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Buying OSIM On Chinese Love Affair
Tradeable, Tradeable Ideas | 07 August 2014
By: Raymond Leung
Articles (142) Profile
  1. OSIM reported 10 percent increased sales ($183 million) and 13.1 percent growth in net profit ($29.5 million) in its 2Q14 financial report card.
  2. Strong quarter attributed to OSIM products and TWG tea. Both of which experienced robust growth in the greater China region.
  3. OSIM intends to add another 12 TWG outlets by this year as well as the release of new OSIM products.

Analysts' updates on OSIM International

OSIM International (OSIM) announced its results for 2Q14 which saw strong revenue for the group. Sales increased by 10 percent year-on-year (YoY) as it grew from $165 million to $183 million. The increase in revenue led to a net profit of $29.5 million for 2Q14 which is a 13.1 percent growth from a year ago.

The group saw increased demand for various segments of its business. These include OSIM products, nutritional supplements, and TWG tea.

OSIM’s strong quarter was mainly attributed to OSIM products and TWG tea. On the other hand, ONI Global, OSIM’s nutritional supplements division saw conservative growth.

OSIM saw a surge in demand for OSIM products in the greater China region. This is due to the featuring of its product in a Taiwanese variety show that is very popular in the region.

TWG’s increased its presence in the greater China region as it opened more outlets and launched products that were aimed at the Chinese market. Introduced tea products included the Imperial Oolong & Tie Kuan Yin tea which was developed to fit the taste buds of the Chinese.

OSIM's growing financials are in major part due to its stake in TWG tea.

To sustain the sales for OSIM products, the firm will be launching uBuddy, uSqueeze, and a new flagship massager in 2H14. Growth for TWG is expected to continue as the firm is adding another 12 outlets by the end of this year. Currently, TWG has 33 outlets but will be bringing total outlets to 45 by the end of 2014.

The new outlets for TWG will be targeted at the increasingly affluent Chinese market as the new outlets will be opening at the Taipei 101, Shanghai Grand Gateway & IAPM, and Guangzhou Tai Koo Hui. Concurrently, the group will be closing the retail shops that have been underperforming.

OSIM’s management expects its business to remain strong for the rest of 2014. An interim dividend of $0.02 was declared which is the same as last year. In view of the dividend and potential growth, Maybank Kim Eng Research gave OSIM a “Buy” call with a potential profit of 23.7 percent.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

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