CENTURION CLUB: HEALTHCARE SERVICES + PHARMACEUTICALS

Malaysia-based but Singapore-listed Riverstone Holdings Ap4 has somehow managed to deal with softerning demand for gloves, masks and personal protection equipment (PPE) better than many of its peers.

For the three years under consideration, Riverstone, under executive chairman and CEO Wong Teek Son, was the winner for growth in profit after tax (PAT), weighted return on equity (ROE) and the overall sectors.

Riverstone was founded in 1991 and listed on the Singapore Exchange S68 in 2006, specialising in the manufacture of cleanroom and healthcare gloves, finger cots, cleanroom packaging bags and face masks. Customers include major players in the electronic and healthcare industries.

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When the pandemic struck, the glove-making industry was “blindsided” by the surge in demand for gloves, masks and PPE. This, in turn, drove up sales, average selling prices and earnings of glove-makers and, ultimately, their share prices. Big new capacity were added in anticipation of sustained demand but with the pandemic no longer a public health emergency, demand for such equipment have normalised.

As noted by Wong in the most recent annual report for FY2022 ended December 2022, consolidation in the glove sector has resulted in demand and price normalisation. As such, its revenue dropped to RM1.26 billion ($363 million) in FY2022 from RM3.08 billion in FY2021 while earnings dropped to RM314.40 million from RM1.42 billion in FY2021.

Still, Riverstone managed to maintain its net margins at 24.96% in FY2022. Overall, both top and bottom lines for FY2022 were still higher than before the pandemic. For the three years under consideration for this year’s Centurion Club, Riverstone reported profit after tax (PAT) growth at a CAGR of 34.1% and a weighted return on equity (ROE) of 42.6%.

Riverstone now runs five manufacturing facilities in Malaysia, Thailand and China while maintaining a network of sales offices and strategic partners in Asia, the Americas and Europe, as exports account for more than 80% of its sales.

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Wong cautions that the market for healthcare gloves might see consolidation in the coming years because of overcapacity. On the other hand, his cleanroom gloves business has performed better despite a weaker second half caused by the slowdown in the electronic and semiconductor sectors. The average selling price of high-end cleanroom gloves remains stable due to their customised nature which requires in-depth knowledge and experience to develop and manufacture, which is where Riverstone will focus on, he adds.

Hyphens Pharma International, led by executive chairman, executive director and CEO Lim See Wah, is a homegrown healthcare company that helps distribute speciality drugs, sells its proprietary products and has interests in various digital platforms serving the healthcare industry.

Hyphens Pharma was listed in 2018. In FY2022 ended December 2022, revenue grew at a CAGR of some 8.8% while earnings grew at a faster pace of 20.5%. In its FY2022 annual report, Lim says the result is an indication that his organic and inorganic growth strategies have borne fruit. While the company is relatively new as a listed entity, parts of its business have had a long lineage. For instance, Pan-Malayan Pharmaceuticals has been managing its wholesale business since the late 1940s. Hyphens Pharma also operates WellAway, described as Singapore’s first and only HSA-registered e-pharmacy where registered doctors can give e-prescriptions and have the prescribed medicine delivered to the home of patients.

“As part of our long-term growth strategy, we have been and will continue to be prudent and disciplined in our approach to acquisitions, seeking out opportunities that are accretive for our business and in alignment with our strategic goals,” says Lim.