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Q1 2011 profit after tax and minority interests (Patmi) of $20 million (+150 per cent y-o-y, +19 per cent q-o-q), exceeded our and street estimates. This was achieved on the back of a 16 per cent y-o-y growth in sales to $149 million.
After adjusting for the $5 million write-off for GNC Australia in Q1 2010, Patmi grew 54 per cent y-o-y from $13 million to $20 million. We are raising our earnings estimates by 10-11 per cent for FY2011 and FY2012 and lowering our topline estimates by 5-6 per cent to take into account the lower priced albeit higher margin product mix.
In conjunction with Taiwan Depository Receipt (TDR) requirements, the group has declared an interim dividend of 1 cent/share and an official dividend policy of 10-30 per cent, going forward. Its TDR listing is slated for end May 2011.
We upgrade the stock to a 'buy' with a new TP of $1.84, still pegged to an unchanged 18x FY2011F earnings.
Expect higher margins from better product mix. Q1 2011 Patmi margins improved to 14 per cent (+4 percentage points y-o-y, +1 percentage point q-o-q). The expansion is attributed to a better product mix and a shift in manufacturing from Japan to China. We believe Patmi margin of 12 per cent (versus our previous assumption of 10 per cent) and sales growth of 20 per cent over FY2011-2012 is achievable, driven by new product launches and store expansion in China.
New products in pipeline for every quarter in 2011: The 'uDivine Sports,' targeted at men was unveiled at the Q1 2011 results briefing and will be launched in Singapore next month. It will be retailed at $8,800 compared to $5,000 for the normal uDivine range.
Other products in the pipeline include uDivine fashion for women, uJazz - the world's first 'Internet Massage Chair' - and 'uPapa Music Synch'.
Expansion on track: As at March 31, 2011, OSIM saw its store count dip from 608 in Q4 2010 to 595 as the group actively rationalises its stores, closing non-profitable ones. It still expects to open 60-80 outlets in 2011. For RichLife, it has 107 outlets and expects to have 200 by year end. For GNC, it has 158 outlets and growth in Malaysia is on track.
TWG plans: OSIM plans to target TWG's expansion into HK followed by Taiwan then China and Korea. It expects to open two stores in HK and one in Taiwan by end 2011. It will target China in 2012, starting with Shanghai. As TWG is not expected to have any material impact to earnings for FY2011, we have not included any earnings contribution for FY2011 and FY2012.
the best team in the world i reckon are the team that win money for me.
arsenal
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04-May 2011 Wednesday
12:14 AM (4744 days ago)
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04-May 2011 Wednesday
12:15 AM (4744 days ago)
