Tuesday, August 19, 2008

Why I do not own a single OSIM stock

Was thinking about this Singapore company OSIM. I once did a report on its branding back in university days.

Sad to say, a good company is not a good stock.

OSIM is perhaps trading at one of its lowest prices ever (even below its IPO price). Revenue has dropped. Profits? None.

I was once into this stock thinking that it was one of those business that could grow to become a super brand like Coke or something. Good thing I exited the stock for a small profit after intuition told me that something was just not right.

Whenever I passed by an OSIM shop, I could not help but notice how empty the shops were. While it is true that alot of people say that based on the profits they get from selling 1 x Massage chair, they did not need to have customers filling up their shops everyday. While that might be true to some extent, it did not seem like people were buying OSIM chairs either.

Let's put it this way: I have visited many houses and I have not seen that 1 x Massage Chair that is being sold. 30 days, should at least sell 30 OSIM chairs. Given the number of point of sales (POS) they have around in Singapore, shouldn't these chairs be seen in every other household in Singapore. There are 4 over million people in Singapore, but how many in these 4 million own an OSIM chair? I don't own one. My family does not own one. My extended family does not own one. My friends don't have it in their houses (okay, one of my friend's dad has one. Just ONE of my friends). So apart from seeing these products at all the various outlets and also Changi Airport, I have only seen 1 x OSIM chair in all the houses of people that I have visited. And this is an observation that I have made over close to 5 to 6 years now.

Well, you may argue that perhaps some people just buy their smaller products. But again, how much profit can that earn? And if people are buying their small products, these products must sell in huge qty. Again, I do not see people flocking or crowding out the OSIM outlets. Zero. Just empty OSIM outlets no matter which part of Singapore. There can be lots of human traffic but the only people trying out the OSIM products are often the sales people themselves.

Don't get me wrong. I think OSIM is a wonderful Singapore company. They have made much headway in expanding to other countries. They have done much to create a special Singapore brand. Who has not heard of OSIM in Singapore? But the fact is while they have a strong brand, not a huge percentage of the population in Singapore are using their product. I go to a hawker centre and I see people drinking coke or green tea (think F&N). I see people taking public transport everyday (think SMRT, Comfort Delgro). I see buildings owned by Suntec REITs, Ascendas REITs, etc. I see people eating Sakae Sushi (Apex Pal). I just do not see people using OSIM products. Not in public and certainly not many use them in their homes.

OSIM is a good company in terms of their branding. But they would need to do much more than branding to make their products sell. It is simply too small a market. I spend on food, housing, petrol, car, electricity, phone bills, internet bills (Singtel), cable TV bills (Starhub). But if I am not spending a monthly sum or a one time sum on OSIM products, I will not buy a single stock in OSIM. That would be lying to myself that I have found a great business when I do not even own a single product from OSIM.

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