The company is a manufacturer of industrial brushes. To complement the manufacturing activities, they are also involved in the trading of industrial hardware and machinery parts which supports the customer’s manufacturing needs. The principal products can be categorized as follows:

 

 

Industrial brushes can be hand-held or attached to manufacturing machinery or equipment used for heavy-duty scrubbing or surface treatment such as polishing or cleaning in conveyorized processing. They are made using different monofilament materials to form the different brush specifications and applications including stiffness, density, coarseness, and antistatic feature. Generally, the range of industrial brushes can be used either for the following uses/specifications:

 

The range of industrial brushes is sold to a wide variety of end-user industries such as rubber gloves manufacturers, industrial manufacturing, agriculture, E&E contract manufacturers, food processing, and industrial/commercial cleaning. They receive repeat purchase orders from the customers as industrial brushes are wear and tear items that need to be replaced between 1 week to 6 months, depending on the frequency of replacement and extent of usage in their manufacturing activities. The customers are required to make advance payments or deposits for their respective purchase orders for the industrial brushes on a case-to-case basis, depending on the length of the relationship with the customers and the size/order quantity received from the customers. Such advance payments or deposits are generally required for new customers (i.e. length of the relationship of less than 1 year) depending on the size of their orders. Depending on market conditions, the company gradually passes on the increase in the cost of raw materials (including the cost of monofilament materials) to the customers in a progressive manner for their subsequent orders. This will allow the company to remain competitive in the industrial brush industry and enhance the attractiveness of the products’ pricing as compared to the competitors. 

 

They also provide custom-made industrial brushes in accordance with the customer’s manufacturing request and requirements in terms of design, material, and length to fit its manufacturing purposes.

 

 

Industrial hardware and machinery parts are wear and tear parts used in the manufacturing and assembly lines that are replaced after certain hours of usage in order to keep the machinery running smoothly. The industrial hardware and machinery parts offerings also complement the customers from the manufacturing segment with their manufacturing or production hardware needs. The company normally sells the industrial hardware and machinery parts to the industrial manufacturing customers, walk-in customers as well as trading houses distributors. This is also in line with the objective to be able to provide a comprehensive range of industrial brushes, industrial hardware, and machinery parts which has allowed the Group to cross-sell the products to their customers. 

 

YLPH is also currently the non-exclusive authorized distributor of Festo’s range of automation parts (such as pneumatic valves and valve manifolds, sensors, connectors, fittings and tubings, and valve terminals, sensor boxes, actuators, and other pneumatic connectors) to the customers in Malaysia. The authorized distributorship arrangement with Festo is non-exclusive and is valid from 1 January 2015 until 31 December 2022. 

 

Save for the geographical restriction for YLPH to distribute Festo’s automation parts in Malaysia only, the authorized distributorship arrangement with Festo is not subject to any material terms and conditions or requirements (i.e. minimum purchase commitment). However, the company is not dependent on the distributorship agreement with Festo for the supply of automation parts, due to the following reasons: 

 

 

Financial Highlights 

 

The following table sets out the financial highlights based on the combined statements of profit or loss and other comprehensive income for the FYE 2018 to FYE 2021:

 

 

• Revenue reached a new high in FYE 2021 with RM 45 million. Through the financial statement, we realize the company's revenue growth highly in FYE 2020 & 2021 due to the high sales from rubber gloves manufacturing.
• The gross profit margin is consistently over 35% from FYE 2018 to FYE 2021. This also shows the company has high bargaining power toward its customers by adjusting the price (Generally GP margin of 20% is considered high/ good).
• PAT margin is consistently over 15%, this shows that the business is a high-profit margin business. 
• The gearing ratio is 0.22 times, and it will become 0.01 times after the IPO. (Good gearing ratio should be between 0.25 – 0.5)

 

Major customer and Supplier

Industry Overview

Plans and strategies for Yew Lee Pacific Group Berhad

1. The company intends to expand the range of industrial brushes and continue to strengthen the market position in the industrial brush industry in Malaysia.
2. The company intends to improve manufacturing efficiency and automate the manufacturing processes to support the long-term growth of our business.
3. The company plans to expand the trading of industrial hardware and machinery parts business segment.
4. The company plans to expand its geographical presence to international markets

MQ Trader View 

1. Strong financial statement. The company had high growth in revenue, high-profit margin, and a low gearing ratio in the past few years’ financial statements.
2. The company has a comprehensive range of products. The industrial brushes comprise roller brushes, lath brushes, circular brushes, disc brushes, spiral brushes, forklift sweepers, twist brushes, strip brushes, oil brushes, and sweeping and cleaning brushes, custom-made brushes as well as household brushes. The company also distributes a wide range of industrial hardware and machinery parts (including PVC valve fittings, stainless steel valve fittings, solenoid valves, tiger valves, push fitting, pneumatic drive, PUN tubing, ornamental pipes, PVC pipes, and schedule pipes).
3. The company manufactures custom-made industrial brushes to fulfill different customers. The company presently manufactures a total of 6 types of custom-made industrial brushes, which are customized based on varying manufacturing requirements, usage, and applications by the customers.  They have the ability to manufacture custom-made industrial brushes to cater for customers’ varying manufacturing needs and requirements. The company is able to manufacture custom-made industrial brushes by understanding and assessing the manufacturing needs of the customers which require the right customized industrial brush for their manufacturing and assembly lines.

1. Inflation. The company is subject to availability and fluctuation in prices of raw materials and supplies. The fluctuations in the market prices of these raw materials due to changes in global supply and demand conditions as well as fluctuations in foreign exchange rates may cause the Group’s financial performance to be adversely affected. The financial years under  affected by any material increase in raw material prices (due to changes in supply and demand conditions as well as fluctuations of foreign exchange rates)
2. High customer concentration risk. The top customer Topglove contribute 32.10% of sales to the company, as we know that the demand for rubber gloves increased during COVID-19 and affected the sales of rubber gloves company had hiked up. This will also drive Yew Lee Pacific Group Berhad’s sales. However, the advent of vaccines and oversupply of rubber gloves had caused the ASP of gloves to decrease, which might also affect the company in the future.
3. Supply chain risk. The top 2 suppliers are from China and Hong Kong which stand for over 40% of the cost of all the suppliers. As we know that China and Hong Kong are facing serious COVID-19 cases at this moment and they had execute the COVID-19 control policy which will affect the supply chain of the company.