­Experienced management and long track record of operations 
YCH is a part of the Singapore-based ‘YCH group’ engaged in supply chain management. YCH was established in the year 2007 as a subsidiary of YCH Group Pte Ltd (Singapore) [YCH Singapore]. YCH is engaged in the business of providing end-to-end supply chain management solutions involving supply chain consulting, design and providing customised logistic solutions. It provides integrated third-party logistics services including warehousing, freight forwarding and transportation services.  YCH Singapore, established in 1955, is the flagship and holding company of the YCH group which provides end-to-end supply chain management and logistics solutions to various global companies across hi-tech/electronics, chemicals and healthcare and consumer goods industries. The group has operations spanning the Asia Pacific, including Singapore, Malaysia, Thailand, Indonesia, China, Taiwan, Hong Kong, Philippines, Australia, India, Vietnam and Korea.

Steady scale of operations
The revenue of the company stood at Rs. 159.56 crore in FY2024 as compared to Rs. 149.49 crore in FY2023, mainly due to higher contributions from the warehouse storage revenue and transport charges. The growth stemmed from higher handled volumes and a steady stream of revenue from both new and existing customers. The company has already attained revenues of ~Rs. 119 Cr. till November 2024 . However, the company’s profitability faced a moderation, with the operating profit margin declining to 25.51 percent in FY2024 from 27.31 percent in FY2023, primarily due to reduced business coming from their major customer Dell. Additionally, due to slowdown in the electronics market finished products occupancy rate of warehouses had reduced in FY2024. Moreover, imports were significantly reduced due to government restrictions imposed on the import of electronic products, because of which their business from Dell reduced significantly. However, other revenue segments helped the company to increase their operating income. The net profitability margin dropped to 14.66 percent in FY2024, compared to 19.49 percent in FY2023. This was on account of increase in depreciation due to capitalising of fixed assets. Acuité believes that the profitability margin will remain at similar but healthy levels over the medium term.

Support from the parent YCH Singapore  
YCH leverages upon the large network of group companies across the world, which enables the company to offer services across the value chain as well as provide a reliable network to its clients as the correspondent agents in the destination countries are YCH’s group companies. YCH Singapore, the holding company, provides management and IT support services to YCH, as well as advanced warehousing and automation technology that YCH uses at its facilities.

Diversified business profile 
The company has a diversified business profile as reflected from its three business divisions, namely Warehouse storage revenue, Transport charges and Destination handling charges with 55%, 36% and 7% contribution to revenue of FY24 respectively. Moreover, the company has a strong customer base helped YCH secure repeat business. Its healthy customer base, including major players like Dell International Services India Private Limited, Lenovo (India) Private Limited, and Apple, contributing to repeat business. YCH strategically extends its logistics operations with 58 warehouses across India, ensuring Pan-India coverage and providing logistic solution globally to China, Hong Kong, Malaysia, Taiwan, Japan, and Korea. With the Chennai SEZ warehouse, the Company is expecting to add new customers to its existing base. This multifaceted presence offers geographical and commodity diversification, aligning with Acuité believe that it positions the company for acquiring new clients, better rate realization, and consistent cash flows.

Healthy financial risk profile 
The tangible net worth of the company stood at Rs.120.37 Cr. as on March 31, 2024 as compared to Rs.111.94 Cr. as on March 31, 2023, due to accretion to reserves. The gearing of the company stood modest at 0.18 times as on 31 March 31, 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.44 times as on March 31, 2024 as compared to 0.6 times as on March 31, 2023. The debt protection metrices of the company remain comfortable marked by Interest coverage ratio (ICR) of 17.09 times and debt service coverage ratio (DSCR) of 5.65 times for FY2024. The net cash accruals to total debt (NCA/TD) stood healthy at 1.56 times in FY2024.

­Working capital intensive nature of operation 
The working capital management of the company is moderate marked by Gross Current Assets (GCA) of 174 days for FY2024 as compared to 194 days for FY2023. The debtor days stood at 108 in FY2024. Days payable outstanding stood at 137 days against 117 days in FY2023. The company can stretch its working capital on account of higher payable days, which causes a negative working capital cycle for the company. This in turn helps the company to have large amount of unencumbered cash and bank balance. 

Revenue growth and margins remain susceptible to economic downturns and government regulations
YCH’s revenue growth is vulnerable to the global economic slowdown, heightened competition, and constrained pricing flexibility, potentially affecting its operations. Fluctuations in government policies regarding export-import trade also pose a risk. Changes in Exim trade volumes directly influence overall sales. Despite these challenges, the company benefits from favourable long-term prospects in container traffic. Established relationships with major shipping lines, coupled with its integrated position in the logistics chain and port operations, help mitigate some of these risks. Additionally,the occupany levels of warehouses , new as well as existing , will remain a key monitorable.