This Company's Q1 Profit -27% on Forex Headwinds. But Analysts Say 'Buy' on Pricing Power and AI demand

A catalyst for the analysts' bullishness is Riverstone’s ability to turn rising raw material costs into a strategic advantage.

Geopolitical tensions in the Middle East have driven up the prices of key petrochemical feedstocks like butadiene and acrylonitrile by up to 102% and 41% respectively.

Instead of absorbing these costs, Riverstone has successfully passed them on to customers who are prioritizing supply security over haggling.

CGS International analysts William Tng and Then Wan Lin upgraded the stock to an "Add" with a raised target price of S$1.00.

They highlighted that robust customer demand should comfortably support cost pass-through, conservatively factoring in up to a 15% average selling price (ASP) revision for the year.

Similarly, UOB Kay Hian analyst Heidi Mo raised her target price by a massive 43% to S$1.10.

She emphasized that the supply tightness is enabling cost pass-through, raising her 2026-2028 earnings forecasts by up to 14% based on higher ASP assumptions.

100% dividend payout

"We ascribe a premium valuation to RSTON given its earnings exposure to higher-margin cleanroom gloves (vs. its competitors) and management’s commitment to return excess cash to shareholders post-Covid 19 — assuming a 100% dividend payout ratio for FY26-28F, dividend yields are attractive at the 6%-7% level." -- Willima Tng (photo) and Then Wan Lin

Multi-Year Prospects and the Booming AI Supply Chain

Beyond near-term pricing power, Riverstone is riding a massive structural tailwind.

During the Q&A segment of the earnings call, an analyst asked about the two-to-three-year horizon, specifically asking how the tight semiconductor supply chain and heavy capital expenditures in the AI sector are benefiting Riverstone's cleanroom glove business.

Responding to the inquiry, CEO Wong Teek Son painted a highly encouraging picture driven by the hard disk industry's evolving needs.

Crucially, the demand comes from the entire supply chain, including downstream component suppliers.

Cleanroom gloves: 10% growth? Mr. Wong highlighted that other emerging and growing sectors—such as sensors, automobile batteries, lenses, and pharmaceuticals—also require top-tier cleanroom gloves. He projected volume growth for the cleanroom business over the next one to two years: "We can optimistically say that it can grow by 10% annually." Wong Teek Son, executive chairman and CEO of Riverstone. When asked if this expectation was already built into the company's capital expenditure plans, Mr. Wong confirmed it was, noting that Riverstone has fully operationalized six new cleanroom lines and is building another six for customized products. This agility ensures Riverstone is positioned to capture surging AI-driven demand at short notice.

→ See also:RIVERSTONE: 100% of profits are paid out, with special dividends covered by "depreciation"