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.

[You must be registered and logged in to see this image.]
Table: YeeLee's last 8 quarterly results

[You must be registered and logged in to see this image.]
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.

[You must be registered and logged in to see this image.]
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.

Author: Alex Lu