Let’s Take a Look At Eu Yan Sang

Eu_Yan_Sang_logo Traditional Chinese Medicine (TCM) is a form of alternative medicine that was developed in China, with more than 5,000 years of history. A TCM company listed in Singapore is Eu Yan Sang International Limited (SGX: E02).

Eu Yan Sang’s history began in Gopeng, Perak, Malaysia in 1879 by founder Eu Kong. He noticed tin mine workers consuming opium to relieve their pain and suffering. He offered a substitute in the form of traditional Chinese herbal remedies to them. Eventually leading to the opening of his first shop called “Yan Sang” in 1879. Interestingly, the company is linked to Mr Eu Tong Sen and most Singaporeans will be familiar with the eponymous Eu Tong Sen Street near Chinatown. The current Chief Executive Officer of the company is Mr Richard Eu, grandson of Eu Tong Sen.

International Presence

Eu Kong’s only son, Eu Tong Sen expanded Eu Yan Sang’s business to Hong Kong as early as 1909. Today, Eu Yan Sang has operations in Singapore, Malaysia, Hong Kong, China, Macau and Australia through a network of approximately 300 retail stores. In Singapore itself, it has 49 retail stores. The company also does wholesale distribution in several countries such as Britain, New Zealand and the United States. Eu Yan Sang offers more than 1,000 different types of Chinese herbs, packaged in over 900 different products, under the Eu Yan Sang brand name and sub-brands.

Furthermore, Eu Yan Sang operates 24 TCM clinics in Singapore and Malaysia, and two Integrative Medical Centre in Hong Kong, caring for a wide range of conditions and illnesses including fertility, cancer and stroke.

Poised for Growth

According to a report by Global Industry Analysts, the global herbal supplements and remedies market is forecast to hit S$143.3 billion by 2017. The Asia-Pacific market is poised to grow the fastest among all regions, at a compounded annual growth rate (CAGR) of 10.5% through 2015. In the US alone, sales of herbal supplements hit more than S$6.36 billion in 2010.

Eu Yan Sang revenue grew at a CAGR of 11.3% per annum from Financial Year 2003 to 2012. Its net profit grew at a CAGR of 24.2% during the same period. It is currently trading at a PE of around 20 and its dividend yield is around 1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.