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Brokers' take update: Ron Sim's offer to privatise OSIM is a good exit price

Monday, March 7, 2016 - 16:31

Early Monday, OSIM International's founder and chief executive officer Ron Sim made a voluntary unconditional cash offer of S$1.32 a share to take the lifestyle company private. The offer price is S$1.30 a share excluding final dividends.

Mr Sim owns 68.31 per cent of OSIM.

The offer comes a month after OSIM reported a full-year net profit of S$51 million for 2015, down 50 per cent from 2014, even while revenue slipped 10 per cent to S$620 million.

Here are some analysts' comments:

sentifi.com

Market voices on:

CIMB, Kenneth Ng and Jonathan Seow:

"We believe that the offer was made to take out the company as it goes through a rough patch. OSIM's earnings has been hit by stalled discretionary spending in Asia, TWG startup expenses and a series of one-off costs."

"The outlook in the next year or so, is not great. A global slowdown is happening and a recovery in chair sales is not likely to happen in 2016. There would still be some legal expense and TWG expenses to book."

"For the minority, the offer represents a chance to exit and switch the capital to other bargains currently. For Ron Sim, the offer probably represents a positive three-year view on the company, when the macro environment should become kinder, one-off expenses would have all been flushed out and TWG starts contributing."

"...the offer represents a good exit price, in our view, for an investor with a 1-2 year investment timeframe."

"We believe minority shareholders should accept the offer. If Ron Sim gets close to the 90 per cent-mark, there might be grounds to speculate on a second offer, But, if the takeover offer falls way short of 90 per cent, we believe that would be unlikely."

OCBC Investment Research, Jodie Foo:

"The offer price represents a 31.8 per cent and 33.5 per cent premium to the volume weighted average price for the corresponding one-month and three-month periods respectively."

"The offer price also represents a significant premium of 61 per cent to our 12-month fair value estimate of S$0.82. Mr Sim intends to make the offer with a view to delist and privatise OSIM."

"Given the tough environment ahead and the lack of strong drivers for earnings, we view this offer to be reasonable and recommend shareholders to accept the offer."

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