Yeo Hiap Seng

Yeo Hiap Seng: CS met with YHS’ management for an update on the company. YHS operates in two segments: F&B and property development, and has c.$400m in cash + investments (with little debt). It has $90m (fair value) of investment properties in Hong Kong/ Malaysia. Property income ($54m in 2012) was historically driven by YHS’ 'monetizing' land bank in Singapore. Management said that property business is the realm of its principal shareholder and that the company may not re-invest in the space. The company did not say that it would develop any of its Malaysian holdings near term. YHS sells its own brands (Yeo's, H-Two-O) of packaged drinks and is the distributor and bottler for Pepsico in SG and distributed brands such as Red Bull and Evian. While gross profits for F&B have grown from $125m to $146m over three years, net profits have been flat ($5m) due to higher costs (competitive pressure). YHS hopes to improve efficiency through reorganisation of its manufacturing locations (in MY and CN). The company said it is also expanding in Indonesia and Cambodia and hopes to increase its top line from $400m in 2012 to $1b in a few years.