Osim

Osim: Good set of 3Q12 results which was above expectations, in a seasonally weak 3rd qtr. Rev at $142.3m, +15% yoy and -8.2% qoq while net profit at $19.6m, +49.3% yoy and -12.9% qoq. Gross margins improved 2% to 69.7%, driven by a better product mix. Strong performance was led by strong sales and with more new products being introduced. Consumer demand continues to grow with OSIM products like uDivine App, uPhoria, uSoffa Runway, uPixie, uCozy, uRelax, uPebble, uHug, uBio and nutritional supplements like Taut Whitening, Zhi, Stem C and Liver Protector. North asia continues to lead sales, with 53% of rev from North Asia and 39% from South Asia. In China, grp is in 45 cities with 274 OSIM outlets. During the qtr grp focused on raising productivity per outlet and per man and increasing profitability. Add that Grp’s 207 GNC outlets are doing well. Overall, grp is focused on growth through innovation and productivity and growing brands and outlets. Grp fundamentals remain strong, with a net cash position of $37m and fixed income investments of $32m (total $69m) At current price, grp trades at 12.7x P/E (Ex cash basis at 11.9x). Co is recommending an interim dividend of 1c per share. Maybank KE maintains Buy, lifts TP to $2.10 from $1.90. CS maintains Buy with $1.90 TP.