FY13 results were within expectations with recurring net profit up 16% YoY to SGD101.6m. It was a record year for OSIM, while 4Q13 was a record quarter in terms of revenue and net profit. Dividend for the full-year was unchanged at 6 SGD cts.

Some one-off items were recorded during 4Q13, but their net impact was negligible. The company ended FY13 with a cash hoard of SGD299m.

We expect profit growth to further strengthen in FY14 as the company consolidates TWG, now another pillar of growth.

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.  

Source: Maybank Kim Eng Research - 28 Jan 2014