OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.19

Market Compass

22 March 2013~ Good Morning Singapore!

Singapore Idea Snippets:

22 March 2013~ Good Morning Singapore! Central Execution Team - Trading For A Living This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : I have just three things to teach: simplicity, patience, compassion. These three are your greatest treasures. - LAO TZU Singapore: The Day Ahead SINGAPORE DAYBOOK: EU gives Cyprus bailout ultimatum, risks euro exit NICOSIA - The European Union gave Cyprus till Monday to raise the billions of euros it needs to secure an international bailout or face a collapse of its financial system that could push it out of the euro currency zone. In a sign it was at least preparing for the worst, the Cypriot government sought powers on Thursday to impose capital controls to stem a flood of funds leaving the island if there is no deal before banks reopen following this week's shutdown. In stark warnings earlier in the day, the European Central Bank said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy. MARKET SCOOP SembMarine's unit gets exclusive licence for MFPs Rickmers issue gets 39.92% undertaking Singapore Feb inflation seen higher on Lunar New Year: Poll Bouchard exercises option for barge unit from ST Engg JTC awards two industrial plots inTuas South Armarda unit ties up distributorship deal with China Telecom Satellite OCBC Securities says... OSIM INTERNATIONAL | BUY | TP: S$2.19 Jitters over the economic growth of China, which is OSIM International's (OSIM) largest market (~25% of revenue), recently resurfaced again, following disappointing industrial production and retail sales figures we believe that our revenue forecast for FY13 has already taken into account the uncertainties over China's economic growth, as it is 2.8% below Bloomberg's consensus forecast We believe the efforts put in place by management to enhance its product appeal through innovation and productivity gains to boost its margins, which also showcases the resilience of OSIM's business The uAngel Sofa-Tranzformer, one of OSIM's new flagship products for 2013, was first launched in Malaysia and Hong Kong at the start of the year We view this as an important development for OSIM as uAngel allows management to capture a new target group of young working female adults and thus provides a platform for OSIM to diversify its customer base OSIM's next product pipeline would be a new high-end massage chair (selling price likely to be comparable to uDivine), and we expect this to be launched in 2Q or 3Q 2013 and endorsed by international artiste Andy Lau Maintain BUY with an unchanged fair value estimate of S$2.19, still pegged to 16.4x FY13F EPS DBS VICKERS Securities says... SOUND GLOBAL LIMITED | BUY | TP: S$0.81 SGL was sold down after its weak 4Q12 results, CFO departure and the ensuing management shuffle It is the cheapest water stock in the region, trading at >40% discount to peers' average of 15x PE Visibility backed by record EPC backlog and growing base of recurring O&M revenue FY13/14F earnings adjusted by -5%/+12% respectively Surging interest expense and delayed execution are key risks; privatization/M&A could be a catalyst TP lowered to S$0.81, but there is still 62% potential upside; valuation stands at >40% disc to regional peers, Maintain BUY DBS VICKERS Securities says... EZION HOLDINGS | BUY | TP: S$2.42 Ezion has secured a charter contract worth US$48.2m over three years to provide a service rig for an international oil company in the Arabian Gulf region This is Ezion's fourth charter contract for 2013, bringing YTD contract wins to US$290m The economics of the project look good, with lower upfront investment costs and operating costs, and we estimate this contract to generate high ROE of close to 58% with 52% EBIT margins, and yield US$7m net profit annually No impact to our FY13F numbers, but our FY14F net profit estimate is raised by 3.5% after including contribution from this latest contract win Maintain BUY for its high earnings visibility and undemanding valuations of 13x/ 8x FY13/14 PE against a solid FY12-14F estimated EPS CAGR of 67%