Eu Yan Sang

[hongonn]

Lately i read news saying the chinese medicines in china the price has been jacked up like crazy. It can gone up like double or triple. Obviously the businessmen there stock up the medicine and speculate the price.

But eu yan sang last quarter result don't seem like affected by this raw material price. The margin still maintain very well. I wonder how they manage to do that?

So far i only aware they only got a sole distribution right for american ginseng.

Recently this eu yan sang also start speculating in properties market, bought a industrial building in singapore, and shop houses in hong kong. The industrial building has no excuse, hong kong shop houses they claimed will use it for retails and head quarter. Anyway quite big sum of money.

[Musicwhiz]

how do u use this ratio? higher rec to rev is not a gd sign?

Apologies for not being clear about that one.

It's actually to compare growth of receivables versus growth of revenues, in % terms. If receivables are growing much faster than revenues it may show up as bad debts in the medium-term, or it might be that the Company is too aggressive in revenue recognition (read the AR for revenue recognition policies - some of these can be "manipulated" to a certain extent and companies engage in revenue smoothing - not EYS in particular, referring to companies in general).

[orang]

Orang,

LOL! It's indeed English lesson time! Everything is semantics!

In my humble opinion working in Supply Chain, what Eu Yan San says is technically correct. In these outsourcing time, "total" supply chain is indeed what you have written: sourcing-manufacturing-wholesaling-retailing.

If we want to split hairs, how many companies can own their own shipping, land, and air carriers? How many companies can "produce" all the raw materials that go into their final products?

Whether that's an competitive advantage or hindrance may depend whether you belong to the outsourcing school or vertical integration school

Or depending whether you are a business owner or employee. Outsourcing is more ofen than not another word for retrenchment to employees

Yes Sir! Don't know about others but I am enlightened.

How nice we meet again. In school, thank goodness. Not in bear cave

---

A good start to this thread may be this takeaway from the company's profile....

......Eu Yan Sang’s ability to control the total supply chain – from the
sourcing of its raw materials to the production and distribution of
its products and the provision of treatments gives the Group an
excellent competitive edge in the industry

Is that competitive edge as mentioned by yourself reflected in the gross and net margins? Assuming they have a sustainable moat, they should be able to sustain or even increase market share over time, and revenues should trend up nicely over the last 5-10 years.

Maybe you can illustrate with some numbers? I have yet to do an analysis for EYS using an Excel spreadsheet.

Thanks!

It was only a copy-and-paste job from the AR - page 3.

Little did I expect to trigger such a response. Like a bull seeing red. Some sharpo you are. And the answers you seek are…...somewhat quite demanding. For a ikan bilis like me?

Whether pertinent or not some easy retail-investor answers I can give...

1) Revenue is a 4-in-1 composite of (a) Retail TCM (b) Wholesale TCM © Clinics and (d) Others. A big chunk comes from retail (80%) which drives topline. On average growth averages 9% over the last 5 years, quite consistent with a variance of 10%

2) Gross margins are a more consistent 51% while PAT margin is 7.2% a 5-year average but a more cheery 7.7% and 9.4% a 3-year at 7.7% and currently respectively.

3) FCF averages 80% of PAT as financing of new stores accounts for the bulk of capex. Translated as ROE it averages 16%

4) Cash on average is consistently in surplus just ahead of the aggregate of ST and LT borrowing

5) Dividend is a lot more boring just a tad above 2c in absolute terms. Seen in the context of a 1:5 bonus issue last year and another 1:4 bonus in 2005 the upward biased is discernible. I think the ongoing yield averages 3%

6) It really depends on which school of thought you are in (borrowed from Jared Seah)......Dividend or Growth. The latter may be an apt fit.

7) Perhaps Total Returns?

8) As I was saying in (1) above the main growth driver in recent times is retail as the growth in the the number of retail stores suggest....from 98 in 2005 to 186 at this point in time.

9) For what it's worth Aberdeen has substantial interests since IPO days. In fact increasing over the years

[Bibi]

Recently this eu yan sang also start speculating in properties market, bought a industrial building in singapore, and shop houses in hong kong. The industrial building has no excuse, hong kong shop houses they claimed will use it for retails and head quarter. Anyway quite big sum of money.

Industrial building they can use to produce "cultivated" cordyceps and maybe shitake mushrooms

[mrEngineer]

Another business like OSIM that I fail to understand why no crowd at the stores but always can increase revenue and profits.

[Musicwhiz]

Another business like OSIM that I fail to understand why no crowd at the stores but always can increase revenue and profits.

Perhaps more of their revenues are from China and SEA? Just a guess.

Anyway a bit OT liao, any further posts on OSIM, please post on the OSIM thread, thanks!

[pianist]

Another business like OSIM that I fail to understand why no crowd at the stores but always can increase revenue and profits.

Perhaps more of their revenues are from China and SEA? Just a guess.
Anyway a bit OT liao, any further posts on OSIM, please post on the OSIM thread, thanks!

i walked in their store at casueway bay, hong kong. 1 or no customers also...however their booth at health fair suntec convention always manage to draw crowd. at least for my area, their tcm clinic can pull in the parents and the kids

[hongonn]

I think their business is good because they have some flagship products that can keep selling, like the bak foong pill, bao yi pill, lingzhi capsule. These bak foong pill, lingzhi capsule, bird nest are selling to women, the bao yi pill is selling to child.

Hehe there is the old saying that women and child money is the easily to earn right :p

[Musicwhiz]

The Straits Times
Oct 25, 2011
Eu Yan Sang chief is top entrepreneur
Award recognises his modern approach to traditional health care

By Esther Teo

A MODERN take on a business steeped in tradition has garnered the head of traditional Chinese medicine (TCM) firm Eu Yan Sang International a top business award.

Group chief executive Richard Eu, 63, was named the overall Ernst & Young (E&Y) Entrepreneur of the Year at an awards gala at Ritz-Carlton Millenia Singapore last night.

The prize followed Mr Eu being named the E&Y Entrepreneur of the Year for the traditional health-care category last month.

The top award recognises his work in transforming the company that began as a family business in 1879 into an industry leader offering a modern scientific approach to TCM health-care and wellness products, making it more accessible to modern consumers with retail stores.

Mr Eu will now battle it out with more than 50 other entrepreneurs from around the globe for the E&Y World Entrepreneur of the Year Awards in Monte Carlo next June.

Previous winners have included Cirque du Soleil's founder, Canadian Guy Laliberte; and Singapore's Ms Olivia Lum, the group president and CEO of Hyflux, who this year became the first woman and the first Singaporean to clinch the global award.

Deputy Prime Minister and Minister for Home Affairs Teo Chee Hean told the 500 guests at the awards ceremony that Mr Eu has revolutionised the concept of traditional Chinese medicine.

'He hired English-speaking staff, launched easy-to-prepare herbal products, and distributed products in supermarkets and online stores to appeal to the younger generation,' he noted.

Mr Eu represents the fourth-generation of the Eu family, whose patriarch was the industrialist Eu Tong Sen.

He started his career in the financial industry but after spending 18 years dabbling in merchant banking, stock broking and venture capital, he volunteered to join the family business in 1989.

In 1993, he took over the reins and, under his leadership, Eu Yan Sang soon became a household name in Asia with about 186 retail outlets locally and in the region.

Mr Eu noted that businesses must always evolve with their environment and consumers to ensure they stay relevant.

But small steps should be taken rather than embarking on a big gamble.

'Everything should be evolutionary. You can't change a business so radically, it becomes something totally different. For us especially, when you're talking about a traditional business.'

The next step is to take larger strides into Chinese cities such as Shanghai, Mr Eu said. The firm has five to six stores in Guangdong province.

He added that he will 'try to do my best to keep the Singapore flag flying' at the global awards next year.

Three other winners were presented with awards last night. They were Tung Lok Restaurants executive chairman Andrew Tjioe for the lifestyle category, Wee Tiong director Tan Wee Beng as the 'emerging' entrepreneur, and Serial System executive chairman Derek Goh for the electronic components distribution award.

esthert@sph.com.sg

[Musicwhiz]

Business Times - 15 Nov 2011

Eu Yan Sang Q1 profit rises 9%

By KENNETH LIM

EU Yan Sang International took a hit from the strong Singapore dollar in its first-quarter earnings, but the traditional Chinese medicine retailer expects continued growth and plans to add close to 26 outlets this year.

Mainboard-listed Eu Yan Sang said net profit outpaced revenue in the quarter ended Sept 30, 2011, rising 9 per cent to $4.5 million from $4.1 million in the year-ago period. Sales gained 5 per cent to $60.7 million from $57.6 million. Earnings per share was 1.02 cents, up 7.4 per cent year on year.

But foreign exchange gains dropped 81 per cent, largely because of the company's exposure to the Hong Kong dollar, which weakened against the Singapore dollar over the past year. 'It's something that we cannot hedge,' Eu Yan Sang chief executive Richard Eu told BT.

In terms of Hong Kong dollars, sales in Hong Kong, Macau and China grew 22 per cent year on year, but only 10 per cent when converted into Singapore dollars.

Based on year-ago exchange rates, Eu Yan Sang estimated that revenue would have risen 12 per cent and profit to shareholders would have increased by 21 per cent.

With the global economy gripped by a debt crisis in Europe, the company maintained its view that conditions will be 'challenging and competitive'.

Mr Eu said the key for the year ahead will be how the broader economic trends affect domestic consumption in the China region. 'If the Chinese tourists are still going into Hong Kong and buying, that's more important for us than what happens in Europe.'

Eu Yan Sang added four new outlets in the quarter - two in Malaysia, one in Hong Kong and one in China.

Mr Eu said he plans to maintain close to the previous fiscal year's expansion of 26 new outlets in FY 2012. That includes at least 10 new outlets in China. He is also focused on improving sales in Singapore.

Eu Yan Sang shares did not trade yesterday. They last changed hands at 73 cents on Nov 11.