Towards Financial Freedom
OSIM International - Roadshow takeaways
We recently hosted OSIM for a roadshow to Malaysia. Response was positive with excitement over newly-launched uAngel for its attractive price point. Among the key highlights, we learnt the product replacement cycle is 3-5 years with 30% repeat customers. Majority of Chinese consumers prefer to shop in department stores hence 90% of OSIM stores in China are within them. We raise our FY13-14F earnings marginally by 2% and raise our valuation multiple from 16x to 17x to derive a new higher TP of SGD2.22. Re-iterate BUY.
uAngel opens up new younger target market. uAngel's sweet SGD2,000 price tag/ MYR4,900, coupled with 12-24 month interest-free installment payment options has opened up a new target market for the Group. The uAngel has been launched in Malaysia and Hong Kong and will be launched this month in Singapore and Taiwan. It will be introduced to China next month.
Andy Lau chair to be launched in June/July. The new chair to replace uDivine will have a price point of SGD5-6k and be launched middle of this year.
Product replacement cycle: 3-5years with 30% repeat customers. Almost all clients raised the questions on the product replacement cycle. It is 3- 5 years with 30% repeat customers. Many trade-in old chairs, which fetch a value of SGD800. Old chairs are destroyed and not re-sold.
90% of China stores within department stores. Majority of Chinese and Taiwan consumers still prefer to shop in department stores hence 90% of OSIM stores are located within them. We also note 95% of Chinese customers pay upfront in cash vs other markets where customers prefer to pay under installments. The receivables in the Group's balance sheet is due to China as the department stores take around a month to pay OSIM back net of
commission.
commission.
Shortlisting franchisees in international markets. The Group is shotlisting franchisees for USA and Europe. They might open flagship stores there in big cities but China will still remain the focus and main driver of earnings.
Source: OSK
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