Towards Financial Freedom
OSIM - Expect Stronger Subsequent Quarters
OSIM reported a 13.2% increase in 1Q13 earnings of SGD25.1m on the back of unchanged sales of SGD150.6m. An interim dividend of 1.0 cent was declared. Earnings are in-line with expectations. We expect stronger subsequent quarters driven by backlog orders for uAngel as well as from the much anticipated new chair to replace uDivine. Reiterate BUY with an unchanged TP of SGD2.22.
- 1Q13 earnings of SGD25.1m in-line. While sales remained static for the quarter, earnings grew by 13.2% to SGD25.1m, driven by a 1.9ppt in net margins from 14.8% to 16.7%. This is on the back of an increase in gross margins as well as operating efficiencies.
- Sales volume of chairs for the quarter doubled, thanks to uAngel. During the results briefing, it was revealed that the sales volume of chairs for the quarter has doubled, driven by demand for the affordable uAngel priced at SGD2,000. This chair has opened up an entirely new market for the Group which includes young single families who pay by credit card with just monthly installments of SGD55.
- Expect stronger subsequent quarters. Going forward, we stronger subsequent quarters which will be driven by: 1) Backlog orders for the uAngel which will flow through to Q2. Revenue is only recognised upon delivery of a product; 2) The launch of the new chair to replace uDivine. Superstar Andy Lau will remain the face of its premium chair and it was revealed that the price will be higher than the current uDivine.
- Management bullish on China. CEO Ron Sim expressed his confidence on the Chinese market saying April numbers have been
strong despite concerns over the slowing Chinese market. He is very confident in maintaining OSIM's dominance in the five core markets of - China, Hong Kong, Taiwan, Malaysian and Singapore. - Better reception from foreign investors. During recent roadshows to the USA and UK, management revealed they have received more
positive feedback from institutional investors who are now more receptive over the idea of massage chairs.
Source: OSK
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