Billion Dollar Club: HEALTHCARE SERVICES + PHARMACEUTICALS & MEDICAL RESEARCH

Tianjin Pharmaceutical Da Ren Tang Group Corporation, which used to be known as Tianjin Zhong Xin Pharmaceutical T14 Group Corporation, may have a relatively low profile among investors here. However, the company was one of the earliest companies from China to list on the Singapore Exchange S68 in 1997, followed by a subsequent listing in Shanghai in 201.

The company focuses on traditional Chinese medicine products and has built up a comprehensive industry and production chain. Its business covers the research, development and manufacturing of Chinese herbal medicines and related materials and products.

The company has a portfolio of traditional brands such as Da Ren Tang, Le Ren Tang, and Long Shun Rong and Song Bai. As an indication of the range of its product portfolio, it has obtained certificates of approval for 599 medicines sold in 500,000 pharmacies. In addition, the company has been actively selling through e-commerce platforms, too, with sales of some RMB40 million generated in the first year.

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For the most recent FY2023 ended December 2023, Tianjin Pharmaceutical generated revenue of RMB8.2 billion ($1.52 billion), comparable to FY2022. However, it enjoyed better margins thanks to higher sales from products fetching higher margins. As such, Tianjin Pharmaceutical reported earnings of RMB987 million for the year, up 15% over FY2022.

Despite the relatively low profile, Tianjin Pharmaceutical’s improved earnings have earned recognition from investors. In the three years under consideration for this year’s BDC, the company posted a CAGR of 39.8% in shareholders’ returns and earned the title of sector winner.

Meanwhile, Haw Par Corp, another company with a long, storied history like Tianjin Pharmaceutical, generated 21.8% in CAGR for its profit after tax, which lets the company top its industry sector in this metric. From earnings of $119.8 million in FY2020, the company grew its earnings to $216.6 million in FY2023.

While Haw Par Corp owns the Tiger Balm ointment range, a household brand, it has significant value from its stakes in two other entities similarly controlled by the Wee family: property giant UOL Group and United Overseas Bank U11 (UOB).

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For its most recent FY2023, Haw Par’s revenue increased by 27.4% y-o-y to $232.1 million, thanks partly to higher consumer spending on its healthcare products.  Its so-called “other income” increased by 44.6% y-o-y to $163.4 million, thanks to a higher dividend rate from strategic investments and higher interest income earned.

Riverstone Holdings, a regular name at the BDC, has come out tops for weighted return on equity (ROE) among its industry peers. The Malaysia-based glove maker has continued to do well even after the pandemic-induced boom for rubber gloves. In the three years under consideration for this year’s Billion Dollar Club (BDC), Riverstone generated a weighted ROE of 26.1%.

For the most recent FY2023 ended December, the company’s revenue dropped by 27.4% y-o-y to RM914.8 million as demand further normalised following the pandemic. Earnings stood at RM220.4 million, down 29.9% y-o-y. Despite lower earnings, Riverstone maintained its track record of paying generous dividends, paying a total dividend equivalent to a payout ratio of 151.3% for the year.

Executive chairman and CEO Wong Teek Son says he is optimistic about FY2024 due to Riverstone’s active bid to diversify its customer base and a stronger cleanroom gloves segment driven by a gradual recovery in consumer electronics demand. “We will continue to focus on customer acquisition to further solidify our standing as one of the world’s leading specialised glove manufacturers.”