RH PETROGAS' been approached; RIVERSTONE to re-rate

Excerpts from analysts' reports

OSK-DMG highlights RH Petrogas' potential takeover possibility

Analyst: Lee Yue Jer

TanSri

Tan Sri Datuk Sir Tiong Hiew King, executive chairman and controlling shareholder of RH Petrogas.

RH Petrogas, in response to SGX’s query, stated that the controlling shareholders of the company have been approached by an investor regarding a potential proposal which may lead to a takeover offer.

No formal offer has been made yet. In addition, the company has been reviewing proposals for mergers and acquisitions, joint ventures and other business opportunities but no binding offer has been made as of today.

Based on our estimates, the liquidation value of RHP’s assets is worth about SGD0.95 per shre, though to an owner-operator the value of the assets could be significantly higher.

We have pointed out that RHP’s oilfield assets appear significantly undervalued, and that should the Fuyu-1 Overall Development Plan be approved, the prospect of large near-term production increases would be a significant attraction to potential investors.

We currently have a BUY recommendation with a SGD1.23 TP.

DBS Vickers highlights Riverstone's potential for re-rating when new factory starts production

Analyst: Ho Pei Hwa

Chairman Wong Teek Son (foreground) and CFO SP Lim (background, with necktie) chat with analysts. NextInsight file photo.

While the rubber glove industry may be swarmed by an influx of new capacity over the next few years, Riverstone appears to be a shimmering gemstone embedded in a muddy riverbank.

The company is enjoying the favourable industry shift towards nitrile gloves and is gaining market share in the relatively inelastic high-end cleanroom gloves.

The stock is trading at a 20% discount to its Malaysia peers, which is unwarranted given its stronger ROE and growth profile.

We expect the commencement of new production lines to drive earnings growth in 2H, and a re-rating of stock valuation closer to peers.

Apart from the potential revaluation gain, Riverstone offers an attractive dividend yield of 4-5%.

Recent story: RIVERSTONE: 1Q record profit of RM16.0 m, new factory to provide boost

RH PETROGAS' been approached; RIVERSTONE to re-rate

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