Press Release 2015


Yee Lee share price on uptrend

Yee Lee share price on uptrend

UNDER-researched consumer company, Yee Lee Corp Bhd, has been gaining traction with its share price climbing 34% year-to-date.

The stock has jumped 48% since mid-December last year.

Director Chok Yin Fatt says the group will continue to focus on its three core segments namely manufacturing, trading and plantation to drive growth.

"With our established distribution networks, we are constantly looking for prospective distributorships to increase our products range,” he says in an e-mail interview withStarBizWeek.

In January, the company announced it had terminated its agreement with Red Bull Asia FZE to distribute the energy drink in a tall and slim blue-silver can with effect from April 30.

To be noted, there are two different packagings of Red Bull in the market. The other type of Red Bull, in a shorter, wider golden can or bottle, is produced in Thailand.

That bottle or can is currently marketed by F&N Beverages Marketing Sdn Bhd in Malaysia and its market share is more sizeable than that of the slimmer can. To put things into prospective,

In 2010, Red Bull Malaysia estimated the energy drink distributed by F&N contributed some RM130mil to F&N’s beverage sales per annum.

Revenue from F&N Holdings’ ready-to-drink segment for its financial year ended September 30, 2011 was RM1.84bil.

Market talk is that a new distributorship for Yee Lee is under way following the termination of the agreement with Red Bull Asia FZE.

Chok, however, dismisses such talk but says that the company is always looking for new or existing product brands with market growth potential that comes with a reasonable profit margin.

For its financial year ended Dec 31, 2014 (FY14), Yee Lee’s net profit fell 19.5% to RM27.01mil but revenue rose 4.88% to RM690.45mil.

Yee Lee attributes the fall in its net profit to the lower contribution from its two biggest arms.

Revenue from its trading division is the highest among all segments at RM464.08mil followed by manufacturing at RM223.7mil.

However, due to the lower margins for the trading division, its manufacturing arm contributes the highest to its bottom-line at RM17.9mil compared with RM7.79mil for the trading division.

To drive growth, it aims to invest RM35mil compared with RM20mil previously.

Its plantations will utilise RM16mil of the planned capital expenditure, RM10mil will be for the palm oil mill, RM7mil for its aerosol cans and RM2mil for trading.

Under its trading division, it distributes its own cooking oil brands like Red Eagle, Vesawitand Neuvida. That division also distributes bottled drinking water from its sister company Spritzer Bhd.

The margin squeeze for the trading division last year was partially caused by the higher advertising and promotion expenses for promoting its in-house brands but Chok expects the expenditure to reduce progressively going forward once consumers accept the brands.

Besides distributing in-house brands, it also has the distributorship for other agency brands like Campbell, Old Town, Red Bull and Kimberly.

This type of distributorship usually excludes key accounts such as supermarkets and hypermarkets.

As for the manufacturing segment, the company produces cooking oil, palm-based products, aerosol cans and corrugated carton boxes.

Last year, its manufacturing arm recorded a lower profit primarily due to lower fresh fruit bunches (FFB) processed and lower sales of aerosol cans and palm kernels.

"The division’s bottom-line was also affected by lower freight on board olein margin over crude palm oil price and high relocating and set up costs for shifting the aerosol can factory in Vietnam to the newly completed factory,” the company says.

Due to the lower FFB processed, the operations of its palm oil mill incurred a loss despite an improvement in the oil extraction rate.

Chok says the company has secured new FFB supplies from two estates, which will increase total FFB supplies by 4%.

Meanwhile, the RM10mil capex for its oil palm mill is expected to improve the extraction rate and reduce operating costs, hence turning around the oil palm mill division this year.

"With the lower petrol price, the manufacturing (division) will save on fuel costs for its boiler consumption,” he notes, although savings will be marginal.

Moving upstream to its plantation segment, Chok says the RM16mil allocation for its plantations is deferred from last year as the company has just obtained the Environmental Impact Assessment approval.

"We are developing our 2,500 acres in Ranau, Sabah into oil palm plantations,” he says.

Currently, the company has about 800 acres of palm oil plantations in Peninsular Malaysia, which is fully planted with trees that have an average age of 23 years. It has also identified 158 acres for replanting in stages.

Its plantation division turned profitable last year after it recorded losses in FY13, mainly boosted by tea sales and better profit margins.

On its prospects, Chok expects the company’s costs to increase slightly with the implementation of the goods and services tax (GST) as not all input taxes are claimable, hence affecting its bottom-line marginally.

Consumer sentiment upon of the implementation of GST, he says, may have a bigger impact on sales as people are likely to tighten their belts before adjusting to the new tax.

On the flipside, consumers’ savings from transportation costs as a result of lower petrol prices could mitigate the impact of GST.

The stock was last traded at RM1.88 per share.

Yee Lee banking on Red Bull power to boost earnings

Yee Lee banking on Red Bull power to boost earnings

KUALA LUMPUR: Yee Lee Corp Bhd is banking on Red Bull to power up its earnings growth.

The company had already invested RM2mil to boost its sales and distribution network after securing the exclusive rights to distribute Red Bull energy drinks in the country.

The fast moving consumer goods distributor will invest a further RM5mil to RM10mil over the next three years via various marketing initiatives to promote the product.

"We are looking to sell five million cases, that’s 120 million cans, this year,” Yee Lee group chief executive officer Lim Ee Young told reporters at a press briefing yesterday.

"The addition of the Red Bull would help us match last year’s revenue figures,” he said.

In April, the company had inked a five-year distribution partnership agreement with Allexcel Trading Sdn Bhd.

The agreement allows it to exclusively market, distribute and sell the latter’s products, including the well-known Red Bull energy drinks.

The deal was done through its wholly owned subsidiary, Yee Lee Marketing Sdn Bhd, giving Yee Lee the distributorship of a variety of consumables including Red Bull Gold, Red Bull Less Sugar and Red Bull Bottle energy drinks

Meanwhile, the energy drink brand is owned and founded by TC Pharmaceutical Industries Co Ltd, and has a market share of some 55% in the energy drinks segment in Malaysia.

"We have been investing a lot into technology so as to keep exploring ways to reach our customers,” Lim said.

"We have also set up a special team specifically charged over the beverage lines so as to improve sales and service customers better.

"There is great room for growth in Malaysia.”

TC Pharmaceutical chief executive officer Saravoot Yoovidhya, who is also the son of the company’s founder, said Thailand, for instance, has energy drinks as household items and was priced low due to market competition.

"We must try harder to bring up the consumption of this energy drink per capita in Malaysia,” Allexcel Trading Sdn Bhd general manager Charles Wong said.

"As 2016 will be a more challenging year, we will figure out how to go about the sales.

"Meanwhile, our business plans are being finalised, as are our growth plans for 2016,” he said, adding that plans for Red Bull to be a more dominant player in the local market were underway.

For the second quarter ended June 30, 2015, Yee Lee posted a net profit of RM5.1mil, 30% lower than the RM7.3mil in the same period last year.

Revenue came in at RM185mil, 4.5% higher than RM177mil last year.

The company had also paid out a first and final dividend of 3 sen per share under the single tier system for the year ended December 31, 2014,

Yesterday, shares of Yee Lee closed up 8 sen on the day’s high of RM1.77, inching up from a six-month low of RM1.44 in late August.

Yee Lee inks distribution deal

Yee Lee inks distribution deal

PETALING JAYA: Fast-moving consumer goods distributor Yee Lee Corp Bhd has inked a five-year distribution partnership agreement with Allexcel Trading Sdn Bhd to exclusively market, distribute and sell the latter’s products, inclusive of the well-known Red Bull energy drinks.

In a filing with Bursa Malaysia yesterday, it said the deal was bagged through its wholly owned subsidiary, Yee Lee Marketing Sdn Bhd. Allexcel features a variety of consumables including Red Bull Gold, Red Bull Less Sugar and Red Bull Bottle energy drinks.