Eu Yan Sang

Eu Yan Sang: to lift trading halt at 12.30pm. EYS will form a 50/50 JV with Chengdu-based Sichuan Neautus Traditional Chinese Medicine Co, to set up a high quality Traditional Chinese Medicine (TCM) processed herbs plant in China, which will allow EYS to become one of the largest exporters of TCM herbs from China. The JV will also set up a sales office in HK to manage overseas sales. The JV is expected to improve the group’s margins through lower costs of raw materials and strengthening the upward integration of the group’s supply chain. The group will also stand to benefit in ensuring a timely, trust source of herbs and ingredients for its pdts. The JV will incur Rmb40m for Phase One, to set up the plant in Chengdu Hi-Tech Zone, Sichuan. EYS trades at 14.5x P/E, 2.6x P/B. Besides the latest corporate devt, EYS may see spillover interest from the strong recent IPO debut performance from renowned TCM player, Beijing Tong Ren Tang (8138 HK). The offer price was HK3.04 and the shares now trade at HK$9.70, since its debut on 7 May.