23-06-2016, 10:49 PM
Came back from the seminar and I would say that I am pretty impressed by the COO Huang Ban Chin. Came across as a genuine and confident fellow who knows what he is talking.
My key takeaways:
1. The group is confident of the award of the license. COO emphasises that it's a "when" question not a "if". The acquisition of China manufacturing plant in 2014 allowed them to fulfil the final criteria for application of licence. They have cleared the city's and province's application and applied to Beijing in December 2014. Based on past cases, it will take 2 to 2.5 years and hence they are looking at Dec 2016 or Mar 2017.
2. Most products of the group are OEM. Setting up Tuas plant in anticipation of China Direct License. Choice of choosing Singapore as Dr Secret is sold as a premium skin care product and hence important to control the quality and at the same time gives the impression that it is a quality product.
3. There is possibility of further growth in Taiwan's market. Last year they hit 1.3 billion NT sale. and the group thinks that they are about no. 13/14 in Taiwan. This year, they are looking at no. 8/9 which mean about 2 billion NT+. Amway which was the leader last year has 11.7 billion sale.
4. The group has been test marketing China over the past few years. They have also registered all products.
5. Recognise that regulatory is one of the group's key risk. That was the key cause of their drop in revenue in 2009 and 2010 when the Indonesia government prevented public officers from using skin products and void 2 licences of their products. This affected their sale as the skin products are sold in set and not in silo. Having said that, COO felt that the chances of regulatory changes should be lower in other countries.
6. Still in Indonesia but focus on weight management product but not skin care product.
7. COO said the group is more prepared this time round as they have a larger range of licenses.
8. HK market is dead because they have to keep increasing product prices to protect China market. This is so as people from Guangzhou will go to HK to buy and sell on Internet in China.
9. Historically, group earning is seasonal with poor Q1 and very strong Q4. With this year's strong Q1 results, management still believe Q4 will still be stronger but the gap would not be as large.
10. Dividend policy of 30% and with the exception of 2014, have paid out dividend twice a year. For 2014, cash was held on as they are in the final phase of purchasing the China manufacturing plant.
My key takeaways:
1. The group is confident of the award of the license. COO emphasises that it's a "when" question not a "if". The acquisition of China manufacturing plant in 2014 allowed them to fulfil the final criteria for application of licence. They have cleared the city's and province's application and applied to Beijing in December 2014. Based on past cases, it will take 2 to 2.5 years and hence they are looking at Dec 2016 or Mar 2017.
2. Most products of the group are OEM. Setting up Tuas plant in anticipation of China Direct License. Choice of choosing Singapore as Dr Secret is sold as a premium skin care product and hence important to control the quality and at the same time gives the impression that it is a quality product.
3. There is possibility of further growth in Taiwan's market. Last year they hit 1.3 billion NT sale. and the group thinks that they are about no. 13/14 in Taiwan. This year, they are looking at no. 8/9 which mean about 2 billion NT+. Amway which was the leader last year has 11.7 billion sale.
4. The group has been test marketing China over the past few years. They have also registered all products.
5. Recognise that regulatory is one of the group's key risk. That was the key cause of their drop in revenue in 2009 and 2010 when the Indonesia government prevented public officers from using skin products and void 2 licences of their products. This affected their sale as the skin products are sold in set and not in silo. Having said that, COO felt that the chances of regulatory changes should be lower in other countries.
6. Still in Indonesia but focus on weight management product but not skin care product.
7. COO said the group is more prepared this time round as they have a larger range of licenses.
8. HK market is dead because they have to keep increasing product prices to protect China market. This is so as people from Guangzhou will go to HK to buy and sell on Internet in China.
9. Historically, group earning is seasonal with poor Q1 and very strong Q4. With this year's strong Q1 results, management still believe Q4 will still be stronger but the gap would not be as large.
10. Dividend policy of 30% and with the exception of 2014, have paid out dividend twice a year. For 2014, cash was held on as they are in the final phase of purchasing the China manufacturing plant.