Brokers' Take
OSIM International
Dec 15 close: $1.55
16 December 2005
The Business Times
CITIGROUP RESEARCH, Dec 14 BROOKSTONE reported losses in Q3 ended Oct 29 of US$11.7 million (versus US$6 million loss last year). These numbers may appear alarming, but note: The first three quarters of the year are typically loss-making, with the group normally swinging to profitability in 4Q; the losses include a US$3 million non-cash inventory write-off (we have assumed a US$20 million write-off for the full year); OSIM acquired Brookstone effective Oct 4, so the group should account for 55 per cent of the US$6.2 million losses in Oct; and we are assuming only a US$2.5 million (S$4.2 million) contribution to OSIM for FY05. Brookstone stays optimistic about the outlook with new products introduced in late 2005 performing at or above expectations. OSIM is working towards new product introductions in 1Q06, and product streamlining to break the typical trend of the first three quarters. Year to date, Brookstone has opened 19 new stores and remodelled nine of the total 305 stores. No change to our positive view on OSIM. Reiterating 'buy' with a target price of S$1.95.
BUY - Compiled by UMA SHANKARI |
