MARKET PULSE: OSIM Intl, KSH Holdings (8 Jun 2012)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.61

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

MARKET PULSE: OSIM Intl, KSH Holdings

8 Jun 2012

KEY IDEA OSIM International: Stronger position to weather a storm We expect OSIM International's (OSIM) earnings momentum to continue in FY12, underpinned by innovative product launches and its strong focus on improving productivity and operational efficiencies. We believe that OSIM is on track to deliver earnings that would exceed consensus' expectations of S$81.2m in FY12. OSIM has also developed a stronger brand equity and is in a better financial health since the last financial crisis, in our opinion. This would enable to group to withstand the current macroeconomic uncertainties. Recent share buyback activities would also enhance shareholder value and lend support to its share price. We retain our forecasts, BUY rating and fair value estimate of S$1.61, which implies total potential returns of 42.8%. (Wong Teck Ching Andy) MORE REPORTS KSH Holdings: Execution at redevelopments to be key The BCA is forecasting a 16% to 34% dip in total construction demand to S$21b-S$27b in 2012, with the bulk of the dip expected to come from lower private demand (S$8b - S$12b in 2012 versus S$16.8b in 2011). KSH has historically been focused on private projects given higher margins, and the weakened outlook would likely put downward pressure on its construction business over the mid-term. With net gearing at a low 4.1% and its expertise in construction, we see KSH well-poised to add value as a JV partner with larger developers. Already we have seen KSH taking stakes in the redevelopment of Hong Leong Garden Shopping Centre, Seletar Garden and 11 King Albert Park. We see execution at KSH's redevelopment projects to be key drivers for the share price ahead and could offset, to an extent, the weaker private construction outlook. Maintain HOLD rating at an unchanged S$0.25 fair value estimate. (Eli Lee)

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NEWS HEADLINES - US stocks lost much of Thursday's gains following Bernanke's comments that the Fed would review the economy before making a decision on further stimulus. - The People's Bank of China on Thursday lowered benchmark interest rates on loans and deposits. The one-year benchmark deposit rate will fall from 3.50% to 3.25% effective today. - SGX is launching dual-currency trading for ETFs on Jun 15th, enabling investors to trade foreign-currency denominated ETFs in Singapore dollars. - Olam International is acquiring Kayass Enterprises SA, a Nigerian maker of dairy and beverage products for US$66.5m. - Riverstone Holdings has awarded construction contracts amounting to ~MYR13m as part of its expansion plans to meet the increasing market demand for the group's cleanroom and healthcare gloves.