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Riding the storm with Osim

Bullionstar

Bullionstar

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The current stock market mayhem may represent a perfect opportunity for investors to enter the market but then again, it is important to refrain from timing the market. You never know whether the correction is the start of a long term bear trend or just a short term flip. In this regard, Osim is riding the storm finely.

Regardless the situation, it is important to set an entry or exit point in your stock investments. Apart from this, wealth builders must understand the importance of allocating wealth across different asset classes like gold bullion.

Gold and Silver Bullion

Gold and Silver Bullion

One of my favourite stocks that I have been monitoring is Osim, a Singapore-based company with substantial overseas market reach, especially in China. The current China’s slowdown is expected to have significant impact on Osim but under the leadership of its founder, the company is likely to ride the storm.

Osim was founded by local entrepreneur, Ron Sim Chye Hock. The company is well known for its luxury massage armchair and over the years, Ron Sim has transformed Osim to a powerhouse lifestyle company with more than 1,100 outlets in over 360 cities across 28 countries. What is more impressive is that Ron has single-handedly established a strong Singapore brand name, similar to successes enjoyed by global companies like Starbucks and Apple. On this note, I respect Ron Sim for his achievement as an entrepreneur.

Osim’s stock prices powered to an all-time high on 2014, reaching the price level of $2.90 on the back of an incredible 21 consecutive quarters of profit growth as reflected in the company’s 2013 annual report. Since then, the counter has been in free fall mode, partly due to the China’s economy slowdown. Will Ron Sim be able to steer Osim out of this stormy sea? I am confident that he will, as he had done so in previous recessions indicated in my previous post.

Many investors tend to perceive Osim as a technology stock, presumably because of its track record of releasing a huge variety of massage armchairs and its accessories. However, to classify it as a technology stock is a mistake because it is actually a healthcare stock which also sells blood pressure monitoring machines and air purifiers. It also owns the health supplement chain, “Richlife” and also boutique tea brand, “TWG Tea”.

Over the years, the company has been actively buying back its shares. As of 3 November 2015, the company has amassed 37 million treasury shares. When a company has been buying shares from the market, it signifies that its management is confident of its business growth and prospect. Fundamentally, Osim’s financial health is strong, with current assets at $543 million and total liabilities at only $358 million. The Return-on-Equity (ROE) has slowed from 44% in 2012 to 23% in 2014. Nevertheless, a ROE above 20% still presents an exciting growth prospect.

I am not vested in this counter but am closely monitoring this stock.

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SG Wealth Builder

 

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Updated: October 31, 2017 — 1:55 pm

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