Wednesday, October 20, 2010


Osim: 3Q10 results. Net profit +86% yoy, +7% qoq to $13m, as margins improved due to better pdt mix, lower other operating costs. However sales fell -5% yoy, -11% qoq to $117m, as mgt converted its GNC Australia into franchised outlets, albeit with better profitability...

Co continues to grow its distribution network, with no. of Osim outlets expanding from 566 to 584, RichLife outlets increasing from 196 to 217, in 3Q. Plans to open 20-30 more Osim outlets, 30 more RichLife outlets by year end, to achieve its target of 50-80 new Osim outlets, 60-100 new Richlife outlets in China per annum…

Despite the higher store count, we flag that China sales declined from $79m to $66m in 3Q, apparently as lower avg selling price more than offset higher volume sales. We would find this worrying if the trend continues into the next quarter.
Still, OCBC maintains Buy with $1.52 target. Stock trades at 17.5x consensus FY10E PE.

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