OSIM International Ltd (OSIM) is scheduled to report its 2Q13 results on 30 Jul after trading hours. We forecast a 9.5% and 11.0% YoY growth in its revenue and PATMI to S$169m and S$25m, respectively. This would be driven largely by a full quarter of contribution from its recently launched uAngel Sofa-Tranzformer massage chair. We see OSIM as a beneficiary of China’s immense consumer market, underpinned by a rising middle-class population and affluence. The group has established a strong brand profile in China given its near 20 years of experience there. Its share price has also remained fairly resilient despite the recent global equities sell-down, supported by its solid financial performance and decent FY13F yield of 3.0%. Maintain our BUY rating and S$2.21 fair value estimate on OSIM.
Forecasting 11% YoY PATMI growth for upcoming 2Q13 results
OSIM International Ltd (OSIM) is scheduled to report its 2Q13 results on 30 Jul after trading hours. We forecast a 9.5% and 11.0% YoY growth in its revenue and PATMI to S$169m and S$25m, respectively. This would be driven largely by a full quarter of contribution from its recently launched uAngel Sofa-Tranzformer massage chair, which had seen an initial positive response from consumers thanks to its lower price point and compact design.
Tapping on China’s massive consumer market
Although concerns over China’s economic growth have elevated in recent months given disappointing macro data points, we believe that its deep consumer market still represents an immense growth opportunity in the long term. This is buttressed by a rising middle-class population and affluence, coupled with growing demand for wellness and healthy lifestyle products. According to research firm Euromonitor, the number of households in China with an annual disposable income above US$200k is projected to increase at a robust CAGR of 10.0% from 1.25m in 2010 to 2.44m in 2017. As OSIM operates 274 outlets across 43 cities in China (as at 31 Mar 2013), we expect it to be a beneficiary of this trend given its strong brand profile. OSIM has an entrenched presence in China for close to 20 years.
Maintain BUY
OSIM’s share price has remained fairly resilient despite the recent global equities sell-down, with a gain of 14.7% YTD (versus STI: +0.2%). We believe this can be attributed to its solid financial performance and decent FY13F yield of 3.0%. We forecast EPS CAGR of 12.1% from FY12-14 and FY13F ROE of 43.1%. Maintain our BUY rating and S$2.21 fair value estimate on OSIM.
OSIM International Ltd (OSIM) is scheduled to report its 2Q13 results on 30 Jul after trading hours. We forecast a 9.5% and 11.0% YoY growth in its revenue and PATMI to S$169m and S$25m, respectively. This would be driven largely by a full quarter of contribution from its recently launched uAngel Sofa-Tranzformer massage chair, which had seen an initial positive response from consumers thanks to its lower price point and compact design.
Tapping on China’s massive consumer market
Although concerns over China’s economic growth have elevated in recent months given disappointing macro data points, we believe that its deep consumer market still represents an immense growth opportunity in the long term. This is buttressed by a rising middle-class population and affluence, coupled with growing demand for wellness and healthy lifestyle products. According to research firm Euromonitor, the number of households in China with an annual disposable income above US$200k is projected to increase at a robust CAGR of 10.0% from 1.25m in 2010 to 2.44m in 2017. As OSIM operates 274 outlets across 43 cities in China (as at 31 Mar 2013), we expect it to be a beneficiary of this trend given its strong brand profile. OSIM has an entrenched presence in China for close to 20 years.
Maintain BUY
OSIM’s share price has remained fairly resilient despite the recent global equities sell-down, with a gain of 14.7% YTD (versus STI: +0.2%). We believe this can be attributed to its solid financial performance and decent FY13F yield of 3.0%. We forecast EPS CAGR of 12.1% from FY12-14 and FY13F ROE of 43.1%. Maintain our BUY rating and S$2.21 fair value estimate on OSIM.
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