{"id":10085,"date":"2021-07-02T07:00:09","date_gmt":"2021-07-01T23:00:09","guid":{"rendered":"https:\/\/www.smallcapasia.com\/?p=10085"},"modified":"2021-07-02T00:17:37","modified_gmt":"2021-07-01T16:17:37","slug":"yenher-ipo-7-key-things-investors-should-know","status":"publish","type":"post","link":"https:\/\/www.smallcapasia.com\/zh-hant\/yenher-ipo-7-key-things-investors-should-know\/","title":{"rendered":"Yenher IPO &#8211; 7 Key Things Investors Should Know"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">On 22 June 2021, Yenher Holdings Bhd (Yenher) released its IPO Prospectus and thus, extended an invitation to subscribe its IPO shares at 95 sen per share. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The IPO subscription has ended on 1 July 2021 and the date of listing is set to be on 15 July 2021. You may download Yenher\u2019s IPO Prospectus (<\/span><a href=\"https:\/\/disclosure.bursamalaysia.com\/FileAccess\/apbursaweb\/download?id=209417&amp;name=EA_DS_ATTACHMENTS\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><span style=\"font-weight: 400;\">Part 1<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/disclosure.bursamalaysia.com\/FileAccess\/apbursaweb\/download?id=209418&amp;name=EA_DS_ATTACHMENTS\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><span style=\"font-weight: 400;\">Part 2<\/span><\/a><span style=\"font-weight: 400;\">, and <\/span><a href=\"https:\/\/disclosure.bursamalaysia.com\/FileAccess\/apbursaweb\/download?id=209419&amp;name=EA_DS_ATTACHMENTS\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><span style=\"font-weight: 400;\">Part 3<\/span><\/a><span style=\"font-weight: 400;\">) to study its prospects. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Alternatively, you could spend around 5 minutes here, where I have summarised 7 major things to know about Yenher before investing into it.\u00a0<\/span><\/p>\n<h2><b>#1: Business Model\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Yenher has <strong>2 business segments: manufacturing and distribution<\/strong>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yenher\u2019s manufacturing division produces premixes, complete feed, formulated products, and biotech animal feed ingredients mainly for the poultry and swine industry. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This division accounted for 56% of its total revenues in 2020 and thus,\u00a0 is a bigger revenue contributor to Yenher.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yenher\u2019s distribution division is currently focused on distributing a variety of animal-related products such as:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">feed additives<\/span><\/li>\n<li><span style=\"font-weight: 400;\">vitamins<\/span><\/li>\n<li><span style=\"font-weight: 400;\">veterinary pharmaceuticals<\/span><\/li>\n<li><span style=\"font-weight: 400;\">veterinary vaccines<\/span><\/li>\n<li><span style=\"font-weight: 400;\">and farm equipment<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This segment contributed as much as 44% of its total revenues in 2020.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Last but not least, Yenher complements and supports both divisions by offering value- added multiple diagnostic and material analyses services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its breakdown of revenues are as follow:<\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-1.16.33-PM.png\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-10086\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-1.16.33-PM.png\" alt=\"\" width=\"1658\" height=\"948\" \/><\/a><\/p>\n<h2><strong>#2: Financial Results\u00a0<\/strong><\/h2>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-3.19.17-PM.png\"><img decoding=\"async\" class=\"alignnone size-full wp-image-10093\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-3.19.17-PM.png\" alt=\"\" width=\"970\" height=\"358\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Overall, Yenher recorded an increase in revenue, from RM 177.4 million in 2017 to RM 202.6 million in 2020. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is contributed by sales increase from Yenher\u2019s manufacturing division, which exceeded a marginal decline from its distribution division in that period. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its PAT had increased from RM 19.0 million in 2017 to as much as RM 22.4 million in 2020. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yenher\u2019s PAT in 2018 was inclusive of RM 7.09 million in gains of property, plant &amp; equipment and its investment properties in that year, which are transactions that are one-off and non-recurring in nature.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Excluding 2018, Yenher maintained a net profit margin of 10-11% a year.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition, with rising current assets and reduction in current liabilities, Yenher has increased its current ratio from 1.71 in 2017 to 5.04 in 2020.<\/span><\/p>\n<h2><b>#3: Utilisation of IPO Proceeds\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Yenher plans to raise a gross proceeds of RM 61.2 million, where it intends to:<\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.44.03-PM.png\"><img decoding=\"async\" class=\"alignnone size-full wp-image-10091\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.44.03-PM.png\" alt=\"\" width=\"1262\" height=\"1140\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">At present, Yenher operates out of 3 properties in 2 rented premises at Penang, where its production capacity currently stands at:\u00a0<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.08-PM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-10089\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.08-PM.png\" alt=\"\" width=\"966\" height=\"198\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">They are now operating at full capacity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, Yenher plans to build 2 factories, 1 office building and 1 canteen on its piece of vacant freehold land located in Penang. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yenher will relocate its operations to its new facility upon completion of its construction. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thus, upon relocation, it shall grow and expand its operations to the planned production capacity stated below:\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.01-PM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-10088\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.01-PM.png\" alt=\"\" width=\"970\" height=\"228\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Currently, the progression of its construction is listed as follows: <\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.16-PM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-10090\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.16.16-PM.png\" alt=\"\" width=\"960\" height=\"728\" \/><\/a><\/p>\n<h2><b>#4: Risks\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Yenher revealed several key risks associated with its business operations:\u00a0<\/span><\/p>\n<h3><b>a. Reliance on 5 Top Customers\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In 2020, Yenher\u2019s 5 largest customers contributed RM 48.2 million in revenue to the company. They accounted for 23.8% of its total revenues in 2020.<\/span><\/p>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.44.03-PM.png\"><img decoding=\"async\" class=\"alignnone size-full wp-image-10091\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.44.03-PM.png\" alt=\"\" width=\"1262\" height=\"1140\" \/><\/a><\/p>\n<h3><b>b. Animal Diseases\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Any widespread outbreak of animal diseases would severely affect the demand for its animal health and nutrition products.\u00a0<\/span><\/p>\n<h3><b>c. Dependency of Foreign Workers\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Presently, Yenher has hired 47 foreign workers from Myanmar, Bangladesh, and Nepal, representing 34% of its total workforce. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Based on requirements that are imposed by the Malaysian Investment Development Authority (MIDA), it would be required to employ at least 80% of its total workforce by 31 December 2022, failing which, it risks its licence to be revoked.\u00a0<\/span><\/p>\n<h3><b>d. Fluctuations to Crude Oil Prices\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Raw materials and distribution products represent 90+% of its costs of sales for the last 4 years. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">They are subjected to fluctuation in crude oil prices as selected petrochemicals which include benzene, cellulose acetate, and propylene glycols are used to produce veterinary pharmaceutical and biological products.<\/span><\/p>\n<h2><b>#5: Main Shareholders <\/b><\/h2>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.45.23-PM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-10092\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2021\/06\/Screen-Shot-2021-06-22-at-2.45.23-PM.png\" alt=\"\" width=\"1238\" height=\"392\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Cheng Mooh Tat and Cheng Mooh Kheng are appointed as the Group Managing Director and Executive Director of Yenher. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">They are major shareholders through their direct shareholdings in Yenher and indirect interest through CGH Holdings which is the biggest shareholder of Yenher after its IPO listing.\u00a0<\/span><\/p>\n<h2><b>#6: Dividend Policy\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Yenher intends to recommend and distribute, at least, 40% of its audited profits attributable to its shareholders in the form of dividends.\u00a0<\/span><\/p>\n<h2><b>#7: Valuation Ratio\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">After its IPO listing, it would have 300 million ordinary shares issued. Hence, its market capitalisation shall be lifted up to RM 285.0 million based on its offering of 95 sen per IPO share.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2020, it had made RM 22.397 million in profits after tax (PAT). Thus, the offer is valued at 12.72x its earnings or at a P\/E Ratio of 12.72.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Based on its dividend policy, Yenher will pay out a minimum of RM 8.96 million in dividends to its shareholders. Thus, its dividend yield is at least 3.14% a year.\u00a0<\/span><\/p>\n<h3><b>Conclusion<\/b><span style=\"font-weight: 400;\">:\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yenher had reported small growth in profitability in 2017-2020 and it intends to increase its manufacturing capacity by constructing its own facility in Penang. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">It has 5.04x in current ratio and will have 5% in gearing ratio, after its IPO listing. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the present, Yenher\u2019s immediate concern would be to hire local workers so that it could fulfill the hiring requirements set by MIDA.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is also to manage its workforce and business operations during the nationwide lockdown (MCO 3.0) that began in June 2021. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">All in all, investors should weigh the potential risks and rewards in both the short and long term before investing into Yenher.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On 22 June 2021, Yenher Holdings Bhd (Yenher) released its IPO Prospectus and thus, extended an invitation to subscribe its IPO shares at 95 sen per share. The IPO subscription has ended on 1 July 2021 and the date of listing is set to be on 15 July 2021. You may download Yenher\u2019s IPO Prospectus [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10096,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[1,60,54],"tags":[1514,1511,1512,1513],"class_list":["post-10085","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-malaysia-stocks","category-ipo-launch","tag-yenher-stock-analysis","tag-yenher-ipo","tag-yenher-stock","tag-yenher-share-price"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/10085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/comments?post=10085"}],"version-history":[{"count":5,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/10085\/revisions"}],"predecessor-version":[{"id":10154,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/10085\/revisions\/10154"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media\/10096"}],"wp:attachment":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media?parent=10085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/categories?post=10085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/tags?post=10085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}