Riverstone hit by stiff competition

Its 3Q ASP declined 2.5% despite robust healthcare market.

Despite the strong demand in the healthcare space, Riverstone Holdings' ASP has declined by 2.5% QoQ in 3Q16, on the back of increasing pressure to lower prices from customers due to stiff competition.

Moving forward, gross margins are likely to fluctuate around the 15% level, said RHB.

The research house also expects the downward pressure on ASPs to continue in the near future as competitors continue with their expansion plans to boost capacity.

Sales from the cleanroom segment increased by 15% QoQ in 3Q16, with the company gaining new customers from the Automotive and Pharmaceutical sectors.  However, that was not enough to maintain the sales mix for the additional capacity of 1bn pa.

RHB said that while demand from the healthcare segment remains relatively strong, it resulted in a higher sales mix of healthcare gloves, which yield lower margins.