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EAST ASIA SECURITI ES C OMPA NY LIMI TED 9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: 3608 8000 Research: 3608 8096 Facsimile: 3608 6113 HONG KONG RESEARCH
Analyst: Sabina Cheng
9th February 2010
– Research
Ruinian International Limited [Stock Code: 02010] Sole Sponsor, Sole Global Coordinator and
Sole Bookrunner
Joint Lead Managers
CCB International Capital Sector : Health Care
Business : A provider of health-related products
Total share offer:* 300,000,000 shares
Business of Ruinian International ("Ruinian"
(30.0% of the enlarged share capital) or "the Company")

Public Offer: 30,000,000 shares (10%)
Ruinian is a health-related products provider in China, focusing on manufacturing and sales of Placing:
270,000,000 shares (90%) amino acid-based nutritional supplements. It Greenshoe: 45,000,000 shares
offers four types of products, including amino acid-based nutritional supplements, other *Comprising 250 mil ion New Shares and 50 nutritional supplements and general health food mil ion Sale Shares products, health drinks, as wel as some types of pharmaceutical products. Price: HK$2.95 – HK$3.78 per share
Within the segment of amino acid-based Market Cap: HK$2.95 bil ion – HK$3.78 bil ion
nutritional supplements, it offers products of Pro forma fully diluted FY09E P/E:
Ruinian-branded amino acid-based tablets, Linger-branded amino acid-based tablets, and 14.75x – 18.9x liquid amino acids. The segment was the major Company guidance of FY2009E net profit:
revenue contributor to the Company in the first not less than RMB200 mil ion nine months of 2009, accounting for over 50% of revenue being generated. Adjusted NTA per share: RMB1.24 – RMB1.41
As of 30th September 2009, the Company had Staffing: 545 (as of 30th September 2009)
61 regional and 383 local distributors for its products. Its nutritional supplements and general HK Public Offer period:
health food products were sold at 41,400 retail 8th February 2010 – 11th February 2010 noon outlets, including supermarkets, convenience stores and retail pharmacies, in 29 provinces Receiving bank: HSBC
Share registrar: Computershare Hong Kong
pharmaceutical products were sold to hospitals Investor Services Limited through its pharmaceutical distributors in China. Listing date: 19th February 2010
The Company currently has manufacturing facilities in Wuxi City ( ) and Nanjing City
), Jiangsu Province (
This report has been prepared solely for information purposes and we are not soliciting any action based upon it. Neither this document nor its contents shall be construed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. The information is based upon information, which we consider reliable, but accuracy or completeness is not guaranteed. Opinions expressed herein are subject to change without notice. At time of this report, East Asia Securities Company Limited has no position in securities of the company or companies mentioned herein, while its group companies may from time to time have interests in securities of the company or companies mentioned herein.

Shareholders after Listing (Assuming the over-al otment option is not exercised)
Furui Investments Limited, whol y owned by Mr. Wang Fucai, the Chairman and the Chief Executive Officer of the Company. Turrence Limited, whol y owned by CK Life Sciences, an independent third party. Tetrad Ventures Pte. Limited, whol y owned by Government of Singapore Investment Corporation (Ventures) Pte Limited. Raffles Partners Asset Management (Hong Kong) Limited, an independent third party. Templeton Strategic Emerging Markets Fund III, LDC, a private equity investment fund. Strong Al y Limited, whol y owned by Furui Investments Limited. Lingrui Investments Limited, owned by various members of the senior management of the Company, Mr. Yu Yan (22.86%), Mr. Li Lin, (22.86%), Mr. Yi Lin (15.48%), Mr. Zhang Yan (12.86%), Mr. Shen Zhong Wei (11.42%), Mr. Zhang Yu Hai (7.62%) and Mr. Tian Xin Hua CCB International Asset Management Limited Public shareholders Use of Proceeds
Net proceeds from the offer are estimated to be HK$763.8 mil ion (based on an offer price of HK$3.365,
being the mid-point of the indicative price range and assuming the over-al otment option is not exercised) HK$ million
For advertising and promoting of Ruinian's products in 2010 and 1H 2011 For capital expenditures to improve production facilities and build new production line For potential acquisitions of products For product development For additional working capital and other general corporate purposes Financial Highlights
Year ended 31st Dec
9 months ended
2008 30th Sep 2008 30th Sep 2009
thousand thousand
Operating profit Profit attributable to shareholders
Gross profit margin Operating profit margin Net profit margin Breakdown of revenue
Amino acid-based 169,597 86.2% 334,770 82.6% 382,079 60.4% 364,625 62.1% Other nutritional 70,753 17.4% 124,604 19.7% 115,184 19.6% - 125,674 19.9% 106,920 18.3% 196,747 100.0% 405,523 100.0% 632,357 100.0% 586,729 100.0%
Ruinian International Limited 2

Peer valuation comparison
Wai Yuen Tong
Tianyi Fruit
International Huiyuan Juice
Gross profit margin Sources: Reuters

Ruinian has a leading position in the rapidly growing amino acid-based nutritional supplement market in China. It had a national market share of 21.6% in 2008 based on total sales in Renminbi. The second largest manufacturer had a market share of 4.5% in 2008, and the five largest manufacturers of amino acid-based nutritional supplements, total y held 33% of the market share in China. Its plans of launching amino acid-based drinks by the end of 2010 should help strengthen its market leader position in this segment. Besides, we expect its high level of gross profit margin in this segment (at 83.6% in 9M 2009) to be maintained in the near future, given its dominant position in the market and the uniqueness of its products. Revenue generated from the Company's other nutritional supplements and general health food products segment trended up between 2006 and 2008, driven by factors such as improvements in living standards, increased disposable income and rising health consciousness among Chinese consumers. Outlook for this segment should stay positive on its decent growth potential in the near term. It is estimated sales in the vitamin and dietary supplement market wil reach RMB86.1 bil ion by 2013, representing a compound annual growth rate of 10.4% from RMB52.6 bil ion in 2008. The Company plans to build its own herbal tea production line with annual production capacity of 200 mil ion cans of herbal tea. The construction wil be completed by the fourth quarter of 2010. This should definitely help capture opportunities in the growing ready-to-drink tea market in China. It is expected sales of ready-to-drink tea in China wil reach 11,985 mil ion litres by 2013, up from 8,178 mil ion litres in 2008. The Company has been expanding its pharmaceutical business since 2009 as it see good prospect in the pharmaceutical industry in China. An active government support is one of the factors supporting such a bul ish view on pharmaceutical industry (with additional spendings of RMB850 bil ion on China's medical reforms between 2009 and 2011). On top of its existing three pharmaceutical products, the Company has four more pharmaceutical product candidates, namely proparacaine hydrochloride eye drops, oxaliplatin injection, letrozole tablets, for which the company expects to obtain the PRC State Food and Drug Administration approval by the end of 2010, as wel as gatifloxacin eye gel which is expected to receive approval by the end of 2011. Weaknesses/Threats
× The Company depends on a limited number of amino acid-based nutritional supplements to generate
most of the Company's revenue. Despite the revenue contribution by this segment has been trending down since 2006 as the company has been diversifying its products portfolio, there is stil high turnover concentration risk since demand for amino acid-based nutritional supplements may be dragged down by factors, including introduction of alternative products. × Ruinian's liquid amino acids are manufactured exclusively by independent third parties manufacturers with Good Manufacturing Practices ("GMP") certification. However, these manufacturers have been waiting for renewal of such certification which was expired on 4th January 2010. If they fail to receive the renewed GMP certification, they wil not sel their products to Ruinian. This may affect the financial condition and operation of Ruinian material y. × Profitability of the Company's relative young pharmaceutical segment should remain uncertain on its potential execution risk. Besides, two of the pharmaceuticals that the Company manufactures, namely ofloxacin eye drops and ciprofloxacin hydrochloride eye drops are subject to government's price controls in the form of retail price ceilings. Trading Buy
Ruinian International Limited 3

Important Disclosure / Analyst Certification / Disclaimer
This document is published by East Asia Securities Company Limited, a whol y-owned subsidiary of The Bank of East Asia, Limited (BEA). The research analyst primarily responsible for the content of this report, in part or in whole certifies that the views on the companies and their securities mentioned in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or wil be, directly, or indirectly, related to specific recommendations or views expressed in this report. This report has been prepared solely for information purposes and has no intention whatsoever to solicit any action based upon it. Neither this report nor its contents shal be construed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. The information is based upon information, which East Asia Securities Company Limited considers reliable, but accuracy or completeness is not guaranteed. Information and opinions expressed herein reflect a judgment as of the date of this document and are subject to change without notice. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This report is not to be taken in substitution for the exercise of judgment by respective readers of this report, who should obtain separate legal or financial advice. East Asia Securities Company Limited and / or The BEA Group accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or further communication given in relation to this report. At time of this report, East Asia Securities Company Limited has no position in securities of the company or companies mentioned herein the report, while BEA along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this report. BEA and its associates, its directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. BEA and/or any of its affiliates may beneficial y own a total of 1% or more of any class of common equity securities of the subject company or companies mentioned in this report and may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company or companies mentioned in the report. This document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in, any locality, state, country or other jurisdiction, publication, availability or use would be contrary to law and regulation. Ruinian International Limited 4


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