Dismal Q1 results boost OSIM’s delisting prospects

Ron Sim is likely to re-list in the future.

After the company turned in unexpectedly weak profits in the first quarter of the year, analysts note that OSIM shareholders don’t have much choice left but bite founder Ron Sim’s privatization offer.

Kenneth Ng, equity analyst at CIMB, noted in a report that OSIM’s dismal poor Q1 performance showed that the group’s earnings recovery in Q4 was a mere blip. 

Ng added that new products are unlikely to reverse OSIM’s profits in the near term, particularly on back of weak demand in its key markets.

“In our opinion, the current S$1.39 (ex-dividend) privatisation offer is the best option on the table for investors. We do not doubt that Ron Sim will relist his business in future, when profits eventually recover,” Ng noted.

Meanwhile, OCBC Investment Research analyst Jodie Foo warned that OSIM’s core business segment is unlikely to post an earnings rebound any time soon, with the group rushing to shut down unprofitable stores across the region.

“We believe the core business segment is facing growth challenges and can no longer thrive as easily as in the past. As before, while TWG Tea offers room for growth in the longer term, the group is still seeing startup and operational cost pressures from this segment. We reiterate our recommendation to accept the offer,” Foo said.