OSIM - DMG raises target price for OSIM to $1.57

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD
Research House: DMG

DMG & Partners has raised its target price for massage chair maker OSIM International <OSIL.SI> to $1.57 from $1.32 and maintained its “buy” rating.



STATEMENTS:

DMG has raised its earnings estimates for OSIM’s 2010-2012 financial years by 20-24% to take into account higher margins arising from a better product mix, economies of scale and improved profitability in the firm’s GNC Australia outlets.

The brokerage raised its target price for OSIM based on 17 times the firm’s 2011 earnings, adding that it anticipated the market to raise earnings forecasts in light of OSIM’s stronger-than-expected third quarter results.

OSIM reported a 86% increase in third quarter net profit to $13 million from a year ago mainly due to higher sales and margins. 

DMG said all of OSIM’s 35 GNC Australia outlets have been converted into franchises, which has led to an increase in sales per outlet by 20-30%.

The brokerage added that OSIM’s launch of its new massage chair next month is expected to contribute to its fourth quarter earnings, and the firm's plans to open another 20-30 outlets in China are on track.

At 0206 GMT, OSIM shares were up 2.8% at $1.12 on a volume of 4.8 million shares.