OSIM: Maybank-KE has cut its FY15/16 earnings estimates for the lifestyle product maker, citing lacklustre consumer spending in China, Hong Kong and Malaysia, and slashed its TP to $1.75 from $2.08 ahead of its 2Q results on 23 Jul.
China’s automobile sales saw its first y/y decline (-2.3%) in Jun, a magnitude not seen in more than two years, as demand appears to have been sapped by its recent stock-market rout.
Hong Kong’s retail sales continued to drift down for the sixth consecutive month, save for a festive Chinese New year bump in Feb.
In Malaysia, retail figures have held up but the Malaysia Retailers Association recently revised down its 2015 retail sales growth projection for the third time, from 4.9% to 4%, on the back of ringgit weakness.
Meanwhile, the house expects earnings to be volatile as OSIM continues to build a base for its next growth phase, underpinned by:
- TWG tea business expansion
- Minority stakes in HK-based cosmetics company Laboratoires du Palais Royal and Singapore-based technology solutions provider Trek 2000.
Maybank-KE maintains its Hold rating in the counter and expects the upcoming 2Q15 earnings to show a 33% drop to ~$20m.
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