Eu Yan Sang

Eu Yan Sang: The traditional Chinese medicine retailer has clinched a key licence to sell prescription drugs and Chinese herbal medicine in China, allowing the co to sell its flagship pdts in its stores.
The first EYS pharmacy will open in Dongguan later this year, and the co is planning a second. This will add to its current 16 stores in the country. The latest store opened yday - a landmark retail-museum store in Foshan, the birthplace of EYS founder Eu Kong, who is also the great-grandfather of CEO Richard Eu.

EYS currently only sells food products and its proprietary Lingzhi cracked spores capsules in its Chinese stores. Now it will be able to carry its other topsellers, such as its Bak Foong pills for menstrual discomforts and postnatal nourishment.
Richard describes China as a 'challenging market' because of its unique business environment and complicated regulatory processes. Says the pharmacy licence is granted on a store-by-store basis, but believes the first stores in Dongguan could help it to 'get a track record' to help smooth future expansion. But adds, the high barriers to entry could also help EYS as an early foreign entrant in the potentially huge Chinese market.

The stock trades at 15.4x P/E, 2.6x P/B.
Other local healthcare product peers, such as Osim, Cerebos, trade at 13.8x and 17.7x P/E, respectively.