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Tuesday, January 10, 2017

Yeelee: At The Cusp of Uptrend Acceleration?

Result Update

For QE30/9/2016, YeeLee's net profit increased by 8% q-o-q or 28% y-o-y to RM10.9 million while revenue was mixed - down 6% q-o-q but up 25% y-o-y to - RM248 million. PBT rose q-o-q mainly due to higher sales of aerosol cans and palm oil mill able to turnaround in this quarter with better OER and higher fresh fruit bunches ("FFB") processed offsetting the lower sales of consumer products in trading division. {Note: The result for QE30/9/2016 was announced on November 24, 2016.]


Table: YeeLee's last 8 quarterly results


Graph: YeeLee's last 41 quarterly results

Valuation

YeeLee (closed at RM2.55 at the close of the morning session) is now trading at a PE of 10.9 times (based on last 4 quarters' EPS of 23.5 sen). At this PER, YeeLee is deemed quite attractive for a well-diversified group with large exposure to consumer spending. While its dividend yield is low at 1.4%, it's trading at a discount of 14% to its book value (of RM2.97 as at 30/9/2016).

Technical Outlook

YeeLee is in a long-term uptrend. Its uptrend is however capped by the line connecting its recent peaks, RR. The stock is now pushing against that resistance line. If it can break above this line at RM2.55-2.60, its uptrend may accelerate.


Chart 1: YeeLee's monthly chart as at Jan 10, 2017_12.30 (Source: Chartnexus)

I have also appended the weekly and daily charts to show the critical resistance level of RM2.55-2.60 that's checking the stock's upside.


Chart 2: YeeLee's weekly chart as at Jan 10, 2017_12.30 (Source: Chartnexus)


Chart 3: YeeLee's daily chart as at Jan 10, 2017_12.30 (Source: Chartnexus)
 
Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, YeeLee is a good stock to hold for long-term investment. The uptrend may accelerate once the share price can breach the resistance level of RM2.55-2.60.


Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

3 comments:

panaceaasia said...

Hi Alex,

It looks you are on to another winner in Yee Lee.

According to UOBKH research, the conservative target price is RM2.90. The PER is 10.5x.

What is your view of its associate company Spritzer please? There is little coverage by broking firms. The branding and marketing sets it apart from other local beverage brands.

The water actually tastes good.

Alex Lu said...

Hi panaceaasia

Spritzr is a good company with potential for continuous growth in revenue & profit. After all, it has a good brand name and its main input - water - is almost free!!

Its financial position is very healthy, with current ratio at 2x and gearing ratio at 0.3x. Its 5-year ROE is relatively low at 7.2% (but better than YeeLee's 5-year ROE of 5.5%).

The stock is trading at an undemanding PER of 12.9x. The stock pays a small dividend yearly, giving a DY of 2.3%. I think a good entry is around RM2.20-2.30.

And, you're right: The water actually tastes good.

panaceaasia said...

Dear Alex,

I thought I was the only one who thought Spritzer water tasted very good.

A belated New Year to you and your family. May you enjoy success and be in excellent health in 2017.