YEW LEE PACIFIC GROUP (YLP) Q2 2025: Navigating Headwinds with a Return to Profitability
Hello fellow Malaysian retail investors!
Today, we’re diving into the latest unaudited interim financial report for YEW LEE PACIFIC GROUP BERHAD (YLP) for the second quarter ended 30 June 2025. In a challenging economic landscape, understanding how our local companies perform is crucial. This quarter’s report for YLP presents a mixed bag of results, demonstrating the company’s resilience to achieve a profit turnaround, albeit on lower revenue, alongside strategic efforts to diversify its business.
The headline? YLP successfully reversed its loss-making trend from the previous year, posting a net profit of RM1 thousand for the quarter. This is a significant improvement, especially when viewed against a backdrop of declining sales. Let’s break down the numbers and see what’s driving YLP’s performance and what the future might hold.
Core Financial Highlights: A Deeper Dive into YLP’s Performance
Quarterly Performance: Q2 2025 vs. Q2 2024
Comparing the current quarter (Q2 2025) with the same period last year (Q2 2024), YLP faced a notable decline in revenue, but managed to pivot to profitability:
Q2 2025 (Current Quarter)
Revenue: RM4.54 million
Gross Profit: RM1.61 million
Profit Before Tax: RM39 thousand
Profit After Tax: RM1 thousand
Basic EPS: 0.00 sen
Q2 2024 (Preceding Year Corresponding Quarter)
Revenue: RM6.11 million
Gross Profit: RM1.70 million
Loss Before Tax: (RM164 thousand)
Loss After Tax: (RM158 thousand)
Basic EPS: (0.03 sen)
Key Takeaways: Revenue saw a substantial 26% decrease, mainly attributed to frail market demand. Gross profit also dipped by 5%. However, the company achieved a commendable turnaround, shifting from a loss before tax of RM164 thousand in Q2 2024 to a profit of RM39 thousand in Q2 2025, and a net profit of RM1 thousand from a net loss of RM158 thousand previously. This turnaround was primarily driven by a better product mix within the industrial sales segment, leading to an improved gross profit margin of 35% compared to 28% in the preceding year’s corresponding quarter. The overseas entity, particularly the Thailand subsidiary, also played a crucial role, contributing RM0.60 million in gross profit this quarter.
Quarter-on-Quarter Performance: Q2 2025 vs. Q1 2025
Looking at the immediate preceding quarter (Q1 2025), YLP experienced a sequential slowdown:
Q2 2025 (Current Quarter)
Revenue: RM4.54 million
Gross Profit: RM1.61 million
Profit Before Tax: RM39 thousand
Profit After Tax: RM1 thousand
Q1 2025 (Preceding Quarter)
Revenue: RM5.07 million
Gross Profit: RM1.73 million
Profit Before Tax: RM191 thousand
Profit After Tax: RM165 thousand
Key Takeaways: Revenue declined by 10% from Q1 2025, and both gross profit and net profit saw significant decreases (7% and 99% respectively). This quarter-on-quarter dip was mainly due to lower selling prices and weaker customer demand, exacerbated by stiff market competition. Despite the lower absolute profit, the gross profit margin slightly improved from 34% in Q1 2025 to 35% in Q2 2025, again highlighting the positive impact of a better product mix in the industrial brush segment.
Financial Health: Balance Sheet and Cash Flow
YLP’s balance sheet remains robust, and its cash position has strengthened year-to-date:
| Indicator | As at 30 June 2025 (RM’000) | As at 31 Dec 2024 (RM’000) |
|---|---|---|
| Total Assets | 80,622 | 79,864 |
| Total Equity | 76,515 | 74,429 |
| Net Assets Per Share (sen) | 14.02 | 13.88 |
| Cash and Bank Balances | 7,888 | 5,910 |
| Inventories | 4,783 | 4,336 |
| Trade Receivables | 3,597 | 4,361 |
| Trade Payables | 1,299 | 1,745 |
Cash Flow Insights: While the Group recorded cash used in operating activities of RM428 thousand year-to-date (compared to RM1.51 million generated in the same period last year), this was significantly offset by a strong net cash generation of RM4.96 million from financing activities. This surge in financing cash flow was largely due to proceeds from the exercise of warrants and withdrawal from short-term investment funds. As a result, YLP saw a healthy net increase of RM2.03 million in cash and cash equivalents year-to-date, ending the period with a robust cash position.
It’s also worth noting that the proceeds from the Initial Public Offering (IPO) have been fully utilised as of June 30, 2025, channelled into areas like manufacturing machinery, warehouse construction, and working capital, aligning with the company’s long-term growth plans.
Segmental Performance: A Mixed Picture
YLP operates in three main segments: Investment Holding, Manufacturing and Trading, and an Oversea Entity. Year-to-date results show a shift in performance drivers:
- Manufacturing and Trading Segment: This segment, which includes industrial brushes, hardware, and machinery parts, saw a decline in revenue and profit before tax year-to-date (PBT of RM1 thousand from RM515 thousand last year).
- Oversea Entity (Thailand): In contrast, the overseas entity has shown strong growth, increasing revenue and turning around its PBT to RM275 thousand from a loss of RM432 thousand in the prior year-to-date period. This highlights the success of international expansion efforts.
Navigating Challenges and Charting Future Growth
YLP acknowledges the prevailing market difficulties, particularly its exposure to the rubber glove industry, which has been grappling with oversupply issues post-pandemic. This directly impacts demand for YLP’s industrial brush products. The company also faces stiff market competition, affecting selling prices and overall profitability.
However, YLP is not standing still. The management has outlined clear strategies to mitigate these risks and drive future growth:
Strategic Initiatives:
- Product Expansion: Enhancing its range of industrial brushes through customisation and strengthening market presence both domestically and internationally.
- Business Diversification: Expanding its trading business to include more industrial hardware and machinery parts.
- Market Diversification: Reducing over-dependency on the rubber glove industry by extending product supply to new sectors like semiconductor, timber, glass, and agriculture. This is a crucial long-term strategy.
- New Revenue Streams: Actively identifying and assessing strategic opportunities to venture into other business sectors.
- ESG Integration: Aligning operations and product offerings with Environmental, Social, and Governance (ESG) best practices, which can provide a competitive edge in vendor selection processes.
These proactive measures demonstrate YLP’s commitment to adapting to market dynamics and building a more resilient business model for the future.
Summary and Investment Outlook
YEW LEE PACIFIC GROUP’s Q2 2025 report showcases a company demonstrating resilience in a tough market. Despite a dip in revenue, a strong focus on product mix and cost management enabled a turnaround to profitability in the current quarter, which is a positive sign. The stellar performance of the overseas entity is a testament to successful international expansion and diversification efforts.
While the company faces persistent headwinds from the rubber glove industry and intense market competition, its strategic initiatives to diversify products, markets, and revenue streams are well-placed. The strengthening cash position also provides a solid foundation for these growth plans.
Key areas to watch for YLP’s future performance include:
- The success of its diversification efforts into new industries beyond rubber gloves.
- The ability to maintain or improve gross profit margins amid stiff competition.
- Continued growth and contribution from its overseas operations.
- Effective management of operating costs and working capital in a fluctuating demand environment.
