OSIM: Reported FY10 results which were in-line with expectations, with Rev at $509m, +7% YoY, while Net Profit at $50m, +117% YoY. Strong growth was due to successful product launches, namely uSoffa Petit, uSoffa, uMama Warm, uPapa Hug IV and uDivine and FY10 results was the highest ever in Co’s history....
Net margins also expanded to 9.8%, +5 B.P. from 4.8% in FY09, due to new product innovation, better operating efficiency and more effective shop & salesman productivity. Going forward, Grp remains confident that OSIM will remain Asia’s No1 brand in well being and healthy lifestyle products and will take position to build and enhance its market leadership position....
In terms of product innovation and competitive positioning, grp expect to create higher consumer demand in the coming year with the launch of one to two major products every qtr and targets to raise productivity per outlet and man to increase profitability. In China grp is in 42 cities, and have 270 OSIM outlets and plan to open another 60 to 80 outlets this yr....
We note that at current price, grp trades at 23.3xFY10 PE vs its historical average of 27.3x, suggesting further slight upside for share price. Macquarie retains Buy Call with $2.06 TP tipping re-rating story to continue with organic expansion in China, while stock is still at a large unwarranted ~35% discount to China consumer plays.
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