OSIM Flexes Its Muscles

And risks straining them.

This article’s Return On Investment:

- Latest deals may be over-stretching OSIM
- Brookstone in Asia
- OSIM to spend S$10-12 million this year


OSIM Lifestyle Store at Raffles City Shopping Center

Adding two big names to its stable sure looks good on paper but analysts warn OSIM had better watch its intake.

It may be on the brink of a burnout.

Here is OSIM’s workout regimen for the year:

1.Finalise the Brookstone deal
2.Bring Brookstone into Singapore and Hong Kong
3.Finalise the Global Active (GA) acquisition
4.Help GA restructure its newly-acquired Australian operations
5.Restructure China operations and turn them into subsidiaries


CFO Peter Lee is happy to explain Brookstone

With so much on his plate, it is no wonder why Chief Financial Officer Peter Lee’s family “doesn’t get to see much of me, even when I’m in town.”

Frequent flying aside, Lee must also work his figures to bring down debt, after borrowing to pay for Nasdaq-listed Brookstone.

“We are taking a five-year loan for the acquisition but we are targetting to pay down faster than that because we have strong cash flow,” Lee tells phoneCAST.

In spite of such assurances, analysts worry the convergence of these deals are placing pressure on management.

OSIM has already appointed several of its directors to the board of Osim Brookstone Holdings LP.

It is also helping GA to restructure its Australian chain.

In addition to those, Lee says they are in the midst of turning their China operations into subsidiaries.


Geezers enjoying the OSIM iDesire

So is OSIM overworking those muscles?

Lee doesn’t think so.

He says he doesn’t have to manage Brookstone’s operations because Brookstone’s existing executives are doing that.

For now, at least.

“The current CEO (Michael Anthony) will continue as chief and will manage the Brookstone business going forward,” says Lee, “together with current management team members.”

Of course, things will be different when Brookstone comes to Asia.

Lee says Brookstone could arrive in Singapore and Hong Kong as early as the end of this year.

On the positive side, GA and Brookstone have collectively boosted OSIM’s presence to over 900 stores worldwide.

According to Lee, that’s just a small step away from hitting his target of 1,000 stores by 2008.

That doesn’t seem like a bad deal, considering how OSIM intends to maintain its annual reinvestment in the business of S$10-12 million.

Investors will keep their fingers crossed they haven’t bitten off more than they can chew.