First "anti-epidemic" stock on the way to launch in Hong Kong
HONG KONG, Mar 26, 2020 - (ACN Newswire) - The Novel Coronavirus (COVID-19) is rampant across the world, affecting and claiming lives, and hitting hard economies, and there is no sign of it waning and nobody could say for certain when exactly an effective vaccine would be available. While governments are attempting on the policy-side to contain the spread, individuals are urged to be responsible for their health and take all possible precautions. Among companies helping people fight the virus and guard their everyday health is Hong Kong-based Tycoon Group Holding Limited, planning for listing in the territory, to raise fund that it may do an even better job.
Set up in 2015 in Hong Kong, Tycoon is a leading and reputable provider of a suite of health and well-being related products including health supplement, proprietary Chinese medicine, skin care, personal care and other healthcare products, and has multiple sales channels operating online and/or offline in Hong Kong, Macau, the PRC and Singapore. Given its business focus, it is one of the very few corporations worldwide not adversely affected by the pandemic. At the onset of the COVID-19 outbreak, having strong connections and sound track record working with quality healthcare products brands overseas, from such as the U.S., Australia, Canada, Japan, etc., Tycoon secured the right to distribute a number of new products for disinfection-related purposes, such as hand sanitisers and wet wipes, and also sourced overseas other anti-epidemic items that are in great demand across the world, such as surgical masks and thermometers. These products have been sought-after by its chain retailer customers. Its ability to provide products that answer the prevailing market needs attests to the elasticity in its operations and resilience of its business model when facing adversities in the market and the macro environment. Financially, the COVID-19 outbreak has had minimal impact on Tycoon of which average revenue of the first two months of FY2020 was largely comparable with that of the last six months of FY2019.
In addition, the good that Tycoon sees will come out of the COVID-19 outbreak is consumers becoming so much more health conscious, changing their habits to better personal health and environmental hygiene, and also going for preventive measures like taking vitamins and mineral supplements. Such changes will translate into demand for quality health supplement products, such as Tycoon's immune-boosting supplements, vitamins and herbal products. That is the company's fastest growing segment with sales climbing between FY2017 and FY2019 at a CAGR of 83.8%, and contributed the most revenue and gross profit to the company in FY2019.
Tycoon has a unique edge that sets it apart from its peers and explains its fast growth and promising prospect - the strong relationship it has with China Resources Pharmaceutical Group (CR Pharm, 3320.hk), which holds 25% stake in the company. In FY2019, Tycoon sold HK$46.6 million worth of products to CR Care, a premium pharmacy brand under CR Pharm. And, stepping into 2020, CR Pharm signed two agreements with the company, including a Master Supply Agreement, with the annual total transaction value to increase up to HK$210 million in FY2021 alone. With Tycoon's proven ability to source anti-epidemic products in very tight supply as the COVID-19 spread continues, CR Pharma is expected to scale up purchasing from Tycoon in the imminent future and coming years under the Master Supply Agreement.
This month, the company furthered cooperation with CR Pharm. The two companies signed the agreement to set up a joint venture (JV), which will operate in the PRC and is expected to obtain a food business permit and a pharmaceutical trade licence this year. The JV will act as a window for CR Pharm to source overseas products, including Tycoon's products, and distribute them in the PRC. According to its 2019 interim report, CR Pharm was operating over 840 retail pharmacies under national or regional premium brands in the PRC. For Tycoon, that means, via the JV, it will have access to an effective springboard - additional sales channels - to tap the vast and growing PRC health care and hygiene products market. Tycoon will not only have a broader reach, but also entitlement to a share of profits made by the JV.
Tycoon also has close ties as a distributor of a leading listed pharmaceutical company in Hong Kong, and provides its products to retail chain store customers in more than 670 stores in the city. And, at the start of the year, a licensed wholesaler of imported and exported pharmaceutical products in Macau, Tycoon was further appointed as the exclusive distributor of the long-standing household Chinese medicine product brand Po Chai Pills in Macau, in addition to being its distributor in Hong Kong.
Tycoon is young, but it has been growing fast and thriving in the past three years with revenue rising at a CAGR of 38.3%, and it boasted a healthy gross profit margin at 27.3% in FY2019. After the listing, the company plans to set the annual dividend payout ratio at no less than 30% of the distributable net profit. The listing has Shenwan Hongyuan Capital (H.K.) Limited as the sponsor, and it together with Soochow Securities International Brokerage Limited are the joint global coordinators, joint bookrunners and joint lead managers.
Sectors: Daily Finance, Daily News
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