OSIM

OSIM: MKE highlights the company as a rare pan-Asian company with true brand equity, from its pricing power and consistently high margins. Long term prospects remain bright as the company firmly controls upstream manufacturing and retail outlets. MKE is expecting TWG to contribute to a 2ppt growth in EPS growth to 19% this year, and estimates TWG to currently contribute towards 10% of group revenue, following OSIM’s increased stake to 70%. Additionally, OSIM is expecting to regain traction in China (30% of sales) following a successful market campaign in 2H13. Sales in North Asia have been lackluster relative to South Asia over the past 2 years. The sheer size of the North Asian market offers OSIM the best long term potential. Net cash hoard of $113m also bodes well for acquisition opportunities, key characteristics of OSIM’s targets include those scalable, with solid branding in the mid-to-high end segment, which management is robust in driving the business. MKE rates a Buy for OSIM with a TP of $2.78, pegged to a 18x FY14e P/E.