14th July 2014, 8.15am & 11.15am Morning Call...Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated
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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
By Phillip Securities ResearchMr. Chan Wai Chee, CEO
Jermaine Tock, Operations Exec
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Results update: Ezra Holdings Limited (S$1.195, Neutral, TP S$1.09 - under review, pending change of analyst)
• Sustains another quarter of growing revenue and improving operating performance (3Q14)
3 months ended 31 May 2014 9 months ended 31 May 2014
Revenue US$402.1mn +27% y-y US$1,042.4mn +24% y-y
Ebitda, adj. US$46mn reversal from loss US$125.4mn +144% y-y
PAT US$10.2mn +6% y-y US$41.1mn -19% y-y (due to one-offs)
• Stronger performance driven mainly by EMAS AMC - Subsea Services higher fleet capacity (2 new vessels),
additional variation orders,
increased value and number of projects taken
four consecutive quarters of operational profitability
• US$2 billion Orderbook expected to be executed over the next 12-18 months
• Consolidation of EMAS Marine (AHTS, PSV, Crewboat) into EOC Ltd (FPSO, Accomodation, Construction) Will create Asia’s largest offshore support services by asset value with a fleet worth of more than US$1 billion
So that Ezra can continue to focus on Subsea Services business while participating in the growth of OSV market
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
• Securities Daily Average Value (SDAV) saw a slight recovery of 3.5% q-q to S$1.125b but trade volumes remain suppressed with SDAV down 30.1% y-y based on SGX figures. Securities activity levels are persistently lower than expected and we see limited drivers in the near-term, leading us to revise our FY15 forecasted SDAV downwards.
• Derivatives Daily Average Volume (DDAV) has shrunk by 8.9% q-q to 0.412 million contracts and 20.2% y-y from an exceptionally strong 4Q13.
• Expect Securities Revenue to pick up as SDAV has recovered marginally and retail versus institutional mix has been more weighted on retail (67%) implying that clearing fees could be higher q-q. Derivatives Revenue could be slightly lacklustre with the dip in DDAV. FTSE China A50 Index Futures (-6.0%) and Nikkei 225 Futures (-26.5%) but mitigated by an increase in the Nifty Index Futures (+16.6%).
• Maintain “Neutral”, with a revised Target price of S$7.45. Dividend yield attractive at ~4%.
• Key note: The “SGX Market Maker and Liquidity Provider Programme” has been available since 1 Jun 14. Market makers and liquidity providers are incentivized through clearing fee rebates. MM up to 100% and LPs up to 75%. Wait to see if this boosts trade volumes!
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
• Since our last report on 16 May 2014, inclusive of 1-cent dividend payout in June 2014, Amara’s price has provided a return of 16% with last closing at $0.61 on 11 July.
• Overseas Portfolio - Expect to see significant earning contributions starting from next year when Amara Bangkok and Shanghai become full operational in 2015 and 2016. These two overseas projects is estimated to contribute to about 50% of revenue of Hotel and Investment Management business segment in 2016.
• Singapore Portfolio – Remain resilient with Amara Singapore, the flagship asset, continued to perform with steady RevPAR and healthy 85% occupancy rate mainly due to support from their corporate clients despite the new hotels opening in the neighbouring area. Amara’s commercial assets are enjoying stable rental income with office and retail outlook still going strong with revision of the tenant mix to optimise rental yields. Overall, Amara hotels will seek to stay competitive by focusing on the upgrading of rooms and providing quality F&B services to draw traffic to the premises.
• Amara remains undervalued and has room for further upward share movement with a deep discount of 40% to our $1.16/share RNAV.
• Reiterate BUY call with TPS $ 0.70
• Potential catalyst: A JV hotel investment in Yangon, Myanmar
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Leading healthcare & wellness company in traditional Chinese medicine (TCM) - >1000 Chinese herbs and medicinal products.
Est. since 1879 in Malaysia, 134-year history in offering TCM through retail and wholesale distributions.
Managed by the Eu family – Mr. Robert, Richard and Clifford Eu (4th gen in family; all 3 are cousins)
Growing retail & distribution network worldwide, fr.$72m turnover in Jun-00 (listed on SGX Mainboard ) to S$326m turnover in Jun-13 CAGR 12.3% in topline:
Over 300 retail outlets in China, Hong Kong, Macau, Malaysia, Singapore and Australia
> 30 TCM clinics in S’pore and Malaysia; 2 integrative medical centres in Hong Kong.
Extend to USA, UK, Oceania and ASEAN through wholesale distributions. Source: Company
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
1st TCM shop estab. by EuKong in Gopeng, Perak, Malaysia.
Passed down to son, EuTong Sen. Expanded business to SG, HK, China
1941: divided among his 13 sons after Eu’s demise. Business divided into EYSHK and EYS SG/MY
1973: EYS SG/MY listed in S’porestock exchange under EYS Hldgs Ltd
EYS Hldgs acquired by LumChang group and renamed LC Development Ltd
EYSHK listed on Hong Kong’s stock exchange
Eu family bought back SG/MY TCM business from Lum Chang
Take-over of EYSHK reunitedEYS TCM business
Listed on SGX mainboard under EYS Int’l Ltd (EYSI)
Expanded manufacturing capacity; in Yuen Long, HK (size: 130,000 ft2)
Expanded into Australia(acquired HealthyLife biz)
Form JV in China to setup plant for better sourcing of high-grade TCM herbs
Bidded for land in Hong Kong to expand production capacity and R&D
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
* Clifford and Laurence Eu (brothers) deemed to be interested in shares held by Euco**Robert Eu deemed to be interested in all shares held by Bestand
Source: Bloomberg
Public float: ~29.4% (as of FY13)
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Source: Company Slides Presentation*updated as of 31 March 2014
avg of ~17 new outlets a year
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Infant Care Women’s HealthGeneral health Improve ImmunityHealthcare
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Geographical breakdown in TTM revenue (as of 3Q14)
Earnings yoy growth
Business segment breakdown in TTM revenue (as of 3Q14)
22%
18%
7% 6%
15%
7%
10%9% 9%
13% 13% 13%
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
300
350
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
9M
13
9M14
Source: Company, PSR
Revenue (SGD mn) Revenue %y-y
Retail, 79%
Wholesale, 16%
Cl inics, 5%Others , 1%
Source: Company, PSR
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
• Known to have longer lasting medical effects and lesser adverse side-effects, compared to western medicine. Widely used for cardio-cerebral vascular, oncology and respiratory ailments.
• Western pharmas such as Norvatis and GSK began looking into TCM research in 2009 and 2012 respectively.
• Actively promoted by China government in globalizing TCM, such as thru nonprofit public institutions (Confucius Institutes), etc.
• TCM exported to 171 countries and regions in 2013, with over 20% yoy growth in both foreign trade exports and imports.1
• Exports (value) from China expected to rise by more than 10% a year over next 5 years from 2012.2
14
Source: China Daily, 2013
Source: CPhi.cn, 2014
*Sources:1. CPhi.cn; 2. China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE)
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Building a strong brand in traditional Chinese herbs and remedies as well as health
supplements and foods
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Mar 2013: Successful bid for land in Yuen Long, Hong
Kong
Directly opposite existing factory in Yuen Long; to
expand production capacity and R&D capability.
Est. cost of HK$500m (~S$80m), incl. land cost.
Expect operations to commence in early 2017 (FY18),
with close to 3 times the production capacity of its
existing facility in HK.
May 2013: Set up 50-50 JV with Sichuan Neautus
Traditional Chinese Medicine Co Ltd.
setting up of hi-quality TCM decoction pieces plant.
Est. cost of RMB40m (~S$8m)
Expect to upgrade supply chain and improve margins
through lower costs of raw materials
Source: Company Presentation
Source: Company Presentation
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Due to expansion of HK production facilities and property acquisitions in HK, SG
Issued $25m notes and $22m warrants due 2016
Issued $75m notes (out of $300m MTN) due 2018
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one-off impairment and losses from discont. Ops: (“YourHealth”, “RWP”, “RWPFS”)
Acquired Healthy Life in Australia
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Strong Brand Recognition: multiple awards & accolades won
Good Regional Presence: China, Hong Kong, Malaysia, Singapore, Australia
Wide range of Chinese herbs and medicinal: premium quality, consumers’ trust
Excellent R&D, manufacturing strengths: GMP, ISO 9001 certified; patents filed!
Strong Management Team: long-term strategic focus
Good Cash Flow Generation: support consistent dividends (avg payout ~50% over last 3
years)
Potential Upsides
Greater demand from greying population and growing affluence in core markets.
Boost to margins and wholesale business from the new EYS NEAUTUS JV.
Lift on ban (since late 2011) of bird’s nest imports (excl canned) into China (Several
M’sia companies given approval to export bird’s nest to China since Dec-13).
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Effects of exchange rates (2) (1) (0) Net Debt/(Cash) (4) 42 62
CCE, end 39 39 98 Net Gearing (X) Net cash 0.3 0.4
Historical multiples and yields are based on historical prices
*Forward multiples and yields are based on current price;
Cashflow statements (SGD mn) Valuation Ratios
Source: Company Data, PSR est
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
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