Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Wednesday, April 9, 2014

Spritzer/Yee Lee

Current (Jan 2014) major shareholders of Sprtizer are Yee Lee Group/Lim A Heng holds 56.5% and Skim Amanah Saham Bumiputera with 5.2%


To recap in Aug 2010 it was reported that Yee Lee Corp Bhd has increased its stake in Spritzer Bhd to 32.35% after buying 5.5 million 50 sen shares, or a 4.2% stake, from Transworld Commodities (M) Sdn Bhd, for RM5.61mil.while Yee Lee Holdings Sdn Bhd has 14.05%, the group will have a total equity interest of 46.39%.


It has raised eyebrows because Yee Lee Corp’s direct interest is closed to 33% threshold level. Does this mean that a corporate exercise between Yee Lee Corp and Spritzer is in the works?



Spritzer recorded revenue of RM55.2 million during 2Q/FY14, an increase of 18.3% y-o Meanwhile, NPAT recorded was RM3.4 million, lower by 34.4% y-o-y. The lower profits were attributed mainly to the higher operating costs. This was especially due to costs on transportation, salary and payroll related expenses, advertising and promotional (A&P) expenses. Furthermore, the weak Malaysian Ringgit had caused an increase in the prices of PET resin consumed.


On the demand side for Spritzer, thedomestic economic environment still appears supportive. This is so due to the fact that most of the group’s sales are derived from the domestic market (whereby the group is the market leader).


In the mean time, the group faces challenges such as domestic inflation, implementation of minimum wages, extension of workers’ retirement age, hike in electricity tariffs and the volatility of raw material prices. Despite of the weak external environment, the group is also working on improving its sales for the export market (for instance Singapore, Hong Kong, Japan, Australia and the Middle East).


With the group’s continuous efforts to promote its various brands and range of bottled water products, enhance its production capacity and to upgrade its warehousing facilities, the sales volume of its bottled water products is poised to continue growing.


The group plans to continue focusing on improving its productivity and operational efficiency in order to remain competitive.


Spritzer has joined the “RM200 million revenue club” at the end of its FY13.


In general, as a consumer product-based business, Spritzer also faces possible routine risks such as a slower rate of economic growth, weak product demand growth, foreign exchange fluctuations, rising production costs (raw materials – e.g. PET resins for plastic bottling) and stiff competition from other major bottled water manufacturers.

Yee Lee has allocated RM36mil for its capital expenditure for 2013 to expand its business while continuously looking to add products to its distributorship portfolio.

It had allocated RM20mil for its packaging business, mainly to expand the efficiency of the aerosol can production machineries, while RM16mil had been set aside for its plantation division.

It is exploring the feasibility of developing a parcel of undeveloped land in Sabah into an oil palm plantation.

The trading division was its biggest revenue contributor, providing 65% of the group's total revenue, followed by 22% from its packaging division, 12% from its palm oil refinery and mill and 1% from its other businesses, including plantation division.

Yee Lee's main products include the Red Eagle cooking oil, Vecorn corn oil and SunLico sunflower seed oil. It also has a 32% stake in bottled mineral water producer Spritzer Bhd.

Its wholly owned subsidiary had lost the distributorship for Johnson & Johnson products from Oct 1 2013.



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