Thursday, May 23, 2013

YeeLee- a very attractive consumer stock



Result Update

For QE31/3/2013, YeeLee's net profit increased by 5% q-o-q or 137% y-o-y to RM8.4 million while revenue dropped 2% q-o-q or 8% y-o-y to RM160 million. The decline in revenue was attributable to the discontinuance of distributorship of Procter and Gamble products in September 2012. The silver lining to this negative development is that the company's profit margin rebounded.

The performance of the two main divisions are:
1. The manufacturing division registered an increase in profit before tax by 53.8% y-o-y from RM4.00 million to RM6.16 million . This was achieved on the back of 1.2% drop in revenue. The better performance was mainly contributed from palm oil refinery and mill division as both divisions continued to achieve profitability arising from higher oil extraction rate ("OER") and better FOB olein margin over crude palm oil ("CPO") price.
2. The trading division managed to achieve higher profit before tax of RM3.38 million as compared to a loss of RM0.40 million in the same quarter of last year. This was contributed from higher sales of products portfolio with better profit margin coupled with lower advertisement and promotion expenses in this quarter.
Finally, the Share of profit from an associate, Spritzer increased from RM841k to RM1.33 million. 


Table: YeeLee's last 8 quarterly results


Chart 1: YeeLee's last 27 quarterly results

Valuation

YeeLee (closed at RM1.10 yesterday) is now trading at a PE of 6 times (based on annualized EPS of 18.6 sen, calculated using the average EPS of last 2 quarters of 4.65 sen). That's very cheap for a consumer stock.

Technical Outlook

YeeLee has broken above a large descending triangle (ABC) at RM0.85-0.90. It should test the horizontal line at RM1.25 soon. An upside breakout of this resistance could send the stock to RM1.70. 


Chart 2: YeeLee's monthly chart as at Mar 22, 2013 (Source: Quickcharts)

Conclusion

Based on improved financial performance, attractive valuation & positive technical outlook, YeeLee is a good stock to hold for long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, YeeLee.

5 comments:

gwynwelsh said...

Dear Alex, What do you think of MFCB?

Alex Lu said...

Hi gwynwelsh

MFCB is fairly attractive, trading at a PE of 6.5 times (based on annualized EPS of 28.8 sen).

It may have broken above its horizontal resistance at RM1.75. If it can surpass the 2010 high of RM1.80, its uptrend will pick up pace.

As such, MFCB could be a good BUY at the present price of RM1.75-1.80.

Billy Teo said...

Hi Alex,

The volume for Yeelee increased tremendously for the past 2 trading days.

Would this be the sign of a new chapter for the "cheap" consumer stock?

Rgds

Alex Lu said...

Hi Billy Teo

According to my computation, Yeelee's EPS is about 18.6 sen. At RM1.22, the stock is trading at 6.6 times. Is that attractive? You decide.

Billy Teo said...

Hi Alex,

YEELEE has been consolidating for few days. What's the support and resistance level?

Rgds