Sales eased 3%; but operating profits tumbled 27%. Eu Yan Sang
International Ltd (EYS) kicked off its 1Q09 on a muted note, in line with
OCBC Bk expectations. Sales slipped by a marginal 2.5% YoY to S$50.4m, but
operating profits after tax tumbled by 26.5% YoY to S$3.3m as persistent
rental cost added pressure to its operating expenses.

Operating profit margin came under pressure. EYS managed to defend
its gross profit margin at 53.5% (vs 53.7% in 1Q08) as it sold a higher mix
of premium products. Its NPAT margin, however, fell to 6.5% from 8.6% a
year ago as high rental and labour costs eroded profitability.

Fair Value: S$0.29 ; Sell