You are here

Hot stock: Osim at one-year low, views from analysts

Wednesday, October 29, 2014 - 14:31

ALosim2910.jpg
Lifestyle products group OSIM International, which sells massage chairs, nutritional supplements and luxury tea, is in the midst of a dramatic sell-down on Wednesday.

LIFESTYLE products group OSIM International, which sells massage chairs, nutritional supplements and luxury tea, is in the midst of a dramatic sell-down on Wednesday.

As of 2.20pm, shares are trading at S$1.915, down 33.5 cents or almost 15 per cent. It last traded at this level more than a year ago.

The sell-off comes after OSIM reported a 28 per cent drop in net profit to S$16.4 million for its third quarter ended Sept 30, 2014, ending a long-running streak of increasing profits.

The profit drop was due to a mix of legal costs and startup costs for TWG Tea and a weaker consumer spending environment in Asia - even as margins for its core massage chair business are holding up.

sentifi.com

Market voices on:

CIMB Research, which had a target price of S$4.05 just four days before the results came out on Tuesday, admitted the latest results were "a shocker".

It slashed its price target to S$2.37.

Analysts Kenneth Ng and Justin Chiam said: "We think profits will stay weak before it gets better. There will be a lower share price to buy into this company."

Over at brokerage DMG & Partners, analyst James Koh maintained his "Buy" call, with a reduced target price of S$2.75, down from S$3.85. "We are confident the business remains fundamentally sound, but are cognizant that the operating environment is weak," he said.

DBS analyst Alfie Yeo kept his "Buy" call with a lower target price of S$2.59, from S$3.26. "Post earnings revision, the stock now trades more attractively at 15 times 2015 forecast earnings, at below +1standard deviation of its mean. We believe current valuations have priced in negatives, given that valuations are below peer averages of 18 times (earnings)," he said.

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom