Towards Financial Freedom
OSIM INTERNATIONAL - More special dividends in the offing?
OSIM reported a 20% YoY growth in 2Q12 earnings of S$22.5m, which are within expectations. We were pleasantly surprised with a special 1 S'' dividend in addition to an interim 1 S'', which brings total payout in 1H12 to 3 S''. Given the Group's highly cash generative business and cash hoard of S$196m (net: S$54m), we believe management will continue to reward shareholders with special dividends down the road. Afteradjusting for higher dividends and lower taxes, our FY12-14F earnings have been raised by 8%. The Company has been aggressively buying back its shares, purchasing 82.5m shares, out of which 50m has been cancelled. We believe this continued buying will provide limited downside risk to stock price. We remain bullish on the stock and raise our TP by 8% to S$1.75, still pegged at 15x FY12F earnings. OSIM remains our top pick in the Singapore consumer space.
Raising earnings on lower taxes in 2H12. 1H12 earnings grew 15% YoY to S$44.7m, in-line with expectations, accounting for 56% of our FY12F. Sales have so far been broad based across all marketswith North Asia accounting for the bulk of it at 57%. 1H12 net margins grew by 1.2ppt to 14.7%, against our estimate of 13.4% for FY12F largely due to a lower tax rate. We now assume lower FY12-14F tax rates of 23% (compared to FY11's 29%, owing to a one-off S$3.5m tax provision).
Expect more special dividends. Apart from reducing our tax assumptions, we have also raised our dividend assumptions to include a special 1 S'' annually in FY13-14F. At last closing, the stock offers investors a 3.5% dividend yield.
Source: OSK
Raising earnings on lower taxes in 2H12. 1H12 earnings grew 15% YoY to S$44.7m, in-line with expectations, accounting for 56% of our FY12F. Sales have so far been broad based across all marketswith North Asia accounting for the bulk of it at 57%. 1H12 net margins grew by 1.2ppt to 14.7%, against our estimate of 13.4% for FY12F largely due to a lower tax rate. We now assume lower FY12-14F tax rates of 23% (compared to FY11's 29%, owing to a one-off S$3.5m tax provision).
Expect more special dividends. Apart from reducing our tax assumptions, we have also raised our dividend assumptions to include a special 1 S'' annually in FY13-14F. At last closing, the stock offers investors a 3.5% dividend yield.
Source: OSK
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