OSIM International reported 3Q12 results which were within our expectations, with revenue and PATMI growing by 15.1% and 49.3% YoY to S$142.3m and S$19.6m, respectively. An interim dividend of 1 S cent/share was also declared, bringing YTD DPS to 4 S cents. Looking ahead, management remains confident of extracting more value from China’s huge consumer market. We expect this to be driven by its strong product innovation, focus on middle-to-high income consumers and continued efforts to improve its productivity per man and per store. We make some minor downward adjustments to our forecasts. But as we roll forward our valuations to 14.3x FY13F EPS, we lift our fair value estimate from S$1.79 to S$1.87. Maintain BUY.
3Q12 results within expectations
OSIM International Ltd (OSIM) reported a 49.3% YoY surge in its 3Q12 PATMI to S$19.6m on the back of a 15.1% YoY increase in revenue to S$142.3m. Results were within our expectations. The strong bottomline performance was partly due to a low base effect in 3Q11, given a one-off tax provision of S$2.8m, without which 3Q12 PATMI would have grown by 23.1%. Sequentially, revenue and PATMI declined 8.0% and 13.1% respectively, but this was largely due to seasonal factors. For 9M12, revenue increased 8.8% to S$447.1m, or 73.3% of our full-year estimate. PATMI of S$64.3m represented a growth of 23.7%, which constituted 74.2% of our original FY12 projections and 93.1% of FY11’s full-year figure.
Three consecutive quarters of interim dividends for FY12
OSIM also declared a dividend of 1 S cent/share (3Q11: nil). This brings total DPS to 4 S cents YTD. We raise our FY12 DPS forecast marginally from 4.5 S cents to 5 S cents. We expect OSIM’s dividend payouts to be supported by its healthy free cashflow generation (9M12: S$65.6m; 9M11: S$54.1m).
Reiterate BUY on undemanding valuations
Management is confident of extracting more value from China’s huge consumer market, and expects its core business to remain strong in the coming quarters. We believe that OSIM’s growth would be underpinned by its strong product innovation, focus on middle-to-high income consumers and continued efforts to improve its productivity per man and per store. In addition, OSIM would also focus on building on its international franchise in FY13. We make some minor downward adjustments to our forecasts as we incorporate this latest set of results in our model (refer to Exhibit 5). But as we roll forward our valuations to 14.3x FY13F EPS, we lift our fair value estimate from S$1.79 to S$1.87. Maintain BUY given undemanding valuations. OSIM trades at 12.5x and 11.4x FY12F and FY13F PER respectively, against our projected EPS CAGR of 13.3% from FY11-13F, while offering FY13F ROE of 38.3%.
OSIM International Ltd (OSIM) reported a 49.3% YoY surge in its 3Q12 PATMI to S$19.6m on the back of a 15.1% YoY increase in revenue to S$142.3m. Results were within our expectations. The strong bottomline performance was partly due to a low base effect in 3Q11, given a one-off tax provision of S$2.8m, without which 3Q12 PATMI would have grown by 23.1%. Sequentially, revenue and PATMI declined 8.0% and 13.1% respectively, but this was largely due to seasonal factors. For 9M12, revenue increased 8.8% to S$447.1m, or 73.3% of our full-year estimate. PATMI of S$64.3m represented a growth of 23.7%, which constituted 74.2% of our original FY12 projections and 93.1% of FY11’s full-year figure.
Three consecutive quarters of interim dividends for FY12
OSIM also declared a dividend of 1 S cent/share (3Q11: nil). This brings total DPS to 4 S cents YTD. We raise our FY12 DPS forecast marginally from 4.5 S cents to 5 S cents. We expect OSIM’s dividend payouts to be supported by its healthy free cashflow generation (9M12: S$65.6m; 9M11: S$54.1m).
Reiterate BUY on undemanding valuations
Management is confident of extracting more value from China’s huge consumer market, and expects its core business to remain strong in the coming quarters. We believe that OSIM’s growth would be underpinned by its strong product innovation, focus on middle-to-high income consumers and continued efforts to improve its productivity per man and per store. In addition, OSIM would also focus on building on its international franchise in FY13. We make some minor downward adjustments to our forecasts as we incorporate this latest set of results in our model (refer to Exhibit 5). But as we roll forward our valuations to 14.3x FY13F EPS, we lift our fair value estimate from S$1.79 to S$1.87. Maintain BUY given undemanding valuations. OSIM trades at 12.5x and 11.4x FY12F and FY13F PER respectively, against our projected EPS CAGR of 13.3% from FY11-13F, while offering FY13F ROE of 38.3%.
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