Yenher set for revenue growth

The growth is attributed to its expansion plans and the expected ASF vaccines sales 

ANIMAL health and nutrition products maker Yenher Holdings Bhd has been expanding slowly but surely over the years. Today, the Penang-based company has expanded its customer network globally, with presence in Indonesia and Nigeria, and a branch in Taiwan. 

Listed on the Main Market of Bursa Malaysia, the company caught the eye of an equity research house that has given the counter a ‘Buy’ rating with a 52-week target price of RM1.1125. The stock ended last Friday’s trading at 95 sen. 

“We anticipate significant growth potential, with a projected revenue growth of 62% year-on-year (YoY) in FY25F. This growth can be attributed to its expansion plans and the expected sales from vaccines targeting the African swine fever (ASF),” CGS-CIMB Research said in a note released last week. 

Noting that the company has a proven track record, it added that with over three decades of industry experience, Yenher has established itself as a comprehensive hub for animal health and nutrition manufacturing and supply. Yenher’s primary focus is on manufacturing premixes and distributing a wide range of animal health products. While Malaysia remains its main market, Yenher has also expanded its presence in overseas markets. 

Starting Point 

Yenher dates back its beginning to 1982 with the establishment of Guan Hoe Farming and Trader (GHFT) in Penang by Cheng Guan Hoe as a trader of animal health and nutrition products focusing on the distribution of veterinary pharmaceuticals, according to the company website. 

Today, the next generation is already on board the company, holding key positions. Guan Hoe’s children steering the company are executive chairman Cheng Mooh Tat, 60, and ED Cheng Mooh Kheng, 54. Their elder brother, Cheng Mooh Chye, 64, is an ED at Yenher’s subsidiaries, according to its 2022 annual report. 

Mooh Tat is said to have joined the family business later in the 1980’s. In 1991, Mooh Tat established Yenher Agro-Products Sdn Bhd with one of GHFT’s suppliers, to expand the trading of animal health and nutrition products to include premixes, feed additives and vitamins. 

Yenher Agro-Products began its operations with a focus on the swine subsector, providing premixes to customers located in Penang, according to the company website. 

In 1993, Cheng Guan Hoe Holdings Sdn Bhd, an investment holding vehicle held by Guan Hoe and his children, acquired 51% stake in Yenher Agro-Products and subsequently in the same year, the entire stake of Cheng Guan Hoe Holdings in Yenher Agro-Products was transferred to Guan Hoe and his children. GHFT was then dissolved in 1993 as the Cheng’s family decided to consolidate all of their businesses under Yenher Agro-Products. 

Over the years, it said that the group has evolved from solely a distributor to a manufacturer and distributor of animal health and nutrition products. It has also expanded its customer network to international markets by appointing distributors in Indonesia in 1997 and Nigeria in 2015. In 2020, it established a branch in Taiwan. 

Increasing Turnover 

In the initiation report on the company, CGS-CIMB has projected that the company’s revenue will see a compounded annual growth rate (CAGR) of 56% from financial year 2017 (FY17) to FY22. 

For FY22, Yenher posted a net profit of RM21.69 million on the back of RM355.34 million in turn-over. The turnover was a good 35% increase from the year before. 

Despites uncertainties within the economic environment including rising interest rate and inflation pressures, as well as outbreak of animal diseases in Malaysia, Yenher’s Mooh Tat said in a statement issued in February 2023 that it managed to close FY22 with record profits, allowing it to continue rewarding its shareholders with dividends of at least 40% payout ratio of dividend policy. 

CGS-CIMB noted that the robust growth can be attributed to the increased sales of raw materials, commodities, vitamins and minerals, feed additives, biotech products, and grain and oil seeds within the distribution activities. 

Moving forward, it said its revenue is projected to achieve RM386.5 million (+9% YoY), RM388.9 million (+1% YoY) and RM630.8 million (62% YoY) for FY23F, FY24F and FY25F, respectively, resulting in a CAGR of 39% in revenue from FY20 to FY25F. 

Notably, CGS-CIMB said in FY2025F, a surge in the group’s financial performance is expected due to the assumed completion and operation of a new plant in the second half of FY25F translating to a higher annual capacity by three-fold, along with increased sales of swine vaccines to combat ASF, which has a mortality rate of up to 100%. The strong demand for the swine vaccine is anticipated to drive revenue growth. 

“Despite the lower sales volume recorded in the latest financial year, Yenher could still capture some market share through its distribution division. Moving ahead, the management is in talks with a few swine vaccine manufacturers and it will take about two years to bring in the vaccine to the country. We expect that the sales of vaccines will commence in FY25,” it said. 

The research house also noted Yenher’s “extremely low” gearing ratio. It said Yenher has demonstrated a commendable track record in maintaining a consistently low gearing ratio of 0.01 times from FY20 through the latest FY22. 

“With such a favourable gearing ratio, Yenher is well-positioned to leverage on its financial strength and pursue strategic investments that will further enhance its market presence and drive long-term sustainable growth,” it said. 

The company has also continuously recorded a steady payout ratio above 40%. Since its listing, Yenher has consistently issued dividends, with a payout ratio of 43% and 41% in FY21 and FY22, respectively, accompanied by a dividend per share (DPS) of three sen for both years. 

Looking ahead, CGC-CIMB anticipates a gradual increase in dividends, with projected DPS of 3.8 sen, 3.7 sen and 7.3 sen for FY23F, FY24F and FY25F, respectively. 

It said these expected dividends represent a yield of 4%, 4% and 8% for the respective years, reflecting the company’s commitment to delivering attractive returns to its shareholders while maintaining a sustainable dividend policy. — TMR 

  • This article first appeared in The Malaysian Reserve weekly print edition