Greetings, fellow investors and market watchers! Today, we’re diving into the latest financial pulse of YEW LEE PACIFIC GROUP BERHAD (YLP), a prominent Malaysian company known for its industrial brushes, hardware, and machinery parts. Their unaudited interim financial report for the first quarter ended 31 March 2025 has just landed, and it presents a fascinating picture of resilience and strategic adaptation.
While the company navigated a slight dip in overall revenue, the standout highlight is a remarkable turnaround in profitability, shifting from a loss to a profit compared to the same period last year. This signals a strategic focus on higher-margin products and efficient operations. Let’s peel back the layers and explore what’s truly driving YLP’s performance and what lies ahead.
Q1 FY2025: A Profitable Turnaround Amidst Shifting Tides
YEW LEE PACIFIC GROUP BERHAD has demonstrated a commendable ability to pivot towards profitability in the first quarter of 2025. Despite a marginal decrease in revenue, the company significantly improved its gross profit and returned to a positive bottom line, a stark contrast to the loss recorded in the corresponding quarter of the previous year.
The Group recorded a Profit After Tax of RM0.17 million in Q1 2025, a substantial improvement from the Loss After Tax of RM0.16 million in Q1 2024.
Key Financial Highlights (Q1 2025 vs. Q1 2024)
Current Quarter (31 March 2025)
Revenue: RM5,070,000
Gross Profit: RM1,734,000
Profit Before Tax: RM191,000
Profit After Tax: RM165,000
Basic Earnings Per Share: 0.03 sen
Preceding Year Corresponding Quarter (31 March 2024)
Revenue: RM5,334,000
Gross Profit: RM1,626,000
Loss Before Tax: RM(144,000)
Loss After Tax: RM(159,000)
Basic Earnings Per Share: (0.03) sen
While revenue saw a 5% decrease, falling from RM5.33 million to RM5.07 million, the Group’s gross profit actually increased by 7%, reaching RM1.73 million. This seemingly counterintuitive growth is a testament to an improved product mix, particularly from the industrial brush segment, which commanded better profit margins due to product customisation. This strategy lifted the gross profit margin from 30% in the preceding year to a healthy 34% in the current quarter.
Furthermore, the positive contribution from the Group’s subsidiary in Thailand, which achieved a 30% gross margin amounting to RM0.30 million in Q1 2025, played a significant role. Coupled with other income, including interest from short-term investment funds and fixed deposits, these factors collectively propelled the Group from a net loss to a commendable net profit.
Quarter-on-Quarter Performance (Q1 2025 vs. Q4 2024)
Comparing the current quarter to the immediate preceding quarter (Q4 2024), YLP saw a marginal 3% decrease in revenue from RM5.24 million to RM5.07 million, primarily due to lower sales orders and customer demand. Gross profit also saw an 11% decline from RM1.94 million to RM1.73 million, with gross profit margin slightly moderating from 37% to 34%. This was attributed to a moderate increase in production costs and a reduction in sales orders from the industrial brush segment.
Profit after tax in the current quarter was RM0.17 million, a decrease from RM0.54 million in Q4 2024. The preceding quarter’s higher profit was partly influenced by the recovery of bad debts and favorable foreign exchange rates.
Segmental Performance: Industrial Brushes Lead the Charge
The segmental analysis further illuminates the drivers behind YLP’s improved profitability. The shift from losses to profits in key operating segments is a clear indicator of operational efficiency and strategic adjustments.
| Segment | Profit / (Loss) Before Tax (Q1 2025, RM’000) | Profit / (Loss) Before Tax (Q1 2024, RM’000) | Change (RM’000) |
|---|---|---|---|
| Investment Holding | 21 | 63 | (42) |
| Manufacturing and Trading Segment | 86 | (36) | +122 |
| Oversea Entity (Thailand) | 107 | (187) | +294 |
| Total Profit Before Tax | 191 | (144) | +335 |
Notably, the Manufacturing and Trading Segment, as well as the Oversea Entity (Thailand), both successfully transitioned from a loss-making position to profitability. This highlights the effectiveness of focusing on higher-margin industrial brush products and the positive impact of the Thailand operations.
Financial Health Check: Strong Equity, Reduced Liabilities
YEW LEE PACIFIC GROUP BERHAD’s balance sheet as of 31 March 2025 reflects a healthy financial position. Total equity saw an increase to RM76.53 million from RM74.43 million at the end of FY2024, contributing to an improved net assets per share of 14.02 sen (up from 13.88 sen). Importantly, total liabilities significantly decreased to RM3.31 million from RM5.44 million, indicating a stronger financial structure.
In terms of cash flow, the Group experienced a net cash outflow of RM75,000 from operating activities in Q1 2025, compared to a net inflow of RM2.27 million in Q1 2024. This shift is something to monitor. However, financing activities generated a substantial RM1.96 million, largely driven by the exercise of warrants and issuance of new shares, reinforcing the company’s capital base.
Navigating Risks and Charting Future Growth
The Group acknowledges its reliance on the rubber glove industry, which has faced challenges due to oversupply and plant rationalization post-pandemic. This has impacted demand for YLP’s industrial brush products. However, the company is actively pursuing strategies to mitigate this dependency and foster new growth avenues.
Key strategies and prospects for the current financial year include:
- Product Diversification: Expanding the range of industrial brushes, focusing on customisable solutions, and strengthening market position both in Malaysia and internationally.
- Market Expansion: Exploring and expanding into more industrial hardware and machinery parts within the trading business segment.
- Industry Diversification: Extending product supply to new markets and industries such as semiconductor, timber, glass, and agricultural sectors. This aims to broaden the customer base and reduce over-reliance on the rubber glove industry.
- ESG Integration: Continuous initiatives to align operations and product offerings with prevailing Environmental, Social, and Governance (ESG) best practices. This is expected to give YLP a favorable position in vendor selection processes.
Furthermore, the Group continues to utilize its IPO proceeds diligently. As of 31 March 2025, RM35.61 million out of RM37.27 million has been utilised, with RM1.66 million remaining for the purchase of additional manufacturing machinery and equipment, indicating ongoing investment in operational capabilities.
Summary and
YEW LEE PACIFIC GROUP BERHAD’s Q1 2025 report showcases a strong operational rebound, moving from a loss to a profit, primarily driven by a focus on higher-margin products and the positive contributions from its overseas operations. While facing challenges from a key customer industry, the company is proactively implementing strategies for diversification across products, markets, and industries, alongside integrating ESG principles. The strengthened balance sheet and ongoing capital investments position the Group for future growth.
Key strategic points highlighted in the report include:
- Mitigating over-dependency on the rubber glove industry through diversification.
- Expanding and customising industrial brush offerings to capture better margins.
- Exploring new markets and industries beyond traditional segments.
- Adopting ESG principles to enhance competitive positioning.
What are your thoughts on YEW LEE PACIFIC GROUP BERHAD’s strategic shift and its potential to maintain this positive momentum? Do you believe their diversification efforts will effectively cushion them from industry-specific headwinds?
Share your insights and perspectives in the comments section below! Let’s discuss how this Malaysian company is navigating the evolving market landscape.
Stay tuned for more in-depth analyses of company reports!
