Broker's take: DBS upgrades Riverstone to 'buy' as valuation turns attractive

DBS Group Research has upgraded Riverstone Holdings to "buy" from "hold" and lowered its target price to S$1.85 from S$2.03.

This comes as the Malaysian glove marker's valuation becomes attractive again after share price correction on vaccine news, DBS said in a research note on Monday.

DBS analyst Ling Lee Keng said Riverstone is now trading at an attractive fiscal 2021 price-to-earnings (PE) ratio of 7.3 times, near the minus-one standard deviation of its five-year PE average.

"Furthermore, we also expect a bumper dividend for FY2020," she added.

The research team expects a firm average selling price on the back of strong demand and tight supply. Order visibility has been further extended to December 2021.

Even with the Covid-19 vaccine's availability, demand is not expected to taper off immediately as hygiene is still a key concern, Ms Ling said. Moreover, the mass availability of vaccines will take time, and the new Covid-19 strain raises risk.

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Shares of mainboard-listed Riverstone were trading S$0.02 or 1.5 per cent lower at S$1.33 as at 10.16am on Monday.