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NRA Capital Pte Ltd

Written by: NRA Team

Thursday 5 Feb 2015

Eu Yan Sang - 2Q15 results announcement

2Q revenue down by 7.8%, but margins improve to 51% from 49%.

Disruption in key Hong Kong consumer market by Occupy Central movement attributed to 16.8% yoy reduction in Hong Kong revenue

Eu Yan Sang (EYS) released their 2Q15 results, posting revenue of $84.7m and net profit of $2m, falling 7.8% and 39.6% versus the previous year. Group CEO Mr Fu said: “Our key markets are relatively strong economies but still fragile especially Hong Kong due to political uncertainty and softening of the retail market.”

Eu Yan Sang is an international integrative health and wellness company with a unique heritage in Traditional Chinese Medicine (TCM). In addition to maintaining control of its supply chain and manufacturing capabilities, EYS operates retail stores and clinics in Asia and Australia. Currently, EYS operates and has franchised out 287 stores as well as 35 clinics and medical centres.

Our views:

  • Demand for EYS products in the key Hong Kong and China market may be affected by the slowdown in Chinas economic growth.
  • The 16.8% fall in Hong Kong is largely due to the disruption in customer traffic from the Occupy Central movement. As the movement has ended, Hong Kong will see an uptick in customer traffic and hence revenue. However, it remains to be seen whether it will match the previous year performance.
  • High inventory loading due to the building up of inventories for Chinese New Year promotions, however, we view in a slowing market is a point of concern for EYS.
  • Working capital requirements and purchase an investment property in Hong Kong has caused net gearing increased to 92% from 70% the previous quarter.
  • Australia continues growing significantly, with revenue growing 20.8% yoy in 2Q15. EYS added 4 more stores, bringing total store count to 43 stores and 31 franchised outlets in Australia.
  • Operating costs increased $1.4m to $31m or +4.81% yoy, as rents and personnel expenses went up.


Current share price for EYS is $0.73, trading at 17x consensus FY06/16 PER. This is above its 7-year historical average PER of 15.5x.

Additional Company Specfic ReportsDate
Eu Yan Sang - 2Q15 results announcement
5 February 2015

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