1H14 earnings within expectation. Yee Lee Corporation (YEELEE)’s 1H14 Core Net Profit* (CNP) of RM16.7m is within expectation as it makes up 49% of our estimate of RM34.0m. YoY, 1H14 CNP declined slightly by 8% to RM16.7m due to lower earnings from manufacturing division (PBT -14% to RM10.2m). We gather that the manufacturing division’s palm oil refinery and mill performance were affected by lower margins due to lower premium of palm olein against CPO prices.
Expecting better 2H14. Despite the short-term weakness, we expect 2H14 outlook to be better. As it is, manufacturing earnings should improve as the premium of palm olein against CPO prices has increased in 3Q14 to RM145/MT (against 2Q14’s RM133/MT). For trading division, we believe that its revenue should improve in view of higher demand seen before the implementation of Goods and Services Tax from 1-Apr-2015 onwards. Note that YEELEE’s trading division is focused on fast moving consumer goods (FMCG) such as cooking oil (under ‘Red Eagle’ and ‘Vesawit’ brand), mineral water (under ‘Spritzer’ brand), oral care products, household products and laundry products.
Balance sheet remained strong. YEELEE’s net gearing remained strong at 0.21x as of end-Jun 2014. Comparatively, this is the same as end-FY13 of also 0.21x but it has shown significant improvement against FY12 (0.30x) and FY11 (0.50x). We are positive on this as the low net gearing is positive in view of possible higher interest rate in 2015. Additionally, low net gearing enables YEELEE to continue its expansion plan without affecting its dividend payment capability.
Under appreciated jewel. YEELEE has a track record of 21 years of profitability since its listing in 1993. In addition, net profit has grown at 5-year CAGR of 13% historically to RM31.6m in FY13. We also expect FY14-FY15 earnings to grow 8%-11% to RM34.0m-RM37.8m. In our view, YEELEE is undervalued as it is currently trading at historical PE of 7.6x or 57% discount to its peer average historical PE of 17.9x. In addition, YEELEE is trading below its book value of RM1.90. We believe that these discounts are not justified due to its growth prospect and strong profitability track record.
- Maintain Target Price of RM2.10. Our Target Price of RM2.10 is based on unchanged Fwd. PE to 11x to FY14E EPS of 19.1 sen. Overall, we expect potential total returns of 46.9% (Upside 44.8% and Dividend Yield of 2.1%) from here.
Source: Kenanga
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How Did Calvin Spotted Yee Lee Years Ago When It Was Going For A Song?
Yee Lee price crashed all the way from over to RM2.00 to RM1.00 with little coverage by analysts.
All this while Yee Lee Director/Insider were quietly buying & buying & buying.
Buying but Yee Lee price kept dropping & dropping? Yes, as Yee Lee crashed more and more they stepped up buying more & more.
So Calvin took notice & alerted his "Johor Sifu". At RM1.00 Yee Lee Stopped dropping. Why?
Well At that time Yee Lee gave a nice 4% dividend & it found support. Then Yee Lee Shot Up Like A Rocket to over RM4.00 on share split & bonus issue.
Adjusted Yee Lee is only 35 cents (our entry price).
Ha! Now that Yee Lee has Gone Up So Much - Johnny came lately analyst is coming out to tell people how "deeply undervalue" Yee Lee is.
Where were all these "experts" when Yee Lee was 35 cents?
Let me tell you.
NOBODY WANTED YEE LEE WHEN IT WAS SELLING AT 35 CENTS!
AND THAT WAS THE TIME TO BUY!
Only 2 persons DID! My Johor Sifu & Calvin the Contrarian!
2014-11-13 10:31
calvintaneng
CORRECTION! CORRECTION!
YEE LEE Was Deeply Undervalue at 35 cents (after split & bonus issue).
Now Already Up 420% in 7 years or 60% a year annually.
It is no longer "very undervalue now".
Same like Perak Corp was 60 cents (about Yee Lee's time) when NOBODY WANTED THEN!
The ONLY "VERY UNDERVALUE STOCK" TODAY IS BJ CORP!!
BJ Corp is 48 cents with NTA of RM1.30 - A Huge Discount of 64%!
Someday When BJ Corp has gone up 400% to 600% like Yee Lee & Perak Corp
People Will then Come Out To Shout BJ Corp is "very undervalue" then.
2014-11-13 10:21