Osim's Brookstone files for bankruptcy

Will Osim's earnings be badly hurt?

According to OSK, the wsj yesterday highlighted that U.S. specialty retailer Brookstone, majority-owned by Osim, has filed for chapter 11 bankruptcy as a result of being unable to service its debt burden.

Here's more:

Osim had fully provided for its equity investment in Brookstone back in 2009 and more recently, made a SGD31m impairment provision for its investment in Brookstone’s preferred notes.

As such, there will not be any financial impact from this latest turn of event. On a separate note, Osim’s core business of selling lifestyle products and massage chairs is currently in tip-top shape, leading the competition in terms of brand awareness and product innovation across Asian markets.

The uDiva, replacing the widely successful UAngel, will debut today with Korean superstar Lee Min Ho as its ambassador. A new growth driver comes in the form of TWG, the premium retail tea chain which Osim secured a majority stake last year. 

TWG has clearly established as a premium product and Osim intends to scale up TWG aggressively from the current 26 stores to 45 by year end. We continue to like Osim for its steady execution and upgrade our T.P from SGD2.60 to SGD3.04 based on SOTP valuation.