Osim

Osim: has again increased its shareholding in TWG Tea, this time from 53.7% to 70%. This arose from a rights issue by TWG to raise $25m. The funds will be used mainly for expansion in 2014 and to repay a bank loan and a shareholder loan. Osim expects the transaction to be earnings accretive in FY14. Last wk, Osim was hosted at DBSV’s corporate conference and met with close to 70 institutional investors. Key takeaway is that Osim continues to be capable of delivering sustainable earnings growth over the next few years. Growth is expected to be positive this year, driven by OSIM chairs, with the introduction of recent models uAngel and uInfinity and newer versions of existing chairs. Meanwhile, TWG will continue growing as it doubles its store count in 2014 with aggressive expansions of TWG stores planned all over North Asia, Southeast Asia and the Middle East, and earnings contributions of new stores expected to kick in from 2015. DBSV has a Buy rating on Osim with TP $2.60.