KUALA LUMPUR: PublicInvest Research is positive on Yee Lee Corp Bhd's joint venture's contract with Shell Malaysia Trading Sdn Bhd to provide chain services to Shell's convenience retail outlets in Peninsular Malaysia.
The research house said pending further clarification from management, it is keeping its earnings estimates unchanged. It maintained its outperform rating with a target price of RM2.58.
"Overall we are positive on the news, as we see a wider revenue stream coming
from Shell’s established petrol station network, allowing Yee Lee to reach a
higher volume of end-consumers," it said.
According to Yee Lee's announcement, the contract will take effect from Oct 1, 2018 to Sept 30, 2021 with an option for Shell to extend it for another two years.
PublicInvest said the contract is a significant milestone for Yee Lee given Shell's established netwwork of petrol station in Peninsular Malaysia.
It added that YLTC Sdn Bhd, Yee Lee's joint venture with Tasco, has allowed the group to enhance its trading and distribution expertise through deeper exploration into the networking of logistics services.
"In the near to medium term, the contract is expected to further boost Yee Lee’s trading and distribution revenue.
"If execution goes well, this would add positively to its portfolio as Yee Lee’s first venture into supplying to petrol chain retail outlets could open up doors to other petrol chains in the future," it said.
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