Brokers' Take

Osim International, Jan 27 close: $1 (+5 cents)

28 January 2005
The Business Times

Citigroup Smith Barney, Jan 26

FY04 results: 4Q rocks; sale is still on, shopping time! Osim's FY04 results were about 6 per cent above our forecast with revenues up 15.6 per cent year-on-year to $332 million, while net income grew 31.8 per cent year-on-year to $31.7 million (SB at $30 million). Final dividend and 25th anniversary special dividend total $0.01/share, bringing total dividend payment up to $0.017/share (or a yield of 1.8 per cent). The company registered a blowout 4Q04, with revenues, net income and margins at an all-time quarterly high. This came largely on the back of phenomenal sales of iSqueez and the launch of their complete range of massage chairs.

The outlook is robust with 20-30 products planned for launch in 2005. iSqueez will be launched in China and Taiwan around March and we expect sales to be robust in these two significant markets. Malaysia has turned around with 4Q sales surging 46 per cent year-on-year. On the back of the better than expected results and outlook, we have raised our FY05E and 06E earnings estimates by 2.3 per cent and 4.2 per cent, respectively.

We re-iterate our Buy/Low Risk (1L) rating on Osim with a new 12-month target price of $1.23 (up from $1.20). We believe valuations are attractive, as they are currently trading at 10.6x FY05E earnings with a PEG of 0.4x, along with a healthy and growing brand equity.
BUY/LOW RISK

Compiled by JOYCE KOH