(08-05-2015, 11:31 AM)Clement Wrote: [ -> ] (08-05-2015, 03:29 AM)roxhockey Wrote: [ -> ]You and I both know that noone is lending to Osim at a cheaper rate than you can get on a fixed deposit.
The upper ends of those rates are different currencies (with higher base rates) and the conversion option has real value which you're not including in your effective interest rate.
No view on Osim but it is a valid question what all the debt is for, and its not improving the capital structure like an above poster said if its just going to sit in excess cash.
We don't know what the currency breakdown or product structure the fixed deposits comprise of. Per the AR, most of the fixed deposits are held at parent company level, but we are unable to get a breakdown on the interest on those deposits.
The conversion option means that Osim is indirectly short call options on its own shares, indirectly a hedge against stalling growth. The transaction took place when Osim shares were trading at $2.80, so management was taking advantage of low cost equity funding. The low share price now offers the company a chance to hedge its exposure cheaply by performing buybacks, which the company is doing.
If interest rates rise and growth continues to stall, bond holders might redeem the bonds in 2017 instead of being locked in at low yields till Sept 2019. The conversion option is of course of significant value when the bonds were first issued. The value is significantly lower now with growth sputtering. I would think that management probably knew about the coming slowdown when issuing the bonds.
I view the bond issue as an opportunistic transaction by the management. Taking advantage of the chance to secure funding at favourable terms.
management must be laughing to the bank right now, make money from public and use that money to do share buyback and increase their own holdings %. Wonder if they are still thinking of expanding into Russia and Turkey. Maybe can use that as excuse to do another round of money raising.
if it drop back down below 10cents, it will become a classic story on the SGX. Cant recall any share that has had such crazy performance in such short a span of time.
-eagerly awaiting 5 cents and worms to crawl out of the massage chairs-
The reason why OSIM got to 5 cents a few years back was the combination of two main factors leading to a perfect storm: the Brookstone saga and the onset of the GFC. Will something cataclysmic as these come up once more in the near future? My opinion - happy waiting lol.
(10-05-2015, 08:58 PM)BlueKelah Wrote: [ -> ] (08-05-2015, 11:31 AM)Clement Wrote: [ -> ] (08-05-2015, 03:29 AM)roxhockey Wrote: [ -> ]You and I both know that noone is lending to Osim at a cheaper rate than you can get on a fixed deposit.
The upper ends of those rates are different currencies (with higher base rates) and the conversion option has real value which you're not including in your effective interest rate.
No view on Osim but it is a valid question what all the debt is for, and its not improving the capital structure like an above poster said if its just going to sit in excess cash.
We don't know what the currency breakdown or product structure the fixed deposits comprise of. Per the AR, most of the fixed deposits are held at parent company level, but we are unable to get a breakdown on the interest on those deposits.
The conversion option means that Osim is indirectly short call options on its own shares, indirectly a hedge against stalling growth. The transaction took place when Osim shares were trading at $2.80, so management was taking advantage of low cost equity funding. The low share price now offers the company a chance to hedge its exposure cheaply by performing buybacks, which the company is doing.
If interest rates rise and growth continues to stall, bond holders might redeem the bonds in 2017 instead of being locked in at low yields till Sept 2019. The conversion option is of course of significant value when the bonds were first issued. The value is significantly lower now with growth sputtering. I would think that management probably knew about the coming slowdown when issuing the bonds.
I view the bond issue as an opportunistic transaction by the management. Taking advantage of the chance to secure funding at favourable terms.
management must be laughing to the bank right now, make money from public and use that money to do share buyback and increase their own holdings %. Wonder if they are still thinking of expanding into Russia and Turkey. Maybe can use that as excuse to do another round of money raising.
if it drop back down below 10cents, it will become a classic story on the SGX. Cant recall any share that has had such crazy performance in such short a span of time.
-eagerly awaiting 5 cents and worms to crawl out of the massage chairs-
Brookstone was a lifestyle chain in the US that OSIM finally divested after it went into bankruptcy proceedings last year.
TWG is a luxury tea chain which OSIM has acquired for aggressive expansion in china. Like brookstone i am pretty sure they are planning to IPO TWG Tea at some stage once they have enough expansion and stores in china to qualify for IPO.
With the clampdown on luxury spending in China, we can see that profits are already starting to take a hit.
5 cents should not be hard to imagine if the bubbly stock market in China and HK come tumbling down. Dun think the luxury tea and luxury massage chair businesses will be doing well. A lot of luxury brands are shuttering stores now in China.
Will revisit this thread again when this perfect storm occurs again, otherwise just like stratech, another waste of time counter
I beg to differ. As China becomes a more consumption based economy as its middle class continues to expand, consumer companies like Osim catering to this segment of the market should do well. Currently, Osim's balance sheet is much stronger than the Brookstone days, with a net cash position. Therefore, probability that the share price would plummet to such drastic levels is almost zero. The recent pullback offers a good entry point for those who believe in the long-term potential of the company.
(10-05-2015, 11:55 PM)BlueKelah Wrote: [ -> ]Brookstone was a lifestyle chain in the US that OSIM finally divested after it went into bankruptcy proceedings last year.
TWG is a luxury tea chain which OSIM has acquired for aggressive expansion in china. Like brookstone i am pretty sure they are planning to IPO TWG Tea at some stage once they have enough expansion and stores in china to qualify for IPO.
With the clampdown on luxury spending in China, we can see that profits are already starting to take a hit.
5 cents should not be hard to imagine if the bubbly stock market in China and HK come tumbling down. Dun think the luxury tea and luxury massage chair businesses will be doing well. A lot of luxury brands are shuttering stores now in China.
Will revisit this thread again when this perfect storm occurs again, otherwise just like stratech, another waste of time counter
I have visited a few TWG stores. Can't see the market. Maybe my timing is wrong. I just could not understand how they make money from it.
(11-05-2015, 09:00 PM)corydorus Wrote: [ -> ]I have visited a few TWG stores. Can't see the market. Maybe my timing is wrong. I just could not understand how they make money from it.
i was gonna ask this question about the foot traffic at TWG stores as well, seems like you read my mind! LOL
They likely don't make much from it.
High end products with endless money raising and exponential expansion.
If it sounds too good to be true, it usually is.
(11-05-2015, 09:00 PM)corydorus Wrote: [ -> ]I have visited a few TWG stores. Can't see the market. Maybe my timing is wrong. I just could not understand how they make money from it.
Osim sells TWG to airlines and hotels.
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As chairman Ron Sim pointed out, Osim is not Mcdonald's or BreadTalk, depending more on volume to boost the topline. You can't expect stores selling massage chairs and other more expensive products to be crowded all the time.
(11-05-2015, 10:00 PM)BlueKelah Wrote: [ -> ] (11-05-2015, 09:00 PM)corydorus Wrote: [ -> ]I have visited a few TWG stores. Can't see the market. Maybe my timing is wrong. I just could not understand how they make money from it.
i was gonna ask this question about the foot traffic at TWG stores as well, seems like you read my mind! LOL
They likely don't make much from it.
High end products with endless money raising and exponential expansion.
If it sounds too good to be true, it usually is.
(12-05-2015, 10:54 AM)Teletubby Wrote: [ -> ]As chairman Ron Sim pointed out, Osim is not Mcdonald's or BreadTalk, depending more on volume to boost the topline. You can't expect stores selling massage chairs and other more expensive products to be crowded all the time.
Go down to Jimmy Choo and compare the foot traffic there. hehe
Or how about The Hour Glass?
during the weekends should be a good comparison.
Pretty sure I saw more people there the last time, not crowded but at least not as empty.