This article was first published on Tom K's blog, and is reproduced with permission
GLOBAL YELLOW PAGES reported net profit of S$3.1 million for the nine months period ended 31 December 2014, compared to S$5.2 million for the corresponding period last year. This is 39.4% lower.
I think this result will not cheer its investors, especially when the reduced profits arose due to lower revenue (S$21.1 million, a 8.8% y-o-y decrease) coupled with a higher expense of $21.4 million (3.9% higher y-o-y).
Global Yellow Pages' investment in Yamada Green Resources, a company which it holds almost a 20% stake in, as well as other companies, returned almost a similar figure of $1.8 million. There were other gains of S$2.1 million (S$0.4 million higher than corresponding period last year), which though helpful is just a small contribution to the bottom-line.
In Global Yellow Pages' latest financial results, the company's main business in advertising is not doing as well as its newer businesses - Singapore River Tour and Taxi services and ice-cream chain Wendy's in Australia and New Zealand.
GYP's bumboat river tour services 13 landing points along its route, and passes major tourist attractions that include Clarke Quay, the Raffles Landing Site, the Merlion, Marina Bay Sands and the Singapore Flyer. Photo: Company
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I had asked in my earlier post whether the low share price which Global Yellow Pages is currently trading at (just four cents) will become the base for the stock to become a multi-bagger. I have confidence that the team helmed by Mr Mah Bow Tan and with a key investor in Mr Sam Goi can continue to look for acquisitions and investment opportunities to transform Global Yellow Pages into a conglomerate with its stock price becoming a multi-bagger.
I have some humble suggestions.
Global Yellow Pages has acquired a 20% stake in Yamada Green Resources, a shitake mushroom producer in Fujian. Photo: CompanyGlobal Yellow Pages can consider disposing of its stake in Yamada Green Resources, a S-chip company which is not doing well in stock price (I feel Singapore retail investors generally do not really appreciate S-chip stocks) and use the monies to invest in other F&B companies.
Possible candidates include Etika Holdings and Super Group, two companies which Mr Sam Goi has invested in as well. This may help in the company's growth in Food & Beverages sector.
On the property front, the Group can also consider investing in or even acquiring other smaller-cap property companies to accelerate its growth in this area. There can be some investments in GSH, a company helmed by Mr Goi as well. GSH is focused on properties in West and East Malaysia and in my opinion is doing well.
Definitely, acquisitions cost monies but from a strategic point of view, I think it may be worthwhile in the long term to accelerate Global Yellow Page's growth into a conglomerate which I hope to see, a conglomerate in Food & Beverages as well as Properties, with its share price many times its current level.
Related story: YAMADA GREEN RESOURCES: Buying by GYP and independent director