Osim

Osim: Announced 3Q11 results which was below bullish estimates, partly back of a one-off $3.5m tax provision. Rev at $123.6m, +5.9% yoy and -10.4% qoq, while net profit at $13.1m, was flat yoy and -28.9% qoq. Result brings 9M11 rev to $411m, +9.3% yoy and Net Profit to $52.0m, +57.6% qoq, forming 69% of FY11 average analysts forecast. Ebitda margins at 20.4% was however a major improvement vs 13.8% yoy.

9M11 saw a 9% yoy increase in sales, driven by the launch of new innovative products and better product mix. Sales momentum of uDivine, uSoffa, UPapa Music, uCrown Pro, Taut, Zhi and other key products remained strong, with North Asia accounting for 57% of grp’s rev, while South Asia made up 37%.

Going forward, grp remains positive on prospects and expect to continue dominating its market position and leader as Asia’s #1 brand in well being and healthy lifestyle products, and will continue to grow sales, create sustainable profits and build positive operating cashflow.

We note that balance sheet remains strong, with grp in a net cash position of $61m, and at current price, valuations are compelling, with grp trading at an annualized 11.9x FY11E P/E vs historical average of 28.6x P/E. DMG maintains Buy with $1.55 TP.