Friday, August 2, 2013

OSIM International: To uInfinity and beyond! (OCBC)

OSIM International:
Fair value S$2.40
add: 12m dividend forecast S$0.06
versus: Current price S$2.06

To uInfinity and beyond!
• 2Q13 PATMI jumps 15.9% YoY
• 2 S cents interim DPS declared
• Product pipeline remains strong

Despite challenging economic conditions in China, OSIM International Ltd (OSIM) managed to record a 15.9% YoY jump in its 2Q13 PATMI to S$26.1m on the back of a 7.0% increase in revenue to S$165.5m.
The former was 4.4% ahead of our forecast while the latter was 2.4% below. An interim DPS of 2 S cents was declared, in line with expectations and brings YTD dividends to 3 S cents/share. As a continuation to its innovative product drive, OSIM launched its new high-end massage chair named uInfinity in Hong Kong. This will also be sold in its other key markets in the coming weeks. We raise our FY13 and FY14 PATMI estimates by 2.5% and 2.4%, respectively, largely to account for higher share of profits of associated companies (mainly from TWG-Tea). Rolling forward our valuation to 16.5x blended FY13/14F EPS, our fair value estimate is raised from S$2.21 to S$2.40. Maintain BUY.

2Q13 PATMI slightly ahead of our expectations
OSIM International Ltd (OSIM) reported a 15.9% YoY jump in its 2Q13 PATMI to S$26.1m on the back of a 7.0% increase in revenue to S$165.5m. In our view, this was a commendable set of results considering the challenging economic conditions in China, OSIM’s largest market. Although revenue was 2.4% lower than our forecast, PATMI came in 4.4% ahead due largely to higher-than-expected financial income and share of profits of associated companies. For 1H13, revenue rose 3.7% YoY to S$316.1m, while PATMI of S$51.3m represented a growth of 14.5%.

Healthy dividend trend continues
OSIM declared a 2 S cents/share interim dividend for 2Q13, similar to our forecast and 2Q12 (which included a special DPS of 1 S cent).This brings YTD dividends to 3 S cents/share and we are forecasting FY13F DPS of 6 S cents, which translates into a yield of 2.9%. We expect this to be financed by its strong free cashflows, which we estimate to be 12 S cents/share for FY13.

New high-end massage chair launched
Following the introduction of its uAngel Sofa-Tranzformer in 1H13 which saw robust demand from a new target segment group, OSIM recently launched its new high-end massage chair named uInfinity in Hong Kong. This comes with 19 massage programmes, carries a retail price of S$6,988 and will continue to be endorsed by international artiste Andy Lau. uInfinity will be launched next in OSIM’s other key markets in 3Q13. Management’s strategy for its massage chair segment would be to have products with different price points, ranging from S$2-3k (lower-end) to S$4-5k (mid-end) and S$7-8k (high-end).

Maintain BUY
We raise our FY13 and FY14 PATMI estimates by 2.5% and 2.4%, respectively, largely to account for higher share of profits of associated companies (mainly from TWG-Tea). As we roll forward our valuation to 16.5x blended FY13/14F EPS, our fair value estimate is raised from S$2.21 to S$2.40. Maintain BUY.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 31/07/13

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