Osim International Limited (O23)

Source: OSIM website

Happy CNY to all readers! It has taken me forever to post this as I've been busy and truth be told, I don't blog about all the stocks I research on a daily basis as I just can't afford the time. Time = $$$ and I need to make some $$$ everyday. It seems that most readers who drop by are interested in local stocks so I'm trying to do more of such posts.

ACCICB was looking at Osim International Limited (Osim) so I was curious and decided to take a look since TWG Tea is definitely what I would call a rising star under the BCG product matrix. Plus he told me that the price had plunged since the issuance of convertible bonds in September last year so I figured it was worth a look.

Osim's revenue stream come from 4 business units namely OSIM, GNC, RichLife and TWG Tea. I find these 4 brands compliment each other as they are all within the realm of the health and lifestyle industry. It is reminiscent of Reckitt Benckiser Group plc focus albeit at a smaller scale.

OSIM requires no introduction as its products such as massage chairs are always endorsed by mega stars such as Andy Lau, Sammi Cheng, Lee Min-ho etc. Personally, I've used their products before but still prefer a human massage therapist thus I'm an unlikely convert. I would think that OSIM still contributes to the bulk of the company's revenue through the strength of its brand and its business strategy of constantly launching new products really ensures that it is being kept in the consumer's top of the mind awareness.

Oni Global Pte Ltd (Oni) is the sole franchisee for GNC in Singapore, Malaysia, Taiwan and Australia. It also owns the RichLife franchise in China. Oni also distributes nutraceutical products such as supplements, vitamins, minerals, herbs and functional foods. I would think that this retail setup would come under fire as markets evolve and people turn to buying these items online, which is exactly how the U.S. market has become for the vitamin and supplements industry. Maybe this is where 1/3 of the money from the convertible bond issuance would be used for potential M&A acquisitions to strengthen this business segment.

Of all the divisions, I am most upbeat on it's TWG business segment which has been growing rapidly as seen by the opening of new outlets. However, Osim does not provide a revenue breakdown of it's business segments, instead it does a breakdown through geographic regions which is pretty much of little use to us since the company is concentrated in Asia. As I am unable to ascertain whether TWG is able to provide continuous and high growth, it makes me stop short of investing in it for the long term.

The other issue I had with Osim was that it has revenues in multiple currencies and at this point where I am suspecting a currency war, I am hesitant to invest in companies that are exposed to too many currencies. As we all know, it is tough to successfully hedge for multiple currencies regardless whether you are doing it individually or otherwise. I think it is made worst when your base currency is in SGD which is not as widely traded as USD, JPY, GBP etc. In addition, not 100% of a company's  FX exposure is being hedged most of the time which leads to the risk of losing part of their revenue gains should the market move against them.

Management wise, it is run by Ron Sim who also owns 62% of shares and succession plans are a question mark which is typical of many home grown companies listed and otherwise. This would not sit well with credit although there are ways to mitigate this risk. As a shareholder though, you tend to worry if you are indeed holding this counter for the long term which I hardly do nowadays with the market being as fluid as it is.

The current price of 1.98 is ok I guess although I told ACCICB that it would have been better to purchase it when the price was at 1.80! For those who had done that, a big Congrats to you!

Comments

  1. SillyinvestorFebruary 22, 2015 at 3:56 PM

    Hi Joyce,

    I was looking at Osim not too long ago, albeit preliminaryly

    My colleague pass me a TWG tea bag for tea once, and I must say it really taste fragrance and different!

    I do think its a possible growth engine the only bug I have is yield ...

    Nice post and happy new year to you!!

    ReplyDelete
    Replies
    1. Joyce LeongFebruary 22, 2015 at 6:17 PM

      Hi Sillyinvestor,

      Thanks for dropping by and Gong Xi Fa Cai to you too! I was also similarly introduced to TWG by ACCICB's colleague whom we call TWG girl because it seems she only dines there! I think TWG is at a good place right now and dividend yield is dismal which from observation is quite typical of owner managed listed companies on SGX. Thus I usually trade such companies if there's an opportunity ;)

      Delete

Post a Comment

Popular posts from this blog

A tale of two stocks

Once in a while say a year or two later, I will be very kaypoh and look at the past stocks that I’ve analysed before just to see how it’s doing. I may or may not have invested or traded in that stock but it just takes one second to click on the link and see the chart. I would have remembered it’s previous price so the current chart can either make me have 3 reactions. Oh chey, it’s the same or not much difference, Wow look at it go to heaven or Wah Kao this one die liao.  For the first reaction I usually just leave the stock be but for the other two reactions, I will go and take a look at my past analysis to see whether I’ve “predicted” it’s future. Two stocks caught my eye as one went to the sky and one straight to hell. Both were similar in the sense that they faced crises except that one managed to turnaround whereas the one in the depths of hell have a long way to go. Let’s start with the one in hell which is  Capita  which I did a sort of write up on in 2014. ...
Read more

Are you exchanging time for money?

Time is the most precious commodity on Earth. Or maybe it should be oxygen because without it we would just die! Assuming that our basic needs are met ensuring our survival, then time is more valuable than money although some may argue that money can be used to buy time. It's true in some situations and not in others. For example, money can help to relieve you of some mundane tasks so that you have more time to do things that you like. But money can't buy you time with your loved ones if their time is up. If you hate your job, you may feel like you are exchanging your time for money especially as you count down the minutes, days, weeks, months or even years to a new job or to a new endeavour that hopefully won't make you dread getting out of bed everyday. Sometimes I think we forget how precious time is and waste it like it is always there. In a way time is like oxygen, we breathe every second until we forget its very existence until it is taken away from us. The tim...
Read more

True or False: Guaranteed minimum of 40% returns

I had some difficulty thinking of what to write in this post and as I read the posts of other bloggers, I thought that I should share about my Chinese beautician who is an excellent source of stock market ideas and everything from China.  Basically we talk about stocks almost all the time since she invests in purely Chinese stocks. Currently ACCICB covers Chinese stocks so I've been thinking of starting my research and who knows I may pick up some stocks along the way. Back when we both didn't know that the other invests/trade, we already get along since we bitch to each other about work and I find her rather similar to me in terms of personality. I admire her candor among other characteristics and over the space of many years, we have become rather close. I do worry when she wants to return back for good and as she will be going home for a month, she told me that she knows of this scheme in China which seems like a deal too good to be true except that it's tru...
Read more