Retractable Technologies, Inc.

RVP Details

Retractable Technologies, Inc. (NYSE: RVP) designs, develops, produces, and markets safety syringes and other medical safety devices for the healthcare industry. The VanishPoint insulin syringe, tuberculin, insulin, allergy antigen syringes, blood collection tube holder, tube adapter, allergy tray, IV safety catheter, VanishPoint Blood Collection Set, and needles are the company's products. In addition to its other goods, it supplies VanishPoint autodisable syringes in the worldwide market. As of October 18, 2021, the company's market capitalization stood at USD 321.05 million.

Latest News:

• Declaration of Dividends: RVP declared a dividend of USD 0.25 per share to Series II Class B Convertible Preferred Stockholders of record on October 12, 2021, payable on October 22, 2021. Dividends have accrued at a rate of 10% per year and will cover monies owing from July 01, 2021, until the date of conversion or September 30, 2021, whichever is later.

H1FY21 Results:

• Increase in Revenue: The firm reported a massive rise of 3.06x in sales to USD 92.57 million during H1FY21 (ended June 30, 2021) compared to USD 22.78 million during H1FY20, due to an increase in domestic as well as international sales.
• Increase in Bottomline: It reported a significant increase in net income to USD 28.62 million during H1FY21 vs. USD 4.09 million reported in H1FY20.
• Increase in Cash Position: Cash flow from operations in H1FY21 increased to USD 31.51 million compared to USD 0.21 million during H1FY20.
• Healthy Balance Sheet: As of June 30, 2020, the company's cash and cash equivalents stood at USD 36.34 million, with a total debt of USD 2.24 million.

Key Risks:

• Supplier Concentration: The Company obtained roughly 90.4% and 83.5% of its products in H1FY21 and H1FY20, respectively, from its Chinese manufacturers. As a result, any delay in receiving the required amount or unfavorable costs from Chinese manufacturers might skew its output, severely harming its overall operational state of affairs.
• Customer Concentration Risk: The US government accounted for 64.4% and 70.4% of net sales in Q3FY21 and H1FY21, respectively. RVP anticipates that the US government will remain a key client until at least March 2022. Such over-reliance on specific clients for business may be detrimental to its financial health in the long run.

Outlook:

• Expansion Activities: RVP has hired a construction company and an architect to help enlarge its current administrative offices. It is presently estimated that the expansion will cost around USD 5.0 million and will be finished by the end of March 2022.

RVP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

RVP's share price has declined 24.54% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 7.25 to USD 21.50. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 35.13.

Considering the company's track record, high profitability margin, consistent dividend yield, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 9.44, up 3.28%, as of October 18, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.