highest profit margin (both comparable to Hartalega).
2020-07-08 18:15
Riverstone has hit $4 today. This has been quite a journey upwards for those who are patient and sit tight on profits, you are handsomely rewarded. In addition, the share price has blow past all 3 banks TP of $3.60 and $3.90. Lets look forward to the results soon.
2020-08-03 22:43
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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A note or error to point out - after publishing our article, we noticed UOB Kay Hian has revised the TP of Riverstone upwards by 18% to $2.53. TQ
2020-05-26 17:08