Will the market snatch up OSIM's uSoffa Runway and uDivine App?

OSIM seems to have learned the lessons of the last financial crisis and is forecasted to generate S$80.8-89.5m of FCF over FY12-13F.

Sales of uDivine massage chair and uPhoria leg massager remained robust. The uSoffa Runway and uDivine App is also expected to bolster sales growth. Rationalisation of non-performing outlets and focus on improving its productivity could result in OSIM expanding its net margin from 12.5% in FY11 to 13.7% in FY12.

Here's more from OCBC Investment Research:

Expecting earnings momentum to continue. OSIM International’s earnings momentum is expected to continue in FY12, following its recent solid 1Q12 performance. During the meet up with OSIM recently, management updated that demand for its uDivine massage chair and uPhoria leg massager continued to remain robust. The launch of new products such as the uSoffa Runway and uDivine App to further drive its sales growth. In addition, the rationalisation of non-performing outlets and focus on improving its productivity underpins the forecast for OSIM to expand its net margin from 12.5% in FY11 to 13.7% in FY12.

OSIM seems well-positioned to deliver earnings that would exceed consensus’ expectations of S$81.2m in FY12, if it manages to sustain its current growth trajectory and operational efficiencies.

Healthy balance sheet to weather the macro uncertainties. While the macroeconomic environment continues to be with fraught with volatility and uncertainty, OSIM’s healthy balance sheet, at a net cash of S$52.7m as at 31 Mar 2012, and strong free cashflow generating ability to buttress its financial resilience. OSIM seems to have transformed itself into a stronger entity with a healthier financial position and better brand equity since the last financial crisis. OSIM is forecasted to generate S$80.8-89.5m of FCF over FY12-13F. This would bolster the group’s capacity to pay out decent dividends.

Meanwhile, OSIM’s share buyback activities in recent weeks seems likely to enhance shareholder value, lend support to its share price and send a positive signal to investors.

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