[ YOCB ] - A Left-behind Consumer Company ??? - J4 Investment Capital
Yoong Onn Corperation Berhad is an integrated designer, manufacturer, distributor and retailer of bed and bath linen , bedding accessories , curtains , carpets with more than 50 years of experience in this field . This company has created their own 10 main brands of home linen for premium to mid-range consumers around the world especially in Asia and Middle- East . They are now tying up with the foreign major and prominent mattress manufacturer and distributor where by they design and manufacture bedding, and related products for their local and overseas market.
In 2000 , they have set- up a new manufacturing plant on its 9.3 acres of land in Nilai , Negeri Sembilan to increase production capacity . There are also 2 new warehouse in their Nilai factory with a total up more than 165,000 sq.ft of storage capacity built in 2012 and 2015 respectively.
Their products are also available in departmental stores, specialty stores and hypermarkets. To date, the group has 280 consignment counters in Malaysia, primarily in high-traffic retail chains such as Aeon , Sogo, Isetan, Metrojaya, Harvey Norman, Parkson, Tesco and Robinsons. There are a few brands which are more popular including Novelle, Jean Perry, Louis Casa, Genova, Niki Cains, Diana, and Cotonsoft where we can find it near the bedding accessories section in the store .
To even expand their company’s business and gain more reputation , the company has set up a fully - owned retail store - “ Home’s Harmony “ all around Malaysia. Until the year of 2017, it has a total of 20 retail outlets ( 2 new stores in 2017 ) opening wide in Selangor , Kuala Lumpur and Penang .
Besides , the group is also involved in the hospitality- based institutions ( hospital , military , cruise ships , as well as the hotels and resorts . This is to maintain a strong , continuous supply of products to a specific customer for a longer period of time .
So what’s making this company much more stronger for those value - investor ?
1. A high dividend yield of 4 + % .
2. A stable yet growing company .
3. Benefiting in a weaker MYR rates .
4. Leaving far from the trade wars .
5. A 0% GST for 2 months .
In the company’s prospect , the group is optimistic with their business remaining strong for the rest of the year and in 2018, despite a less robust global economic outlook which may affect their domestic performance and their export markets in the region. The Group aims to grow from strength to strength over the years and to achieve sustainable growth in sales and profits every year. They are now focusing on their own retail-store business where they wish to expand it not only in Malayisa . With the advantage of a weaker MYR rates and 0% GST for the 2 months , the company may achieve a better result compared to the last quarter result .
Intrinsic Value :
The intrinsic value of YOCB calculated using cash valuation method is 0.48 ( included all borrowings) , which is lower than its current closing price of 1.22 . It is due to the less cash holding by this company , however we expect that the cash flow of this company will improve together with the improvement in revenue and profit . From the calculation of intrinsic value , this stock is overvalued.
PER RATIO CALCULATION = PE / Est Growth %
= 8.2 / 15
= 0.55 ( undervalue )
Fair value calculation = Est Growth x Current rolling 4 quarter EPS
= 15 x 14.88 sen
= RM 2.23 ( 83 % potential gain )
Technical Analysis :
Based on the chart above , there’s a signal on a upcoming bullish- trend after a perfect cup and handle pattern has formed . This indicates an end of a downtrend momentum and creates a reversal trend . A strong support has been comfirmed at the price of RM 1.15 and there will be a resistance at RM 1.25 . I strongly believe that there will be a breakout soon if the price successfully maintained above the support line . To be safe , it is more encourageable to consider your price after the breakout at RM 1.28 or above the support line RM 1.15 .
Based on the indicators above , there is a significant money flowing into the market and is accumulating it since May. The a MACD Golden Cross signal which indicates a positive sentiment with a ongoing bull trend .
Disclaimer : Information above is for sharing and education purposes , not a buy and sell advice , please refer to ur advisory for any buy or sell call , buy and sell at your own risk .
Happy investing !
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J4 Investment Capital.