Yee Lee Corporation Bhd ('Yee Lee') is involved in manufacturing; marketing & distribution of fast-moving, high quality consumer products (such as household food products, oral care products, household cleaners and laundry products); and eco-tourism (which is carried out near its Sabah Tea estate, near the foothills of Mount Kinabalu). Its manufacturing operations include:
- Manufacturing of corrugated fiberboard cartons and boxes
- Milling of crude palm oil and palm kernel
- Printing and manufacturing of general line tin cans
- Manufacturing and distribution of tea
Recent Financial Results
Yee Lee has just announced its results for 2Q2009 ended 30/6/2009, where its net profit increased by 11.9% q-o-q to RM4.5 million on the back of a 5.6%-increase in turnover to RM177 million, with higher turnover from sale of cooking oils and Dutch Lady products. Compared to 2Q2008, net profit was lower by 10.7% while turnover dropped by 12.7%. The lower turnover was "primarily due to the substantial decrease in crude palm oil price which directly reduced the selling price of oil palm products. However the sharp decrease had been mitigated by the substantial increase in the sales of bottled water and other agency products such as Campbell and newly secured agency product, Dutch Lady".
Table: Yee Lee's last 8 quarterly results
Chart 1: Yee Lee's last 27 quarterly results
Financial Position
Yee Lee's financial position is deemed satisfactory, with current & gearing ratios at 1 time each. To be fair, the gearing ratio includes short-term borrowings of RM151 million which was used to finance its working capital. If this amount is excluded, the gearing ratio is only 5%.
Valuation
Yee Lee (closed at RM1.40 yesterday) is now trading at a trailing PE of 5.6 times (based on last 4 quarters' EPS of 25 sen) or at a Price to Book of 0.46 times (based on NTA per share of RM3.04 as at 30/6/2009). At these multiples, Yee Lee is fairly attractive.
Technical Outlook
Yee Lee appears to have been trapped in a bottoming phase over the past 3 years until it broke above the RM1.20 resistance level in March. It subsequently surpassed the next resistance level of RM1.40 (to make a high of RM1.50). Since then, it has dropped back below the RM1.40 level. Above the RM1.40 resistance, Yee Lee will encounter another resistance at RM1.70.
Chart 2: Yee Lee's weekly chart as at Aug 18, 2009 (Source: Quickcharts)
Chart 3: Yee Lee's monthly chart as at Aug 18, 2009 (Source: Quickcharts)
Conclusion
Based on attractive valuation and satisfactory financial performance, Yee Lee could be a good stock for long-term investment. Technically, the stock needs to break out convincingly above RM1.40 before a new upleg shall commence.
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