OSIM INTERNATIONAL LTD
O23.SI
OSIM International: 42% decline in PATMI for 1Q16
- OSIM International Ltd (OSIM) released its 1Q16 results yesterday evening.
- 1Q16 revenue was down 7.7% YoY to S$138.3m, which met 22- 23% of consensus and our full year estimate. However PATMI fell 42% to S$7.8m, forming only 13-15% of consensus and our full year estimate.
- As performance in their core markets remain soft, management cited adopting a cautious approach towards investing and opening new stores. They will also continue to rationalize unprofitable stores.
- We believe the core business segment is facing growth challenges and can no longer thrive as easily as in the past.
- As before, while TWG Tea offers room for growth in the longer term, the group is still seeing startup and operational cost pressures from this segment.
- Understandably, OSIM has also dropped its interim dividend vs. the 1 S-cent/share last year.
- We reiterate our recommendation to accept the offer.
Jodie Foo
OCBC Securities
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http://www.ocbcresearch.com/
2016-04-20
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