Eyes on Southeast Asia traditional remedies
makes Tolak Angin went public this week and is worth about $850 million (R8.88 billion).
Shares in PT Industri Jamu dan Farmasi Sido Muncul Tbk jumped 24 percent when it became the first herbal medicine company to list in Jakarta on Wednesday. With Chinese peers now trading at premium prices, Sido Muncul is just the latest in a crop of Southeast Asian traditional medicine firms with big plans to grow amid strong investor interest.
Stacked with products that claim to cure anything from rheumatism to sexual dysfunction, the market for traditional medicine in Southeast Asia is projected to grow to $3.9bn by 2017, nearly 50 percent more than this year, according to research firm Euromonitor International.
While the ingredients in tra- ditional medicines may be advertised as natural and enjoy historical acceptance in Asia, they don’t meet with universal approval. Health regulators in places like Britain have warned of high concentrations of elements like mercury in some products, and conservation groups say some use ingredients taken from endangered animals.
Still, alongside the maker of Tolak Angin – “Repel the Wind” in Indonesian – firms in the region, including Singapore’s Eu Yan Sang International and Malaysia’s Power Root, are drawing the attention of investors.
Shares in Eu Yan Sang and Power Root trade at 18.75 and 15.05 times their expected earnings, respectively. That’s far below the average of 76.38 times for a group of eight listed Chinese traditional medicine makers, according to data from Thomson Reuters StarMine.
Sido Muncul started in 1940 as a tiny business operated by Rahmat Sulistio and her three assistants in Yogyakarta, a city in the central Java region.
More than 70 years later, the company’s IPO was 11.4 times over-subscribed. At its latest trading price, its market valuation was about $850m.
Sido Muncul had posted annual sales growth of about 10 percent on average in the past few years and aimed to launch new herbal drinks, Irwan Hidayat, the grandson of Sulistio and head of the company, said. It plans to use IPO proceeds of about 870 billion rupiah (R743m) to develop new products and increase manufacturing capacity.
At Singapore’s Eu Yan Sang, Hong Kong accounted for 47 percent of revenue in the three months ended September. Singapore contributed 22 percent. – Reuters