OSIM International (Maybank)

First Look At The New Chair

uInfinity soft-launched in Hong Kong.

eagerly awaited new chair, which has just been soft-launched in Hong

Kong. This chair will replace the existing uDivine, which has been the

flagship for the past three years. Initial selling price was HKD46,800,

almost 35% above the existing uDivine App. Singapore’s selling price

would likely be in the SGD6,000+ range. This will likely be softlaunched

in Singapore and China over the next few weeks.We had a firsthand look at the

Getting closer to the human hand.

immediately was the much better massage mechanism, even compared

to uDivine which was considered a revolutionary technology. The leg

portion has also been given a significant upgrade, feeling similar to the

popular leg massager uPhoria. The chair feels much more snuck, owing

to the slightly smaller profile, though the sales assistant was quick to

assure that even plus-sized customers can still fit comfortably!Upon testing, what struck us

No significant change in design.

underwhelmed by the similarity in design to its predecessor. Our view is

that this could result in less power drawing in customers at the shops,

and OSIM would have to run an effective marketing campaign to

counteract this. We understand there are plans in place, which will

come in during the official launch.We were however, slightly

Previewing 2Q13 results.

the 30

growth of 15% and 18% (SGD26.5m) respectively. Growth will likely be

driven by sale of the uAngel, which will have a full quarterly effect and

some spillover orders from 1Q13. Gross margins may see a marginal

downtick due to the lower prices of uAngel, though we would expect

this to be balanced against higher prices of the uInfinity.OSIM will announce after market close onth July. For the quarter, we are expecting revenue and profit

Maintain BUY.

revenue estimates. Earnings upside could come from better than

expected sales of the new flagship massage chair, which we estimate

accounted for as much as 50% of sales historically. Our TP of SGD2.53

remains pegged to 18x FY13F (translates to 20X upon exercise of

convertible bonds), implying 1x PEG. Maintain BUY.We trim our earnings forecast by 2-3% on lower

OSIM International – Summary Earnings Table

FY DEC (SGDm) 2011 2012 2013F 2014F 2015F

Revenue 553.7 601.7 682.6 759.4 846.2

EBITDA 111.8 126.6 149.1 167.9 189.3

Recurring Net Profit 69.1 86.9 102.4 116.6 132.7

Recurring EPS (SG cents) 9.2 12.0 14.1 16.1 18.3

DPS (SG cents) 3.0 6.0 6.8 7.2 8.2

PER (x) 22.3 17.1 14.5 12.8 11.2

EV/EBITDA (x) 12.8 11.2 9.5 8.2 7.1

Div Yield (%) 1.5 2.9 3.3 3.5 4.0

P/BV (x) 9.3 7.6 6.0 4.7 3.9

ROE (%) 41.7 44.3 41.1 37.2 34.3

ROA (%) 16.2 18.5 20.0 20.2 20.5

Consensus Net Profit na na 100.6 113.8 129.7

Source: Company, Maybank KE estimates