Eyes on South­east Asia tra­di­tional reme­dies

Weekend Argus (Saturday Edition) - - BUSINESS -

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

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