MARKET PULSE: OSIM, LMIRT, Roxy-Pacific (4 Jan 2013)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.14

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.52

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.54

MARKET PULSE: OSIM, Lippo Malls Indonesia Retail Trust, Roxy-Pacific

4 Jan 2013

KEY IDEA OSIM International: Weaving its magic for the new year We believe that OSIM International (OSIM) would be a key beneficiary of a recovery in economic conditions in China, which is its largest market. Looking ahead, we expect OSIM to continue its product innovation drive, with plans to launch two new massage chair models in 1H13 to augment its product portfolio. Management has also embarked on a nationwide media advertising campaign in China to increase its reach to new audiences. These initiatives, coupled with a focus on improving productivity, would help to drive its sales and profitability for FY13, in our view. Despite OSIM's recent strong share price run up, we see room for further re-rating given the improved market risk appetite and its attractive valuations versus its peers. We raise our fair value estimate on OSIM from S$1.87 to S$2.14 as we apply its peers' average forward PER of 16.4x to its FY13F EPS. Maintain BUY. (Wong Teck Ching Andy) MORE REPORTS Lippo Malls Indonesia Retail Trust: LT pipeline from Lippo Karawaci According to a Bloomberg article dated 21 Dec 2012, PT Lippo Karawaci, Indonesia's largest listed property company and LMIRT's sponsor, will have finished building about half of the 15 new malls it has plans for by 2015, in cities such as Semarang in north Java, Denpasar in Bali and Manado in north Sulawesi province. Starting from a lower base of development, we believe that some of these cities should see higher rates of retail growth than Jakarta. These malls could serve as a longer term pipeline for LMIRT. We maintain our fair value of S$0.52 and BUY rating on LMIRT. (Sarah Ong) Roxy-Pacific Holdings: Acquiring another site at Wilkie Terrace The group announced yesterday that it has agreed to acquire a freehold residential site at 13 and 15 Wilkie Terrace for S$24.5m. The land area is 9,324 sq ft; with a plot ratio of 2.1, this translates to a total GFA of 19581 sq ft and land cost of S$1,251 psf. Management indicates that it intends to amalgamate this site with a another site in its land-bank (7,9,11 Wilkie Terrace) for a residential development. We believe the price paid for the site is reasonable, especially given that the acquisition would give the group more flexibility in planning a larger scale project at the area. For this counter, however, we believe most positives are priced in at current price levels. Maintain HOLDwith an unchanged fair value estimate of S$0.54. (Eli Lee)

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NEWS HEADLINES - US stocks fell on Thu after the Fed signalled a likely end in 2013 to its bond purchases, offsetting upbeat jobs data from the private sector. The Dow and S&P 500 index each fell 0.2% to 13,391.36 and 1,459.37, respectively, while the Nasdaq finished 0.4% lower at 3,100.57. - Singapore's manufacturing activity shrank for a sixth straight month in Dec due to further declines in new orders, new export orders and production output, as purchasing managers' index dipped to 48.6 from 48.8 in Nov. - Three plots of industrial land in Tuas released under the Industrial Government Land Sales programme in Nov drew keen interest and bids from multiple developers, suggesting that demand for industrial property remains robust. - Second Chance Properties' 1Q13 net profit fell 10% YoY to S$3.4m as revenue slid 0.2% to S$9.4m, due mainly to a decline in revenue at its gold business as a result of rising gold prices which deterred buyers.