Osim

Osim achieved its 20th consecutive quarter of earnings growth, as 4Q13 net profit rose 22% to $27.6m, in tandem with a 16% growth in revenue of $178.6m. This brought its FY13 earnings to a consecutive 5th year record profit of $101.6m (+17%). Revenue for the quarter was mainly driven by high consumer demand for the group’s products like its uInfinity, uDivine App, uAngel and uPhoria Warm etc, while TWG Tea which became a subsidiary in Oct'13 further buoyed Osim’s top-line. Geographically, the three main regions which the group operates in, North Asia (+13%), South Asia (+17%) and others (+25%), all contributed to higher sales growth for the quarter, although bottom-line was weighed by a 91% rise in Other operating expenses to $103.8m (impairments of Brookstone and ONI Global), offset partly by a 880% spike in Other operating income of $46.5m (fair value gains of TWG Tea). For the year ahead, market watchers are expecting OSIM to launch a new product, aimed at replacing the highly successful uAngel, and other product enhancements to smaller products, while TWG is expected to be a significant growth contributor going forward. Following the consolidation, Maybank-KE estimates TWG to contribute around 10% of Group revenue currently, and will increase to 20% by FY16E. Overall, the group’s fundamentals remain solid with a net cash position of $113m, representing 15.6¢ per share, and at current price, Osim trades at 16.5x FY13 P/E versus regionbal peers average of 23x. To sweeten things up, Osim is proposing a 4Q Final dividend of 2¢ per share, taking FY13 total payout to 6¢ per share (FY12: 6¢). Latest brokers ratings as follows: Maybank-KE maintains Buy with $2.78 TP Credit Suisse maintains O/p with $2.60 TP OCBC maintains Buy with TP $2.90 UOB Kay Hian maintains Buy with TP $2.85