1.1 Cerebos Pacific Limited (CPL)
Cerebos Pacific Limited (CPL) is a manufacturer and distributor of health supplements, Asian and Western food, and beverages to market throughout Asia and Australasia. The company's products include its flagship BRAND'S chicken essence, other health supplements, coffee, sauces, canned products and desserts. BRAND’S® will celebrate its 175th Anniversary in 2010, with significant milestones underlined by the opening of new state-of-the-art manufacturing facilities in Thailand and Malaysia scheduled for April 2010. The increased capacities in BRAND’S® Essence of Chicken, Bird’s Nest and InnerShine range production as well as for cap manufacturing will enable the Group to keep up with growing demand in the Asia markets and completes their major capex investments for the medium term. The company is headquartered in Singapore and employs about 2,580 people as on September 2007.
The Company’s geographical segment includes Thailand, Taiwan, Australia and New Zealand. Having made key strategic investments in the past years, the Group is currently in a strong position to exploit market opportunities to expand sales of their products in the expected recovery of the global economies projected by some economists.
1.2 Eu Yan Sang International Ltd (EYSI)
Eu Yan Sang was established in 1879 with the noble vision of caring for mankind. The group was listed on Singapore Stock Exchange main board as Eu Yan Sang International Limited (EYSI), in 2000.
Eu Yan Sang International manufactures and retails Chinese herbs and medicines in more than 140 stores across Singapore, Hong Kong, Taiwan and Malaysia, with a portfolio of more than 280 own-brand products and 1,000 types of medicinal herbs. In addition, the company also operates a chain of Traditional Chinese Medicine (TCM) clinics in Singapore and Malaysia and specialist clinics in Singapore. The company's flagship products include bak foong pills, bo ying compound, deer's tail pills, extra strength lingzhi cracked spores, h4h hair formula, menoease pills and wild yunzhi powder extract.
The group has renewed its focus on their core Traditional Chinese Medicine (TCM) business in Year 2008, took the necessary steps to complete their exit from non-core businesses within the group, restructured their investment in the retail concept store red white & pure into a 20% holding in the sanctuary spa this will enable EYS to remain focused on TCM while maintaining an interest in the fast growing health and lifestyle sector. The company primarily operates in Singapore where it is headquartered and employs 891 people.
2. Ratio Analysis
2.1 Profitability Ratio Calculations
(a) Calculate ratios which will assist you to assess the performance of the companies over a period of three to five years
200730- Jun 200930- Jun
Return on Capital Employed28.23%33.01%29.77%20.29%18.51%26.87% Return on Shareholders’ Funds22.16%21.63%22.45%14.01%5.61%16.15% Gross Profit Margin49.72%50.24%54.47%51.05%50.15%50.22% Net Profit Margin11.73%11.35%12.14%5.87%2.36%8.12%
Operating Margin85.09%84.51%84.34%91.35%91.89 %86.01%
Selling, advertising & promotional to sales16.86%16.41%21.84%32.00%30.57%29.19% Admin to sales17.28%18.25%16.82%9.51%10.73%9.57%
2.2 Profitability Ratio Analysis
(b)Compare the performance of the two companies, explaining the likely reasons for the differences between their performances over the period.
200730- Jun 200930- Jun
Return on Shareholders' Fund 22.16%21.63%22.45%14.01%5.61%16.15%
Both CPL and EYS have similar ROCE in the Year of 2007 with CPL performs much better than EYSI. CPL exhibits consistent performance as shown in their ROCE and Return on Shareholders’ Fund ratios....