Eu Yan Seng

Eu Yan Seng: DMG Maintains Buy with $0.90 TP. House recently spoke to CEO Richard Eu and came away with the following takeaways: 1) Acquisition of 96 HealthyLife stores and distribution business in Australia for A$5m is expected to boost Group’s topline by A$50-60m, 2) Targets 20 outlets in China by end-FY12 and +20 in FY13/14 respectively, 3) Recently secured pharmacy license in China will see first pharmacy be opened in Dongguan, enabling the Group to offer the Chinese market its entire product range as current stringent Chinese regulations restrict it from retailing certain medicinal products. Going forward, expect core margins to contract from 9% in FY11 to 7-8% in FY12-14F due to lower margin Australian business. FY12F earnings are lowered to take into account the S$8.8m write-off on Healthzone and we introduce our FY13-14F numbers. Expect FY13-14F earnings CAGR of 23%, driven in part by lower base in FY12.