• Strengthening brand and product visibility
• Retail scenes still seems soft
• Share buybacks in a bid to support price

Sales traction for flagship chair may improve

OSIM International Ltd (OSIM) had previously mentioned that we would see more marketing initiatives for their new flagship massage chair, uMagic in the second half of this year. The company has recently revealed its brand ambassadors to be Singapore’s celebrity couple Fann Wong and Christopher Lee.

More A&P was done for its smaller massage product, uHip for the local market as well. We note that OSIM also took good advantage of the current haze situation to promote its air purifier uAlpine (worth S$699), which has been featured under the National Environmental Agency’s list of portable air cleaners and suppliers. Such A&P initiatives may likely improve sales traction, particularly for their flagship chair in 4Q.

But increased concerns on a macro level

Soft retail scenes and macro environment remain in the group’s other core markets such as China, and latest data on Singapore suggests a similar picture. OCBC Treasury Research & Strategy suggests that the SG50 Jubilee celebrations in August may not have helped much to boost domestic consumption, and they see an increased risk of a technical recession in 3Q15 for Singapore following a disappointing NODX performance. Mirroring the concerns on the local economy is the slightly weaker consumer confidence level in September according to the ANZ-Roy Morgan Singapore Consumer Confidence Index.

Engaged in share buybacks again

The company had continued its share buybacks from 17 Sep onwards with the most recent done yesterday evening. Shares were acquired within a price range of S$1.50 to S$1.64/share. Amid the equity market rout, OSIM's CEO Mr Ron Sim has purchased shares at about S$1.50/share or lower since the company's release of 2Q15 results in August. Note that the stock has been trading ex-dividend from 28 Sep, with DPS of 2 S-cents declared. Maintain HOLD, with fair value estimate of S$1.52. Meantime, we would also await updates on the on-going legal disputes.

Source: OCBC Research - 29 Sep 2015