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Yeo Hiap Seng Ltd Case Study
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Executive Summary Founded as a small Soya sauce maker by Yeo Keng Lian in China and reinvented by his sons following the 2nd world war, in Singapore, YHS is a global leader in Asian food and beverages and a leader in the manufacturing and distribution of some of the world best know brands across Asia. YHS has a proud a successful history and has emerged as a powerful and highly diversified manufacture of food and beverages. Despite this, YHS has encountered a number of difficulties during its long transition from local manufacture to Multinational Corporation. The past four years have seen dramatic changes at a shareholder, board and operational level; most significantly this can be seen in the takeover by Mr Ng Teng Fong’s Orchard Parade Holdings (OPH). The result of this takeover has removed the company’s traditional powerbase, the now defunct YHS Holdings, the Yeo family company. With the demise of the Yeo family interest, a significantly changed board and management team, YHS has emerged for the first time with a company vision, mission and a set of beliefs. These statements which have been included in the 1995 Annual report have quickly been reinforced by new investment in product development, new plants across South East Asia, considerable investment in China and the realization of vast property assets. The YHS share price has fluctuated dramatically during the 1990’s, which can be attributed to the takeover battle that occurred between OPH and Camerlin Ltd. Shareholder value increased by over 100% from 1992 to 1994, this is however not a true reflection of the company performance. Despite a dramatic turnaround in profitability from a loss in 1994 to a S$17,078,000 profit in 1995, total company sales have been gradually declining since the peak in 1991. This decrease can in part be attributed to underperforming divisions which have recently been annexed but also acts as a warning to the new management team that a fresh direction is required to reinvigorate sales. New CEO Alex Chan has already taken steps to curb declining sales and seize upon opportunities in emerging markets, particularly in China. Plans are underway to introduce up to six new Asian beverages and five new Asian sauces. These new products will be introduced under the Yeo’s brand which will become an important focus of sales and marketing in the medium term. Continued growth is expected with YHS stable of licensed international brands, and YHS global partner’s confidence in its capacity to deliver first class manufacturing distribution and marketing of their brands has been reinforced with the signing of an unprecedented 10 year deal with PepsiCo. With a clearly set vision for the future, the discarding of underperforming divisions and the recent internal management disruptions behind, YHS is in a strong position to capitalize on its vast experience in the manufacture and distribution of food and beverage products throughout Asia, and achieve its target of S$1 Billion in sales by 2000. Company History 1900- Company founded as a small Soya sauce maker by Yeo Keng Lian in China. 1935- Yeo Keng Lian’s three sons founded the Yeo Hiap Seng Sauce Factory in Outram Road Singapore. 1940’s – Following the war a new factory is built by the brothers on what was then the outskirts of the city, Bukit Timah 1955- The company is incorporated as the Yeo Hiap Seng Sauce factory 1955- Incorporation of Yeo Hiap Seng (Malaysia) Berhad 1960’s- Overseas operations commenced with the establishment of a branch office in Hong Kong 1969- Company is listed on the Singapore stock exchange as Yeo Hiap Seng Ltd (‘YHS’) 1975- YHS (Malaysia) listed on Kuala Lumpur stock market, of which YHS had a 34% stake. 1981- Acquisition of Melowise Ltd (Hong Kong) 1989- Acquisition of Chun King (USA) US$52 million – partnered by Singapore Govt investment arm- Temasek 1991- Company grows to turnover $341 million and operates in Europe, Asia and the US 1993- Bukit Timah rezoned residential, YHS required to move, book value of land revalued to $172.5 million –amounting 60% of YHS net tangible assets 1993- Aggregate result of associated companies jumps by 80% from $4.93 million to $8.95 million 1993- North American losses almost %6 million- 50-60% of this attributable to Chun King March 1994- Charles Yeo and uncle Ben Yeo and a lawyer are successful in their bid to join the board, amid rumours of a family feud 1994- Y.Y.
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