Monday, March 7, 2011

OCBC reiterates Osim at Buy; strong fundamentals

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

OCBC reiterates Osim (O23.SG) at Buy with a fair value estimate of $1.96. It says the company’s resubmission of its TDR listing application is no cause for concern: “Management explained to us that the resubmission process (despite having no change in details) was due to technicality issues with regards to the use of treasury shares (vs ordinary shares)...there will still be no dilution to existing shareholders.” 

As before, Osim expects to raise $76 million, “and management also said that there would not be an impact on its expansion plans even if proceeds raised are less than what was estimated.” 

OCBC adds, Osim’s fundamentals remain strong: “The Hong Kong government recently announced its decision to hand out HK$40.5 billion ($6.59 billion) in cash and tax rebates from its latest Budget. This is likely to boost retail sales, and we believe that OSIM will be a beneficiary of this. We also expect sales from China to remain strong.” 
North Asia contributes 59% of Osim’s total revenue. The stock is off 0.6% at $1.56. 

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