Refrigeration

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Nam Lee Pressed Metal Industries was incorporated in 1975 and has been in metal fabrication business since the 1950s. The firm started supply metal products to HDB in 1991. Beside metal products, the company also supply aluminium, UPVC, steels and is the only third-party manufacturer of aluminium frames for a major customer worldwide.

Executive positions in the Board are mostly held by members of the Yong family.

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Businesses are segmented into:

• Aluminium

• Mild Steel

• Stainless Steel

• Others

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Facilities and served markets are Singapore and Malaysia.

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Business - FY-September

Nam Lee operate in a cyclical industry. Revenue and earning were on downtrend from FY15~FY20.

Covid-19 pandemic led to a huge demand for refrigeration requiring aluminium frames. As a result, aluminium demand jumped 66% from $107M (86% mix) to $172M in FY21.

Mild Steel also spiked from $10M to $23M (12% mix).

Stainless Steel & Others constitute only a negligible portion of overall business.

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Despite the strong top-line growth, gross margin only improved from 15.5% to 16.3% YoY due to higher material, labour & compliance cost.

Operating margin jumped from 3.3% to 7.2% on lower rate of increase relative to revenue.

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FY21 overall revenue increased 68% and profit jumped 146% to $15.7M.

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98% of business are recorded in Singapore and 2% in Malaysia.

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Opinion

Business is generally well managed with good cost containment. As global economies adopt 'living with Covid' and reopens (except for China), demand for refrigeration could soften; hence impacting Nam Lee outlook from FY22.

Other than productivity enhancement, there are no known strategic initiatives to drive earning growth.

Dividend past five years range between 1.5 ~ 2.5 cents. Dividend cover about 50%.