YSPSAH: Bottom-line soared

Background

Y.S.P.Southeast Asia Holding Berhad (“YSPSAH”) is involved in the importation, export, and tradeing of various kinds of pharmaceutical products as well as the manufacturing of pharmaceutical products.

Latest Quarterly Results

For QE31/3/2015, YSPSAH's net profit rose 33% q-o-q or 71% y-o-y to RM9.3 million while revenue rose 8% q-o-q or 15% y-o-y to RM59.3 million. revenue rose q-o-q due to higher demand of the Group's products especially from export segment. Bottom-line improved due to higher revenue, more efficient operations and lower cost margin for product mix during the quarter under review.

 
Table: YSPSAH's last 8 quarterly results

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Chart 1: YSPSAHs last 11 quarterly result


Chart 2: YSPSAH's last 11 yearly result

Financial Position

As at 31/3/2015, YSPSAH's financial position is deemed satisfactory, with current ratio at 4.4 times & gearing ratio at 0.3 times. Cash balances stood at RM56 million before deducting loan & borrowings totaling RM17 million & finance leases totaling RM7 million. After netting off, the net cash balances stood at RM32 million (or, 24 sen p.s.).

Valuation

YSPSAH is rallying in early morning trades now. As at 9.30am, it trading at RM1.80 or at a PE of 9 times (based on last 4 quarters' EPS of 20.4 sen). At this PE, YSPSAH is deemed undervalued. It could command a PE multiple of 10-12 times for a smallcap pharmaceutical stock in the current environment.

Technical Outlook

YSPSAH broke above its horizontal line at RM1.25 in June 2013 & rallied to a high of RM1.85 in May 2014. Further upside would only come if YSPSAH can break above the RM1.85 mark.


Chart 3: YSPSAH's monthly chart as at May 14, 2015 (Source: ShareInvestor,com)

Conclusion

Based on improved financial performance, healthy financial position & attractive valuation, YSPSAH could be a good stock 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, YSPSAH.