Stock Review – YSPSAH (7178) (Y.S.P.SOUTHEAST ASIA HOLDING BERHAD)

Bursa Malaysia - 7178

Bloomberg - YSP:MK
Yahoo - 7178 .kl
Webpage - http://www.yspsah.com/Home/Home.asp

Sector : Health Care

Sub Sector :Pharmaceuticals

Revenue :

YSPSAH revenue mainly consists are from two segment as below.

1)  Manufacturing

Manufacturing of Pharmaceutical products.

2) Trading

Import, export and trading in various kinds of pharmaceutical, traditional herbal and veterinary products.

Pie chart below shows YSPSAH revenue distribution for financial year 2018.

From the pie chart above, YSPSAH main business focus on manufacturing of Pharmaceutical products which stands 85 % of the 2018 revenue.

Bar chart above shows revenue and operating margin of YSPSAH from 2010 to 2018.

5 Years Annualise Growth of Revenue	8.63 %
9 Years Annualise Growth of Revenue	9.29 %

YSPSAH had very consistence revenue growth rate of around 8 %.

YSPSAH operating margin is around 12 over the past 9 years expect in 2015 it had high operating margin of 17.83.

Nett Profit

Bar Chart below shows YSPSAH nett profit from 2010 – 2018.

5 Years Annualise Growth of Nett Profit

12.60 %

9 Years Annualise Growth of Nett Profit

10.55 %

From the graph there is a significant increase in nett profit since 2015 with 75% of nett profit grow in 2015. The nett profit surge is mainly due to the goods and services tax (GST) implemented by the government in April 2015 where its customer stocked up the pharmaceutical products to avoid paying the GST. Besides that YSPSAH also had an unrealised gain of RM 6.7 million and RM 5.9 million for 2015 and 2016 respectively. While on other year between 2010 – 2018 period YSPSAH unrealised gain / loss on foreign exchange rate is between RM 0.5 million to RM 1.0 million. In 2017 YSPSAH had unrealised lose on foreign exchange of RM 6.6 million which drag the nett profit down by 27 % in 2017.

Assets and Liabilities

From the chart above, YSPSAH assets increase over time while liabilities reduce from 2010 to 2016 and increase from 2017 to 2018. In 2018 there is an increase in borrowing from RM 19,848,000 (2017) to RM39,655,000 (2018).

Trade Receivables

Let compared trade receivable of YSHSAP against trade receivable past due every year.

From the comparison above, YSPSAH trade receivable increase over time. Percentage of trade receivables past due from 2011 – 2018 have a range of 16 % to 31 % with lowest in 2016 which is 16.69% and increase after 2016 to 24.75 % in 2018.

Financial Ratio

There would be few financial ratios to be look at here:

1) Interest Coverage Ratio (Green Bar Chart)

2) Cash Ratio (Blue Line Chart)

3) Current Ratio (Red Line Chart)

1) Interest Coverage Ratio

Interest coverage ratio measure how capable the company pay off the existing debt. With an interest coverage ratio above one mean the earnings before interest & tax (EBIT) is able to pay of the full amount of the financial cost of the year.

YSPSAH had interest coverage ratio of 23.10.

2) Cash Ratio

As cash is the most liquid assets of the company, cash ratio is use to determine company ability to pay off short term liabilities using cash. Cash ratio above one indicates that company able to settle all current liabilities using available cash.

YSPSAH cash ratio maintain above 1 for the period except 2011 which the cash ratio is 0.92. In 2018 YSPSAH has RM 76,641,000 in cash and equivalent while have RM 39,655,000 of total borrowing.

3) Current Ratio

Current ratio measures ability of the company to pay off short term obligation (current liabilities). Current ratio above one means the company able to pay off the current liabilities with current asset.

YSPSAH current ratio generally inverse over time but in 2017 there is a drop in current ratio from 5.89 (2016) to 4.63 (2017) and recover to 5.21 in 2018. YSPSAH having current ratio well above one which mean they are financially strong in short term.

Turnover in Days

Let look into three types of turn over as follow:

1) Inventory Turnover (Blue Line)

2) Trade Receivables Turnover (Red Line)

3) Trade Payable Turnover (Green Line)

1)  Days Sales of Inventory

9 Years Days Sales of Inventory Median (days) – 222

YSPSAH days sales of inventory had increase from 192 in 2010 to 250 in 2012 before drop back to 222 in 2018 on average took 222 days to sell their products.

2)  Trade Receivable Turnover (Days)

9 Years Trade Receivable Turnover (Days) – 85

YSPSAH trade receivable turnover had shown a downward trend from 100 days in 2010 to 78 days in 2018.

3)  Trade Payable Turnover (Days)

9 Years Trade Payable Turnover (Days) – 35

YSPSAH trade payable turnover would be constant around 35 days. YSPSAH trade payable turnover is less than trade receivable turnover hence YSPSAH required some cash for the cash flow.

Per Share Analysis

1)  Earnings per share (sen) (Blue Bar)

2)  Dividend per share (sen) (Red Bar)

3)  Net total assets per share (Green Line)

1)  Earnings per share

YSPSAH earning per share increase significantly in 2015 and drop in 2017. The main reason of the significant increase and loss was due to gain (2015) and loss (2017) in the foreign currency exchange.

2)  Dividends per share

YSPSAH had pay dividend consistently every year since 2010. YSPSAH dividend payout ratio is not consistent it range about 0.3 to 0.6 over 2010 – 2018. In 2017 despite lower earnings per share YSPSAH continue give high dividends to the shareholders, dividend payout ratio of 0.57.

3)  Net total assets per share

YSPSAH net total assets had growth consistently since 2015.

Director’s Remuneration

Some company paid high remuneration to director despite low profit. Let see how much is YSPSAH director’s remuneration in comparison to staff fee and operating profit.

YSPSAH director’s remuneration average stands 4.70% of total salaries expense and about 11.68 % on average of the operating profit.

YSPSAH director’s remuneration does not reduce despite poor performance in 2017 which make percentage against operating profit increase to 17.62 %. The percentage against total salaries expenses also has increase from 4% in 2010 to 12 % in 2008.

Market Report

Date	Research House	Target Price
25-02-2020	AFFIN HWANG CAPITAL	2.21
26-02-2020	CGS – CIMB SECURITIES SDN BHD	3.00
	Average Target Price	2.605

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