Wednesday, December 11, 2013

Eu Yan Sang : When Australia turns around (CIMB)

Eu Yan Sang Int'l Ltd
Current S$0.82
Target S$0.89
When Australia turns around

The eventual return to a breakeven position in Australia will improve group profitability. At the same time, a joint venture with Sichuan Neautus gives EYS access to quality herbs and the capacity expansion plan will support increased demand into the next decade.

The key catalyst for Eu Yan Sang is the reduction in losses at its Australian operations. Australia is expected to lower the group‟s earnings by S$5.8m in FY14 before achieving breakeven in FY15. Rolling forward to CY15 earnings, we raise our target price to S$0.89 (based on 16.3x P/E, 0.5 s.d. above the five-year historical average). Under our revised structure, our rating changes from Neutral to Add.


Turnaround
We understand that Eu Yan Sang lost about S$2.2m in Australia in 1QFY14 and about S$0.3m in China. Based on discussions with management, we see losses in China in FY14 at around S$1.5m before a breakeven occurs in FY15. The company could experience losses of S$5.8m in FY14 for Australia, before breakeven is achieved in FY15. Although its core operations in Singapore, Malaysia and Hong Kong are profitable, an earlier return to the black for Australia would boost group earnings.

Potential JV contribution
Eu Yan Sang has a 50/50 joint venture with Chengdu-based Sichuan Neautus, which will make the company one of the largest exporters of TCM herbs from China. Other than this business‟s export potential, Eu Yan Sang can improve its margins via lower raw material costs made available through this joint venture.

Capacity expansion
In Mar 2013, the group was successful in the bid] for a piece of land (170,100 sq ft) in Yuen Long, Hong Kong, which is directly opposite its existing factory. The new factory will be constructed in phases, with phase 1 expected to be completed in 2016 and operations slated to come online in early 2017. Phase 1 is estimated to cost about S$80m (including land cost) and [will] more than double its existing production capacity in Hong Kong. This will ensure that the group has the capacity to support the increase in demand for wellness products into the next decade.




Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 29/11/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock