14th July 2014, 8.15am & 11.15am Morning Call...Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated

Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.

Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197201035Z © PhillipCapital 2013. All Rights Reserved. For internal circulation only.

14th July 2014, 8.15am & 11.15am Morning Call

Market StrategistsJoshua Tan, Head of Research

Kenneth Koh, Market Analyst & Equities

Soh Lin Sin, Macro Economist

Osama Bakhteyar, Research Assistant

SG & US Equity AnalystsLucas Tan, Real Estate

Wong Yong Kai, US Equities

Colin Tan, Telcos

Caroline Tay, Real Estate

Ben Ong, Financials & O&M

Richard Leow, Transport

By Phillip Securities ResearchMr. Chan Wai Chee, CEO

Jermaine Tock, Operations Exec



2

Results update: Ezra Holdings Limited (S$1.195, Neutral, TP S$1.09 - under review, pending change of analyst)

• Sustains another quarter of growing revenue and improving operating performance (3Q14)

3 months ended 31 May 2014 9 months ended 31 May 2014

Revenue US$402.1mn +27% y-y US$1,042.4mn +24% y-y

Ebitda, adj. US$46mn reversal from loss US$125.4mn +144% y-y

PAT US$10.2mn +6% y-y US$41.1mn -19% y-y (due to one-offs)

• Stronger performance driven mainly by EMAS AMC - Subsea Services higher fleet capacity (2 new vessels),

additional variation orders,

increased value and number of projects taken

four consecutive quarters of operational profitability

• US$2 billion Orderbook expected to be executed over the next 12-18 months

• Consolidation of EMAS Marine (AHTS, PSV, Crewboat) into EOC Ltd (FPSO, Accomodation, Construction) Will create Asia’s largest offshore support services by asset value with a fleet worth of more than US$1 billion

So that Ezra can continue to focus on Subsea Services business while participating in the growth of OSV market



3

• Securities Daily Average Value (SDAV) saw a slight recovery of 3.5% q-q to S$1.125b but trade volumes remain suppressed with SDAV down 30.1% y-y based on SGX figures. Securities activity levels are persistently lower than expected and we see limited drivers in the near-term, leading us to revise our FY15 forecasted SDAV downwards.

• Derivatives Daily Average Volume (DDAV) has shrunk by 8.9% q-q to 0.412 million contracts and 20.2% y-y from an exceptionally strong 4Q13.

• Expect Securities Revenue to pick up as SDAV has recovered marginally and retail versus institutional mix has been more weighted on retail (67%) implying that clearing fees could be higher q-q. Derivatives Revenue could be slightly lacklustre with the dip in DDAV. FTSE China A50 Index Futures (-6.0%) and Nikkei 225 Futures (-26.5%) but mitigated by an increase in the Nifty Index Futures (+16.6%).

• Maintain “Neutral”, with a revised Target price of S$7.45. Dividend yield attractive at ~4%.

• Key note: The “SGX Market Maker and Liquidity Provider Programme” has been available since 1 Jun 14. Market makers and liquidity providers are incentivized through clearing fee rebates. MM up to 100% and LPs up to 75%. Wait to see if this boosts trade volumes!

Update: Singapore Exchange Limited(S$6.94, Neutral TP S$7.45)



4

Update: Amara Holdings Limited(S$0.61, BUY, TP S$0.70)

• Since our last report on 16 May 2014, inclusive of 1-cent dividend payout in June 2014, Amara’s price has provided a return of 16% with last closing at $0.61 on 11 July.

• Overseas Portfolio - Expect to see significant earning contributions starting from next year when Amara Bangkok and Shanghai become full operational in 2015 and 2016. These two overseas projects is estimated to contribute to about 50% of revenue of Hotel and Investment Management business segment in 2016.

• Singapore Portfolio – Remain resilient with Amara Singapore, the flagship asset, continued to perform with steady RevPAR and healthy 85% occupancy rate mainly due to support from their corporate clients despite the new hotels opening in the neighbouring area. Amara’s commercial assets are enjoying stable rental income with office and retail outlook still going strong with revision of the tenant mix to optimise rental yields. Overall, Amara hotels will seek to stay competitive by focusing on the upgrading of rooms and providing quality F&B services to draw traffic to the premises.

• Amara remains undervalued and has room for further upward share movement with a deep discount of 40% to our $1.16/share RNAV.

• Reiterate BUY call with TPS $ 0.70

• Potential catalyst: A JV hotel investment in Yangon, Myanmar



5

Eu Yan Sang International Ltd

(non-rated)

Colin Tan

Investment Analyst

Phillip Securities Research

14 July 2014



6

Company Snapshot

6

Source: Bloomberg

Share Price (11-Jul): S$0.825

52-Week Range: S$0.71 - S$0.92

Market Capitalisation: US$296m / SG$368m

TTM PE: ~20.2x



77

Background

Leading healthcare & wellness company in traditional Chinese medicine (TCM) - >1000 Chinese herbs and medicinal products.

Est. since 1879 in Malaysia, 134-year history in offering TCM through retail and wholesale distributions.

Managed by the Eu family – Mr. Robert, Richard and Clifford Eu (4th gen in family; all 3 are cousins)

Growing retail & distribution network worldwide, fr.$72m turnover in Jun-00 (listed on SGX Mainboard ) to S$326m turnover in Jun-13 CAGR 12.3% in topline:

Over 300 retail outlets in China, Hong Kong, Macau, Malaysia, Singapore and Australia

> 30 TCM clinics in S’pore and Malaysia; 2 integrative medical centres in Hong Kong.

Extend to USA, UK, Oceania and ASEAN through wholesale distributions. Source: Company



History

1879Early 1900s

1941-1973

19901992

19931997

20002006

20122013

8

1st TCM shop estab. by EuKong in Gopeng, Perak, Malaysia.

Passed down to son, EuTong Sen. Expanded business to SG, HK, China

1941: divided among his 13 sons after Eu’s demise. Business divided into EYSHK and EYS SG/MY

1973: EYS SG/MY listed in S’porestock exchange under EYS Hldgs Ltd

EYS Hldgs acquired by LumChang group and renamed LC Development Ltd

EYSHK listed on Hong Kong’s stock exchange

Eu family bought back SG/MY TCM business from Lum Chang

Take-over of EYSHK reunitedEYS TCM business

Listed on SGX mainboard under EYS Int’l Ltd (EYSI)

Expanded manufacturing capacity; in Yuen Long, HK (size: 130,000 ft2)

Expanded into Australia(acquired HealthyLife biz)

Form JV in China to setup plant for better sourcing of high-grade TCM herbs

Bidded for land in Hong Kong to expand production capacity and R&D



Directors & Major Shareholders

9

Source: Company

Mr Robert Eu(Chairman, Group MD, China)

Mr Richard Eu(Group CEO)

Mr Clifford Eu(Group MD, Int’l)

Board of Directors

Other indep. directors..

Major Shareholders:

Richard Eu 14.7%

Euco Investments* 14.1%

Aberdeen 11.0%

Aberdeen Asset Mgt 7.8%

Bestand Development Corp** 7.1%

HSBC Investments 7.1%

* Clifford and Laurence Eu (brothers) deemed to be interested in shares held by Euco**Robert Eu deemed to be interested in all shares held by Bestand

Source: Bloomberg

Public float: ~29.4% (as of FY13)



Business Segments

10

Source: Company Slides Presentation*updated as of 31 March 2014

avg of ~17 new outlets a year



Top 5 Products

11

Source: Company Slides Presentation

Infant Care Women’s HealthGeneral health Improve ImmunityHealthcare



Revenue and Earnings

12

Hong Kong, 44%

Singapore, 21%

Malaysia, 25%

Austra lia, 11%

Source: Company, PSR

Revenue yoy growth

0%

65%

27% 33%

-48%

28%47%

32%

-35%

10%

86%

0%

-100%

-50%

0%

50%

100%

0

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10

15

20

25

30

FY

04

FY

05

FY

06

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FY

09

FY

10

FY

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FY

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FY

13

9M

13

9M

14


PATMI (SGD mn) PATMI %y-y

Geographical breakdown in TTM revenue (as of 3Q14)

Earnings yoy growth

Business segment breakdown in TTM revenue (as of 3Q14)

22%

18%

7% 6%

15%

7%

10%9% 9%

13% 13% 13%

0%

5%

10%

15%

20%

25%

0

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150

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04

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9M

13

9M14


Revenue (SGD mn) Revenue %y-y

Retail, 79%

Wholesale, 16%

Cl inics, 5%Others , 1%




TCM Industry Outlook



TCM gaining worldwide acceptance

• Known to have longer lasting medical effects and lesser adverse side-effects, compared to western medicine. Widely used for cardio-cerebral vascular, oncology and respiratory ailments.

• Western pharmas such as Norvatis and GSK began looking into TCM research in 2009 and 2012 respectively.

• Actively promoted by China government in globalizing TCM, such as thru nonprofit public institutions (Confucius Institutes), etc.

• TCM exported to 171 countries and regions in 2013, with over 20% yoy growth in both foreign trade exports and imports.1

• Exports (value) from China expected to rise by more than 10% a year over next 5 years from 2012.2

14

Source: China Daily, 2013

Source: CPhi.cn, 2014

*Sources:1. CPhi.cn; 2. China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE)



EYS’s Strategies



Brand Positioning

16

Source: Company Slides Presentation

Building a strong brand in traditional Chinese herbs and remedies as well as health

supplements and foods



1717

Production Capacity Expansion

Mar 2013: Successful bid for land in Yuen Long, Hong

Kong

Directly opposite existing factory in Yuen Long; to

expand production capacity and R&D capability.

Est. cost of HK$500m (~S$80m), incl. land cost.

Expect operations to commence in early 2017 (FY18),

with close to 3 times the production capacity of its

existing facility in HK.

May 2013: Set up 50-50 JV with Sichuan Neautus

Traditional Chinese Medicine Co Ltd.

setting up of hi-quality TCM decoction pieces plant.

Est. cost of RMB40m (~S$8m)

Expect to upgrade supply chain and improve margins

through lower costs of raw materials

Source: Company Presentation

Source: Company Presentation



1818

Scientific and Branding

2 GMP-certified factories (in Hong Kong &

Malaysia)

Advanced herb fingerprinting technology;

monograph library of over 500 herbs

Hi-quality and safety control practices

Research collaborations with various

institutions

Hospitals, educational institutes, medical

research centres, industries, etc.

Building stronger branding

Infusing TCM knowledge into health food

and supplements

Engaging customers through retail outlets,

TCM clinicsSource: Company Slide Presentation

Research Collaborations:

Supplements and health food products:



Financials



(60)

(40)

(20)

0

20

40

60

80F

Y0

4

FY

05

FY

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FY

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FY

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FY

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FY

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FY

13


PATMI (SGD mn) CFO (SGD mn)

CFI (SGD mn) CFF ex div paid (SGD mn)

Financials

20

Gross Profits, EBITDA and margins

Cash flows (S$mn)

Revenue by regions

Net gearing (%)

51% 50% 50% 50% 50% 51% 51% 51% 51% 51% 50% 50%

14% 15% 15% 17%11% 12% 13% 15%

11% 10% 11% 11%

0%

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9M

13

9M14Source: Company, PSR

Gross profit (SGD mn) EBITDA (SGD mn)gross margin % EBITDA margin %

86 95 63 105 110 118 129

95 123

66 63 61

68 77 79 78

60 58

42 53 99 72

80 82 85

68 71

11 35

26 30

0

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400

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FY

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FY

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FY

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9M13

9M14


Hong Kong (SGD mn) Singapore (SGD mn)

Malaysia (SGD mn) Australia (SGD mn)

53%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

(20)

0

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100

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3Q

14


net debt (SGD mn) Net debt/Equity (%)

Due to expansion of HK production facilities and property acquisitions in HK, SG

Issued $25m notes and $22m warrants due 2016

Issued $75m notes (out of $300m MTN) due 2018



Financials

21

54%

0%

20%

40%

60%

80%

0

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2

3

4

5

6

7

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FY

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FY

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FY

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TT

M


EPS (SG cents) DPS (SG cents) Div payout %

5%

7%

9%

11%

5%6%

8%

10%

6% 6% 5%5%

0%

2%

4%

6%

8%

10%

12%

0

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9M

13

9M

14


PATMI (SGD mn) Net margin %

Earnings and net margins EPS, DPS and payout

Same Store Sales (YTD)

Source: Company Slide Presentation

one-off impairment and losses from discont. Ops: (“YourHealth”, “RWP”, “RWPFS”)

Acquired Healthy Life in Australia



Investment Merits & Risks



2323

Investment Merits

Competitive Strengths

Strong Brand Recognition: multiple awards & accolades won

Good Regional Presence: China, Hong Kong, Malaysia, Singapore, Australia

Wide range of Chinese herbs and medicinal: premium quality, consumers’ trust

Excellent R&D, manufacturing strengths: GMP, ISO 9001 certified; patents filed!

Strong Management Team: long-term strategic focus

Good Cash Flow Generation: support consistent dividends (avg payout ~50% over last 3

years)

Potential Upsides

Greater demand from greying population and growing affluence in core markets.

Boost to margins and wholesale business from the new EYS NEAUTUS JV.

Lift on ban (since late 2011) of bird’s nest imports (excl canned) into China (Several

M’sia companies given approval to export bird’s nest to China since Dec-13).



2424

Key Risks

Rising costs from rental and higher staff countmargin compression

Inadequate supply of qualified TCM physicians curtail growth in clinic services

Competitive market

Listed: Hai-O Enterprise (MY), Beijing Tong Ren Tang & Wai Yuen Tong (HK)

Other players, e.g. Ma Kuang, ZTP, HockHua (SG)

New/tighter regulations on Chinese herbs, proprietary medicines, food and clinics

Shift towards a more regulated industry reinforce public confidence in TCM

Risk of product defects and contamination

Upholding high quality and control practices.Peer Comparison

Source: Bloomberg

Market Prices as of: 09-Jul-14 Mkt Cap Ent Val

Company FYE (SG$'mn) (SG$'mn) FY12 FY13 FY12 FY13 FY12 FY13 FY13 FY13 FY13 FY12 FY13

Beijing Tong Ren Tang 12/2013 1,304 1,160 70.9 68.4 37.9 42.9 46.8 35.8 35.1 6.6 27.1 37.3 24.9

Wai Yuen Tong 03/2014 122 123 46.0 45.0 2.9 3.0 18.9 18.9 3.6 0.3 13.7 9.7 9.3

Hai-O Enterprise 04/2014 199 160 39.3 - 22.5 - 17.6 16.0 12.1 - 6.3 20.4 -

Average 52.1 56.7 21.1 22.9 27.8 23.6 17.0 3.5 15.7 22.5 17.1

Eu Yan Sang International 06/2013 368 462 51.0 50.7 5.3 7.0 5.6 5.5 18.6 2.3 12.9 12.8 12.8

Gross Margin Ops Margin Profit Margin P/E P/B EV/EBITD ROE (%)



2525

Summary (S$0.825; non-rated)

Strengths:

Strong competitive advantages, long-term

strategic focus, good cash flow generation

Key Risks:

Cost pressure from rental and staff count,

qualified TCM physicians supply, competition,

regulations, risks of product contamination

Positive Business Growth:

Increasing demand for TCM & wellness,

expansion in China, JV with Sichuan.

Currently trading:

~20x PE (TTM); ~2.7% div yield (TTM)

Fig: 1Y Share Price Performance

0

1

2

3

4

5

-10%

-5%

0%

5%

10%

15%

20%

Jul-1

3

Au

g-1

3

Se

p-1

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Oct-13

No

v-13

De

c-13

Jan

-14

Fe

b-1

4

Ma

r-14

Ap

r-14

Ma

y-14

Jun

-14

Jul-1

4

Mill

ion

s


vol (mn) EYSAN SP Equity STI (rebased)

Fig: 5Y PE Comparison with STI

Mean

SD - 1

SD + 1

SD - 2

SD + 2

0

5

10

15

20

25

30

Jul-09

Oct-0

9

Jan

-10

Ap

r-10

Jul-10

Oct-1

0

Jan

-11

Ap

r-11

Jul-11

Oct-1

1

Jan

-12

Ap

r-12

Jul-1

2

Oct-1

2

Jan

-13

Ap

r-13

Jul-13

Oct-1

3

Jan

-14

Ap

r-14


PE_RATIO



Appendix - Financials

26


FYE Jun FY11 FY12 FY13 FYE Jun FY11 FY12 FY13

Revenue 266 290 327 PPE 66 80 98

EBITDA 40 32 32 Intangibles 1 4 4

Depreciation & Amortisation (7) (7) (8) Associates & JVs 8 0 0

EBIT 34 25 24 Investment properties 22 55 68

Net Finance (Expense)/Inc (1) (2) (3) Others 0 1 7

Other i tems 0 0 0 Total non-current assets 96 139 176

Associates & JVs 1 0 (0) Inventories 46 65 69

Exceptional i tems 0 (2) 3 Accounts Receivables 15 21 22

Profit Before Tax 33 21 25 Investments 0 0 0

Taxation (8) (4) (7) Cash 39 39 98

Profit After Tax 25 17 18 Others 5 4 3

Minori ty interest (0) (0) (0) Total current assets 105 129 192

Net Income, reported 25 16 18 Total Assets 201 269 368

Net Income, adj. 25 18 16 Short term loans 25 47 58

Accounts Payables 29 34 39

Others 9 9 10

FYE Jun FY11 FY12 FY13 Total current liabilities 62 91 106

Long term loans 10 33 102

EPS, reported 0.06 0.04 0.04 Others 7 9 10

EPS, adj. 0.06 0.04 0.04 Total non-current liabilities 17 43 112

DPS 0.02 0.02 0.02 Non-control l ing interest 0 0 0

BVPS 0.28 0.30 0.34 Shareholder Equity 121 135 149

Income Statement (SGD mn) Balance Sheet (SGD mn)

Per share data (SGD)



Appendix - Financials

27

FYE Jun FY11 FY12 FY13 FYE Jun FY11 FY12 FY13

CFO P/E (X), adj. 11.6 15.6 20.2

Profi t before tax 33 21 25 P/B (X) 2.4 2.1 2.1

Adjustments 2 13 10 EV/EBITDA (X) 7.3 10.2 11.7

WC changes 4 (17) (7) Dividend Yield (%) 3.3% 3.2% 3.1%

Cash generated from ops 39 17 28 Growth & Margins (%)

Taxes paid (6) (6) (7) Growth

Cashflow from ops 33 10 19 Revenue 8.8% 8.9% 12.8%

CFI EBITDA 26.1% -21.8% 2.2%

CAPEX, net (20) (39) (30) EBIT 35.9% -26.9% -2.0%

Others (9) (7) 1 Net Income, adj. 31.8% -29.2% -12.8%

Cashflow from investments (29) (46) (29) Margins

CFF EBITDA margin 15.1% 10.9% 9.9%

Share issuance 3 0 1 EBIT margin 12.6% 8.5% 7.4%

Loans , net of repayments 8 46 79 Net Profi t Margin 9.5% 5.7% 5.6%

Dividends (9) (10) (9) Key Ratios

Others (0) 0 (1) ROE (%) 22.0% 12.8% 12.8%

Cashflow from financing 2 37 70 ROA (%) 13.4% 7.0% 5.7%

Net change in cash 5 0 60

Effects of exchange rates (2) (1) (0) Net Debt/(Cash) (4) 42 62

CCE, end 39 39 98 Net Gearing (X) Net cash 0.3 0.4

Historical multiples and yields are based on historical prices

*Forward multiples and yields are based on current price;

Cashflow statements (SGD mn) Valuation Ratios

Source: Company Data, PSR est



2828

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investing in this product.



29

Market StrategistsJoshua Tan, Head of Research

Kenneth Koh, Market Analyst

Soh Lin Sin, Macro Economist

Osama Bakhteyar, Research Assistant

SG & US Equity Analysts Lucas Tan, Real Estate

Wong Yong Kai, US Equities

Colin Tan, Telcos

Caroline Tay, Real Estate

Ben Ong, Financials

Richard Leow, Transport

By Phillip Securities ResearchMr. Chan Wai Chee, CEO

Jermaine Tock, Operations Exec

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14th July 2014, 8.15am & 11.15am Morning Call...Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated