Riverstone braces for headwinds as big four Malaysian competitors expand aggressively

It also incurred higher costs for a new plant in Q3.

Mainboard-listed Riverstone Holdings is bracing for potential headwinds as the big four Malaysian glove makers aggressively expand capacity in Q3. According to OSK DMG, this will put average selling prices under intense pressure, which might bring a potential shortfall in Riverstone's Q3 earnings.

The report also warned that Riverstone will incur additional costs for its new plant in Taiping, Malaysia, which will only start production in Q4 since the firm still has to hire and train new workers first.

“While its competitors have been aggressively expanding capacity and its costs have risen in 3Q, we remain positive on Riverstone's expansion plan and execution capabilities. Riverstone has already secured orders for half of its production lines for Phase 1, with three new customers from Germany, the US and Japan – having signed fixed contracts for two years to take up one line each. However, both parties can exit the contract after six months if either side is not contented, provided that six months’ notice is given. This means for its three lines, its production capacity has been fully taken up for at least a year,” noted OSK DMG.