Eu Yan Sang reels from S$3m blow in 2Q12

As it’s 1H12 net profit plunges 78% to a pitiful S$2 million.

According to a financial statement, Eu Yan Sang International Ltd posted a net loss of S$2.7 million for the three months ended 31 December 2011 (2QFY2012) due to an S$8.8 million impairment on its equity investment in its ASX‐listed associate company, HZL. Without such impairment, 2QFY2012 net profit would have been S$6.1 million. 1HFY2012revenue was up 7% to S$130.5 million while net profit dropped 78% to S$1.8 million.

Financial Performance
The Group’s 2QFY2012 revenue continued to grow, increasing 9% y‐o‐y to S$69.8 million on broad‐based revenue growth from all its main business segments of Retail‐TCM, Wholesale‐TCM and Clinic‐TCM. Maintaining gross margin at 51.4%, gross profit grew a similar 9% to S$35.9 million. In contrast, 2QFY2012 operating profit increased 1% to S$7.8 million due to higher distribution, selling and administrative expenses arising from expanding the retail network.

Operations Review
2QFY2012 Retail‐TCM revenue increased 8% to S$56.0 million demonstrating the continued consumer acceptance and trust of the Group’s brand in our markets. Bo Ying Compound, Bottled Bird’s Nest, Bak Foong Pills, Lingzhi Cracked Spores Capsules and Essence of Chicken remain the Group’s top selling products for the quarter. Wholesale‐TCM revenue increased 20% to S$8.5 million from the greater stock replenishment by wholesalers. Clinic‐TCM revenue grew 4% to S$4.5 million.

In local currency terms, all the Group’s three core markets posted revenue growth. Malaysia recorded the highest growth at 16% while Hong Kong and Singapore grew 12% and 4% respectively. The stronger Singapore dollar versus the Hong Kong dollar and Malaysian Ringgit trimmed their growth when viewed in Singapore dollars to 10% and 13% respectively.