YEE LEE CORP BHD

By Public Investment Bank Research (PIB) Outperform Target price: RM2.42

YEE LEE had announced that it acquired 1.3 million shares in Spritzer for a total consideration of RM3.07mil. Upon completion of the exercise, Yee Lee’s stake in Spritzer will be increased from 27.89% to 28.81%.

“We expect minimal changes in earnings contribution at circa 2%-3% from the higher stake in Spritzer, thus we keep our earnings estimates unchanged at this juncture.

“Overall, we are positive over the acquisition, as Yee Lee’s investments in Spritzer has been beneficial thus far, in terms of profit contributions as well as synergy and compatibility in its trading and distribution business,” PIB said.

PIB has maintained its “outperform” rating on the stock with an unchanged target price of RM2.42 based on a sum-of-parts valuation.

“We continue to like Yee Lee for its steady growth in aerosol cans manufacturing, trading strength in food and beverage and household products distribution, as well as synergy of its own brands with distributorship,” it said.

The research house said the shares were acquired at RM2.36 per share through an off-market transaction, which was “reasonable”, representing 0.9% premium to the share’s volume weighted average price of RM2.339 on April 9, 2018.

“Following the acquisition, which was funded wholly via cash, Yee Lee effectively holds 60.5 million shares at 28.81%, maintaining Spritzer as an associated company of the group,” it said.

Overall, we are positive over the acquisition, as Yee Lee’s investments in Spritzer has been beneficial thus far. Public Investment Bank Research