OSIM: RHB maintains its Neutral call on OSIM with TP of $2.00, following the company's announcement to take up an 8.4% strategic stake in Trek 2000 International.
OSIM’s investment cost is $10.9m, representing an estimated 7x FY16F P/E and 6.4x EV/ EBITDA. It ought to add earnings of around $1.2m next year and is not expected to have a material impact on the company’s profitability initially, but could grow going forward.
OSIM has no board seats, but expects to add value to Trek 2000 by providing input into commercial aspects of the latter’s technology.
House believes SGD1.60 remains an excellent entry-price, which is based on 12x FY15F ex-cash P/E, its historical trough valuation.
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