SINGAPORE (Nov 2): Maybank Kim Eng is keeping its “hold” call on OSIM International with a target price of $1.49, with a view that the recently announced Q3 numbers should be a trough for this year.

For the three months to Sept 30, OSIM's earnings dropped 38% y-o-y yo $10 million, which prompted analysts to trim their earnings estimates. Maybank Kim Eng, for example, had cut its FY15 to FY17 EPS forecast by 23 and 25% respectively. Its revised target price of $1.49 represents a 15times FY16 earnings.

Maybank Kim Eng is optimistic that OSIM would be able to turn its tea subsidiary TWG profitable in the coming year, led by rapid expansion in franchising, which is seen as a low-cost but highly profitable way of expanding.

In addition, OSIM is maintaining, or even improving its market position in the product which it is famous for: massage chairs. During Q3, total share of OSIM's sales of massage chairs rose to 70% from 60-65%. “We are encouraged by this as it suggests OSIM is not losing market share. Further, it also suggests each store can still sell 1-2 high-end chairs a week, which is encouraging in a downturn,” states the brokerage.

As at 11.03am, OSIM shares were up 2.5 cents to $1.385.