Kim Eng on 28 Jan 2014
FY13 results within expectations
OSIM’s FY13 revenue grew 8% YoY, with higher growth coming from South Asia compared with North Asia, where the group rationalised its store network in China (opened 24 and closed 30). However, with a successful marketing campaign in 2H13, sales in China picked up in 4Q13 as evidenced by the 13% YoY growth in North Asia. In our view, this market may surprise on the upside in FY14. The company also recognised some one-off items, though the net impact on P&L was negligible while the actual tangible item was limited to around SGD12m Brookstone bonds.
What’s Our View
We expect TWG to be a significant growth contributor going forward. Following the consolidation, we estimate TWG to contribute around 10% of group revenue currently, increasing to 20% by FY16E. With multiple growth engines in place and a very strong balance sheet, we believe OSIM will be better able to weather potential turbulence in its growth path. We keep our forecasts mostly unchanged and introduce FY16E. Our TP of SGD2.78 remains unchanged, pegged to 18x FY14E P/E.
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