OSIM

OSIM: CS initiates with Outperform with TP$1.85 based on DCF valuations. Cites that OSIM has achieved 12 consec quarters of yoy earnings growth since return to profitability in 1Q09. House expects sales growth accelerating from a 7% CAGR to 14% CAGR from FY12-15. Multiple growth drivers are expected with store count to jump 27% to 1500 by FY15E end. The drivers expected are 1) its expansion in China, with increase of 50 OSIM outlets targeted per year and growth focused for RichLife in seven cities 2) Taiwan, given the stronger contribution from its new GNC franchise 3) increasing growth momentum from the TWG Tea deal At 11.1x FY12E P/E, valuations look compelling vs target FY12E P/E of 17.0x of China/HK speciality retailers and brand footwear/apparel names. Key risks include weak macro economy, execution risk, proliferation of counterfeits/lookalike products