Eu Yan Sang

[pianist]

didnt know HK market is the biggest for EYS..

[Musicwhiz]

Business Times - 10 Jan 2012

Eu Yan Sang could buy failed Aussie retailer

It is likely to target Healthzone's distribution business: analyst

By KENNETH LIM

EU Yan Sang International sits on a short-list of potential buyers for bankrupt Australian health products retailer Healthzone, Eu Yan Sang chief executive Richard Eu told BT yesterday.

While declining to say if the traditional Chinese medicine retailer would submit a bid as Healthzone receivers look to solicit another round of offers, Mr Eu said Eu Yan Sang had expressed interest in buying certain businesses of Healthzone, minus any liabilities.

'There was a list of people who were potentially interested,' Mr Eu revealed. 'Then we were allowed to do some due diligence and things like that. It was sort of like being short-listed.'

The receivers could make a decision in a month or so, Mr Eu added.

Eu Yan Sang has been raised as one of the most likely bidders since Healthzone went under receivership on Nov 17 following the Australian company's inability to pay a secured loan.

Eu Yan Sang already holds more than 16 per cent of Australia-listed Healthzone, which saw its shares last trade at A$0.26 before being suspended. Eu Yan Sang has invested about S$7 million to S$8 million in Healthzone, including in a capital raise in October.

Mr Eu said that Eu Yan Sang, which has a representative on Healthzone's board, had not known that Healthzone's financial situation 'was so critical' at the time. 'We believe information was withheld from us,' Mr Eu added.

Nevertheless, Mr Eu said the aspects of Healthzone that drew Eu Yan Sang in 2010 are still present.

'We saw that there is a substantial retail network in Australia,' Mr Eu said. 'They also have a distribution business in China through a distributor, and we're trying to see what synergies can be derived from the infrastructure.'

If a deal materialises, Eu Yan Sang should be able to fund it internally, Mr Eu added. Eu Yan Sang had S$34.5 million in cash and cash equivalents at the end of September 2011.

DMG stock analyst Melissa Yeap said DMG was positive on the potential bid.

'It is likely they will bid for (Healthzone's) distribution business as they can leverage on that for their own products,' she said.

Eu Yan Sang is interested in Australia, but its key focus at the moment is China, where the company plans to have 50 stores by June 2012, Ms Yeap said.

'For a historically conservative group, they have recently turned aggressive,' she noted.

[pianist]

Eu Yan Sang posts net loss of S$2.7 million for 2QFY2012 due to S$8.8 million impairment; remains profitable for 1HFY2012
 Group writes off equity investment in Healthzone Limited (HZL); plans to acquire some of its business assets and undertakings for A$5.0 million (approx. S$6.7 million)
 1HFY2012 revenue up 7% to S$130.5 million; net profit down 78% to S$1.8 million. Without impairment, 2QFY2012 net profit would have been S$6.1 million.
 2QFY2012 revenue increases 9% y‐o‐y to S$69.8 million

[Contrarian]

If i can short it, I will

[Musicwhiz]

Business Times - 07 Feb 2012

Healthzone write-off hits Eu Yan Sang

TCM retailer group posts net loss of $2.78m for second quarter

By KENNETH LIM

EU Yan Sang International fell into a second-quarter loss as it wrote off its equity investment in failed Australian retailer Healthzone and took a sobering relook at expansion plans in China.

But the traditional Chinese medicine retailer is hoping that its soured Healthzone investment turns into a successful leap into the world of franchising and western-style nutraceuticals.

'We think that it's an opportunity for us to learn about running a franchise business and also a distribution business,' Eu Yan Sang chief executive Richard Eu told BT, adding that the group could eventually explore the possibility of franchising Eu Yan Sang.

Singapore-based Eu Yan Sang yesterday reported a net loss attributable to shareholders of $2.78 million for the three months ended December 2011 - against a net profit of $4.08 million for the year-ago period - after taking $8.8 million in impairment charges from its investment and related derivatives in Healthzone.

Sales over the same period grew 9 per cent year on year to $69.8 million.

For the fiscal half-year, net profit attributable to shareholders stood at $1.72 million, down 79 per cent year on year. Analysts had been expecting full-year net profit of $25 million to $28 million, according to a Bloomberg poll of four analysts.

The strong Singapore dollar continued to hit Eu Yan Sang's bottomline, with about 72 per cent of sales coming from overseas. Sales in Hong Kong, Macau and China grew 10 per cent year on year to $31.1 million in the latest quarter. Turnover in Singapore was up 4 per cent, while in Malaysia it was up 13 per cent.

Eu Yan Sang added 16 outlets over the quarter, bringing its retail presence to 205 stores. The group opened five outlets in China in the quarter, and another six so far in 2012, bringing its current China store count to 16.

Mr Eu, who had hoped to have 50 China stores in 2012, said the aggressive store openings have 'caused a bit of erosion in the net profit'.

He is now paring those plans.

'We're telling them to slow down a bit,' he said. '(Now) we're looking, by this financial year, at about 20 stores in China.'

Looking ahead, Eu Yan Sang said it was 'cautiously optimistic' and expects to remain profitable for the rest of fiscal 2012.

Mr Eu added that the fiscal third quarter is historically the strongest period for Eu Yan Sang, and this year's Chinese New Year sales went as expected.

Eu Yan Sang could soon have another market and a different business to think about if its A$5 million (S$6.7 million) bid for certain businesses of Healthzone goes through.

The crown jewel to that acquisition is Healthzone's franchising business - the deal will go through only if enough franchisees agree to transfer their contracts to Eu Yan Sang - and its Australian distribution network.

Mr Eu clarified that Healthzone's China distribution business is not on the deal table at the moment, although a decision could be announced in the next few days.

'We've also started our own network in China, so it's nice to have but not essential. We need to have some understanding about how to operate the China business ... because a lot of it is a personal relationship,' Mr Eu said.

Eu Yan Sang has never been in the franchising business, and its presence in Australia is still small.

Mr Eu said he planned to maintain the franchise's Healthy Life retail brand. Cross selling between Eu Yan Sang and Healthy Life would be 'low hanging fruit', although synergies in terms of product development could also be possible.

'It's not just about expanding the brand of Eu Yan Sang,' Mr Eu said. 'We'll also look at other brands to help us in this expansion. If we want to go into a western type market, if we have a ready-made network already - to try and build 100 Eu Yan Sang stores in Australia, that's going to be a lot of time and money involved, and it may never succeed.'

[pianist]

sometime i wonder why eu yan sang want to venture and invest into Healthzone Limited? isn't it good to focus on traditional chinese medicine?

by diverting attention and mix into western-style nutraceuticals, i feel it is neither here nor there.

[pianist]

Eu Yan Sang completes acquisition of selected business
assets and undertaking of Healthzone Limited (HZL)
 Group’s retail network now extends from China to Australia with more
than 300 outlets
 Group is now a step closer to realizing its vision of becoming a truly
global integrative healthcare and wellness group
Singapore, 17 February 2012 – SGX mainboard‐listed Eu Yan Sang International Ltd (“EYSI”,
“the Group” or “余仁生国际企业”), a trusted global integrative healthcare and wellness
company with a strong foundation in Traditional Chinese Medicine (TCM), has today
completed its acquisition of selected business assets and undertakings of HZL.
These include the chain of approximately 100 Healthy Life stores and a distribution business,
which is one of the largest health food distributors in Australia. The business has over 25
years’ experience, supplying in excess of 5 million products from 170 suppliers to more than
5,000 retailers in the health food, pharmacy and grocery retail segments. With the
acquisition, the Group’s retail network in the Asia Pacific region now extends from China to
Australia, increasing the total number of retail outlets from just over 200 to more than 300.
The Group’s new Australian business will operate as a new Group entity, Healthy Life Group
Pty Ltd. Revenue and profit will be accreted in full to the Group in subsequent financial
periods. While the Group does not expect any immediate impact on its P&L in FY2012, the
Group is confident in the value and potential of the new business.
The Group aims to stabilize the new business in the short term, and in the long run grow the
Healthy Life franchise network and develop efficiencies in its supply and distribution
business. The Management has been placed under the overview of Mr Byron Patching, a
non‐executive director of the Group’s subsidiary in Australia, Eu Yan Sang Australia Pty
Limited, since 2007. Mr Patching is also the co‐founder and principal of XAct Solutions Pty
Ltd which is a group of business improvement specialists with a particular focus on supply
and distribution, and has an established track record with significant businesses in Australia.
The Group believes the new management team will help realize the Group’s corporate
objectives in the acquisition.
Mr Richard Eu (余义明), Group CEO of EYSI remarked, “This acquisition marks an exciting
new chapter for EYSI and provides a ready platform for the Group to expand and broaden its
products penetration into Australia. We are now a step closer to realizing our vision of
becoming a truly global integrative healthcare and wellness group.”Eu Yan Sang completes acquisition of selected business
assets and undertaking of Healthzone Limited (HZL)
 Group’s retail network now extends from China to Australia with more
than 300 outlets
 Group is now a step closer to realizing its vision of becoming a truly
global integrative healthcare and wellness group
Singapore, 17 February 2012 – SGX mainboard‐listed Eu Yan Sang International Ltd (“EYSI”,
“the Group” or “余仁生国际企业”), a trusted global integrative healthcare and wellness
company with a strong foundation in Traditional Chinese Medicine (TCM), has today
completed its acquisition of selected business assets and undertakings of HZL.
These include the chain of approximately 100 Healthy Life stores and a distribution business,
which is one of the largest health food distributors in Australia. The business has over 25
years’ experience, supplying in excess of 5 million products from 170 suppliers to more than
5,000 retailers in the health food, pharmacy and grocery retail segments. With the
acquisition, the Group’s retail network in the Asia Pacific region now extends from China to
Australia, increasing the total number of retail outlets from just over 200 to more than 300.
The Group’s new Australian business will operate as a new Group entity, Healthy Life Group
Pty Ltd. Revenue and profit will be accreted in full to the Group in subsequent financial
periods. While the Group does not expect any immediate impact on its P&L in FY2012, the
Group is confident in the value and potential of the new business.
The Group aims to stabilize the new business in the short term, and in the long run grow the
Healthy Life franchise network and develop efficiencies in its supply and distribution
business. The Management has been placed under the overview of Mr Byron Patching, a
non‐executive director of the Group’s subsidiary in Australia, Eu Yan Sang Australia Pty
Limited, since 2007. Mr Patching is also the co‐founder and principal of XAct Solutions Pty
Ltd which is a group of business improvement specialists with a particular focus on supply
and distribution, and has an established track record with significant businesses in Australia.
The Group believes the new management team will help realize the Group’s corporate
objectives in the acquisition.
Mr Richard Eu (余义明), Group CEO of EYSI remarked, “This acquisition marks an exciting
new chapter for EYSI and provides a ready platform for the Group to expand and broaden its
products penetration into Australia. We are now a step closer to realizing our vision of
becoming a truly global integrative healthcare and wellness group.”

[steel]

sometime i wonder why eu yan sang want to venture and invest into Healthzone Limited? isn't it good to focus on traditional chinese medicine?

by diverting attention and mix into western-style nutraceuticals, i feel it is neither here nor there.

I can understand where you are coming from and yeah, perhaps they seem to be losing focus here.

My personal take is that Eu Yan Sang went into HZL more for their retail networks. It is much easier to break into a market through the acquisition of existing infrastructure than to build one from scratch. Through the acquired networks, they can slowly introduce and integrate some of their own more mainstream products. In a sense, it is synergistic. Well, we shall see how it works out.

(not vested)

[pianist]

today sgx announcement said aberdeen asset mgt makes "withdrawal" that resulted in percentage level to drop on 23/3. does anyone know what is meant by "withdrawal"? is it the same as sale?

[yogi]

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.

I agree that they are getting defocused by foraying into property investment.

In 2Q Fy12, Company again bought around $26M worth of commercial property in Hong Kong for investment. As of July 2012, ~R48M out of ~$117M net asset is in property investment. This is significant amount.

Instead, the company should have returned cash as dividend to investors and let investor to decide where they want to invest its dividend proceeds.

---

sometime i wonder why eu yan sang want to venture and invest into Healthzone Limited? isn't it good to focus on traditional chinese medicine?

by diverting attention and mix into western-style nutraceuticals, i feel it is neither here nor there.

I can understand where you are coming from and yeah, perhaps they seem to be losing focus here.

My personal take is that Eu Yan Sang went into HZL more for their retail networks. It is much easier to break into a market through the acquisition of existing infrastructure than to build one from scratch. Through the acquired networks, they can slowly introduce and integrate some of their own more mainstream products. In a sense, it is synergistic. Well, we shall see how it works out.

(not vested)

Financial results of Healthzone for half year ending December 31, 2010. Key financial results for the half-year include:
• Record NPAT up 25.4% to $2.51 million
• Record EBITDA up 30.9% to $5.2 million
• Record Sales Revenue up 3.4% to $58.71 million
• Net Asset Growth by 7.9% to $35.4 million

Though its not clear if above profit is contributed by the Australian retail, franchisee & distribution business that company has bought, but looking from rough order of magnitude, acquisition of Healthzone for $5m seems to be good deal (look at NP and NAV of Healthzone above - though its overall group level).

Also getting distribution and retail platform (around 100 stores) in Australia market for $5M seems to be attractive for cross-selling of products as EUS mentioned. As always for any M&A, if they can execute this M&A and extract the synergy successfully is another things. "Its easier to fall in love than maintaining the love". But it has good potential.

My 2cs and my personal opinion.