- Diversified business profile with long track record
Established in 1955 by the late Mr. Yap Chwee Hock, YCH Singapore serves as the flagship and holding company for the YCH group. This group specializes in providing comprehensive supply chain management and logistics solutions to diverse industries, including Chemical & Healthcare, Cold Chain, Consumers & Retail, E-Commerce, Electronics & Technology, and Connectivity. Dr. Robert Yap, the current Executive Chairman and eldest son of Mr. Yap Chwee Hock, brings over 40 years of experience in the logistics and SCM business. Other directors, who are family members of the Chairman, contribute with more than 15 years of industry expertise. YCH Singapore operates DistriParks and supply chain hubs strategically positioned in over 100 key cities across Greater China, India, Malaysia, Thailand, Indonesia, Philippines, Vietnam, Australia, and Korea. These facilities offer advanced warehousing, automation technology, and management and IT support services to YCH for its operations in India. The day-to-day operations of the Company are being managed by Mr. Debashish Mohanty. Acuité believes that the seasoned management team’s extensive exposure in the supply chain solutions industry, coupled with established relations with stakeholders, will pave the way for YCH’s growth over the medium term.
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 60%, 29% and 11% contribution to revenue in FY2023. Moreover, the company has a strong customer base which helps YCH secure repeat business. Its healthy customer base, including major players like Dell International Services India Private Limited, Lenovo (India) Private Limited, and Apple, contributes to repeat business. YCH strategically extends its logistics operations with 64 leased warehouses across India, ensuring Pan-India coverage. With the Chennai SEZ warehouse, the Company is expecting to add new customers to its existing base. It already has Dell and Apple as clients in the Chennai SEZ warehouse. Acuité believes that the diversified revenue streams provide a holistic end-to-end customer experience and positions the company for acquiring new clients, better rate realization, and consistent cash flows.
- Establishing an end-to-end logistics service presence with strong infrastructure and skilled workforce
YCH serves as a comprehensive logistics service provider, offering a range of services such as stevedoring, customs documentation handling, warehousing, storage, freight forwarding, empty container depot operations, inland container depots, steamer agent activities, CFS operations, transportation, and consulting. Operating across multiple ports in Chennai, the company possesses its own fleet of vehicles and handling equipment, including trailers, tippers, dumpers, loaders, reach stackers, empty container handlers, procliners, cranes, and forklifts. Acuité anticipates that YCH’s end-to-end logistics presence, supported by robust infrastructure and a skilled workforce, will enhance its business risk profile in the medium term. The promoter’s extensive experience in logistics is seen as a further strength contributing to the company’s medium-term business risk profile.
- Steady scale of operations
The revenue of the company stood at Rs.149.06 crore in FY2023(Provisional) as compared to Rs.130.66 crore in FY2022, mainly due to higher contributions from the warehouse storage revenue, transport charges and destination handling 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. 85.00 Cr for 6 months ended September 2023 for FY2024. The Company is in advance talks with a few companies for new customer acquisitions, which gives revenue visibility over the medium term.
However, the company’s profitability faced a setback, with the operating profit margin declining to 27.56 percent in FY2023(Provisional) from 29.22 percent in FY2022, primarily due to reduced absorption of fixed and overhead costs.
Moreover, the net profitability margin dipped to 17.07 percent in FY2023(Provisional), compared to 19.25 percent in FY2022. Acuité believes that the profitability margin will see remain at similar but healthy levels over the medium term.
- Healthy financial risk profile
The company’s financial risk profile is marked by healthy net worth, comfortable gearing and strong debt protection metrics. The tangible networth of the company stood at Rs.109.14 Cr as on March 31, 2023(Provisional) from Rs.83.35 Cr as on March 31, 2022 due to accretion of reserves. Furthermore, its capital structure remains leveraged, marked by the gearing of the company of 0.33 times as on 31 March 31, 2023(Provisional). The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.75 times as on March 31, 2023(Provisional). The strong debt protection metrics of the company is marked by Interest Coverage Ratio at 14.73 times and Debt Service Coverage Ratio at 5.42 times as on March 31, 2023(Provisional). The Net Cash Accruals/Total Debt (NCA/TD) stood at 0.87 times as on March 31, 2023(Provisional).
Acuité believes that the financial risk profile of the company will likely remain healthy, supported by healthy networth, comfortable gearing and strong debt protection metrics over the medium term.
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- Working capital intensive nature of operation
The working capital management of the company is intensive marked by high Gross Current Assets (GCA) of 203 days as on 31st March 2023(Provisional) as compared to 194 days as on 31st March 2022. The GCA days is high primarily on account of high receivables. The debtors stood at 106 days in FY2023(Provisional) compared to 130 days in FY2022. Further, the GCA days of the company has also emanates from the other current asset, which mainly consists of advance taxes paid to the tune of Rs. 23.03 Cr and other loans and advances for about Rs.4.50 Cr. The fund based limit remained utilized at ~53.22 per cent over the eleven months ended August, 2023. Against this, the company has dependence on its suppliers to support the working capital; creditors stood high at 125 days as on March 31, 2023(Provisional). Acuité believes that the working capital requirements of the company will remain at similar level over the medium term and any stretch in receivables will remain a key monitorable.
- 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.
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