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NRA Capital Pte Ltd

Written by: Jacky Lee

Thursday 5 Feb 2015

OSIM International – 4Q14 results review

4Q14 net profit down 0.67% yoy to S$27.4m

Share price looks attractive compared to its 5-year average historical PER band of 16.3x.

After a setback in 3Q due to overall weaker environment and the loss of sales to Brookstone. OSIM 4Q revenue recovered by +12.5% qoq but -1% yoy to S$177.7m. 4Q net profit dipped 1% yoy to S$27.4m, 2014 full-year earnings increased by 1% to S$102m compared to the year before. The group has declared a final dividend of 2 cents per share, bringing it to a total of 6 cents per share for 2014 (same as 2013).

OSIM International operates 842 outlets globally across its three businesses – OSIM (561), GNC (238) and TWG Tea (43).

Key takeaway from results briefing:             

  • Region contribution remains the same: North Asia 53%; South Asia 40%; the rest of the world 7%.
  • China, Hong Kong, Taiwan and Malaysia markets remains strong.
  • OSIM outlets reduced by 29 stores yoy to 561 outlets at as 31-Dec-2014 (mainly closing non-performing outlets in China). Management doesn’t expects more outlets to close this year, but will review continuously the performance of its outlets.
  • New products: uSqueez Air and uHip were launched last month. The group revealed these are selling well so far.
  • GNC/RichLife outlets reduced 7 stores yoy to 238 outlets. However, Taiwan was doing well for GNC last year and the group is targeting to open more stores in Taiwan this year.
  • Its TWG chain increased by 17 stores yoy to 43 outlets, mainly located in North Asia. Just opened its second outlet in Shanghai, expects 2 more this quarter, 1 will be located in Guangzhou. 
  • In total, the group is targeting to open another 15 to 20 new TWG outlets this year with capex guidance similar with last year at around S$23m.
  • After losing its trademark lawsuit case in Hong Kong July last year, TWG changed its name to TeaWG Hong Kong at IFC mall, the group targets 4 more stores to open in Hong Kong this year.
  • New TWG Tea outlets have opened with supporting infrastructure including central kitchens, one already done and the next kitchens will be in Beijing.


At S$2.02, OSIM is trading at 14.5x consensus PER in 2015, 12x in 2016 and 10x in 2017. Together with its strong balance sheet and reasonable yield of 3%, we view the share price to be looking attractive as compared to its 5-year average historical PER band of 16.3x. At 16x consensus PER, the share price could trade up to $2.23. Without M&A, we believe its new growth driver will come from TWG over the next two years.

Including fixed income investments of $34m, the group has total net cash of $276m as at 31 December 2014.


Additional Company Specfic ReportsDate
OSIM International – 4Q14 results review
5 February 2015

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