Money Talk: Osim, Frasers Centrepoint Trust, Mapletree Industrial Trust

Osim's current products and shop front. -- PHOTO: OSIM 
Osim's current products and shop front. -- PHOTO: OSIM 

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. Osim

Broker: Maybank Kim Eng

Osim is now a highly established brand in its key markets. It is a capex-light business as most of the heavy lifting has been done in prior years in terms of store count expansion. By year-end, we estimate the company will be sitting on net cash of almost $300 million and generating free cash flow in excess of $100 million.

Much is remembered of Osim's unsuccessful $144m acquisition of a majority stake in US-based retailer Brookstone, but the market was initially sceptical when it invested just $118 million in ONI (GNC) and TWG, which have turned out to be great contributors.

With TWG's maiden consolidation, we expect Osim to report revenue growth of 16 per cent year-on-year in Q1 despite muted consumer sentiment in Singapore and Malaysia. We also expect net profit to grow 15 per cent year-on-year to $28.9 million and are keeping our forecasts intact for now.

With its net cash pile having grown substantially, we believe it is fair to account for that separately. This takes our target price up to $3.45 (previously $2.78).

2. Frasers Centrepoint Trust (FCT)

Broker: OSK-DMG

Frasers Centrepoint Trust reported Q2 distribution per unit (DPU) of 2.88 cents, above our quarterly run-rate at 2.75 cents.

Portfolio performance was strong across the board (except for Bedok Point due to ongoing refurbishment), which contributed to revenue growth of 2.9 per cent to $41 million and net property income growth of 2 per cent to $29.3 million.

FCT's portfolio enjoyed 9.3 per cent higher rental reversion with portfolio occupancy at 96.8 per cent (due to ongoing asset enhancement initiatives at Bedok Mall).

We maintain our earnings forecasts as cumulative first-half DPU of 5.38cents accounts for 49 per cent of our FY2014 estimates. FCT currently trades at 6 per cent FY2014 DPU yield.

Maintain Neutral with a target price at $2.27 as we prefer higher yielding sub-sectors like Grade A office and Industrial Reits.

3. Mapletree Industrial Trust (MIT)

Broker: CIMB

MIT reported Q4 revenue of $75.2 million (up 4.2 per cent year-on-year) and distribution per unit (DPU) of 2.51 cents (up 7.2 per cent year-on-year), mainly driven by rental revenue growth for all property segments and rising occupancy of the flatted factories.

MIT recently announced its largest build-to-suit project to date, a $250m project for Hewlett-Packard Singapore. On completion in 2017, the project is expected to boost DPU by about 9.7 per cent, bringing about the next stage of growth for MIT.

With about 29 per cent of total debt due in FY2014-FY2015 to be refinanced, we are confident that MIT's management will continue to take advantage of the current cheap lending environment and refinance these debts before they are due.

On the back of further room to grow both organically and inorganically, we maintain our Add rating with an unchanged target price of $1.64.