Singapore Company Focus

OSIM International Refer to important disclosures at the end of this report

Bloomberg: OSIM SP | Reuters: OSIL.SI

DBS Group Research . Equity

6 May 2015

HOLD S$1.93 STI : 3,471.19

Weak earnings

Price Target : 12-month S$ 1.82 (Prev S$ 1.94) Reason for Report : Change in earnings/TP Potential Catalyst: Recovery in chair sales Where we differ: Contrarin view that chair sales will slow

Andy SIM CFA +65 6682 3718 [email protected]

Price Relative Relative Index 220 2.9

200 180

2.4

160 140

1.9

120 100

1.4

80 0.9 May-11

May-12

May-13

OSIM International (LHS)

Forecasts and Valuation FY Dec (S$ m) Revenue EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (S cts) EPS Pre Ex. (S cts) EPS Gth (%) EPS Gth Pre Ex (%) Diluted EPS (S cts) Net DPS (S cts) BV Per Share (S cts) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Consensus EPS (S cts): Other Broker Recs:

May-14

60 May-15

Relative STI INDEX (RHS)

2013A 648 140 129 102 98 14.0 13.6 18 15 12.9 6.0 36.0 13.8 14.2 12.3 9.5 3.1 5.4 CASH 43.5

2014A 691 158 132 102 108 13.4 14.2 (4) 4 12.8 6.0 56.3 14.4 13.6 12.6 7.9 3.1 3.4 CASH 28.8

2015F 707 149 126 97 97 12.5 12.5 (7) (11) 12.5 6.0 63.3 15.4 15.4 11.7 8.2 3.1 3.1 CASH 20.9

2016F 753 158 135 104 104 13.4 13.4 7 7 13.4 6.0 70.7 14.4 14.4 11.1 7.4 3.1 2.7 CASH 20.1

B: 7

(10) 13.8 S: 1

(14) 15.5 H: 3

ICB Industry : Consumer Goods ICB Sector: Leisure Goods Principal Business: OSIM is in the business of marketing, distributing and franchising of a comprehensive range of healthy lifestyle products.

Source of all data: Company, DBS Bank, Bloomberg Finance L.P

www.dbsvickers.com ed: JS / sa: JC

1Q15 earnings below expectations, dragged by weak consumer sentiment across all markets



Dividend of 1 Sct declared



Cut FY15F/FY16F earnings by 10%/14%

 Maintain HOLD with lower TP of S$1.82 1Q15 underperformed. OSIM turned in weaker than expected results. Earnings of S$13.5m (-53% y-o-y) significantly underperformed our and consensus’ estimates. The drag came from a disappointing topline and higher opex. Revenue declined 13% y-o-y to S$150m with weakness seen across all markets. Key declines were from OSIM’s massage products. GNC held steady while TWG was supported by new stores. A 1 Sct dividend for the quarter was declared, in line with our expectations.

Analyst Alfie YEO +65 6682 3717 [email protected]

S$



Slowing near term outlook. We believe chair sales are slowing. Revenue growth has been declining in the last few quarters despite new product launches (uAngel, uInfinity, uShape etc.). Consumer sentiment is soft and chair ASPs have reduced. TWG remains too small to cover for any decline in chair sales. We do not believe there are significant drivers that will turn consumer sentiment around in the immediate term. Lowering earnings estimates. We lower FY15F/FY16F earnings by 10%/14%, led by a slower 1Q15 performance. We cut our store count assumption on less aggressive expansion. We have also imputed higher staff costs and other operating expenses. We expect FY15F earnings to lag FY14 due to the drag in 1Q15 earnings, but we anticipate a slight turnaround and recovery in FY16F on store expansion, new products and better contribution from TWG. Maintain HOLD with lower S$1.82 TP. In line with earnings reduction, we cut our TP to S$1.82, based on 14x blended FY15F/FY16F EPS. Valuations at 14-15x forward earnings are now close to its three year average levels. Upside is capped on weak outlook, but we do not see major downside to valuations. Maintain HOLD. At A Glance Issued Capital (m shrs) Mkt. Cap (S$m/US$m) Major Shareholders Chye Hock Sim (%) Capital Research Global Investor (%) Free Float (%) Avg. Daily Vol.(‘000)

771 1,489 / 1,118 63.9 5.0 31.1 1,326

Company Focus OSIM International

INVESTMENT THESIS Profile Osim is a retailer and brand owner of healthy lifestyle products. The company is the brand owner manufacturer and retailer for the Osim line of massage chairs and related products worldwide; a sole franchisee for the GNC chain of nutritional supplement retail sores in Singapore, Malaysia, Australia and Taiwan; and a majority owner of the TWG brand of high end luxury tea cafes and saloons.

Rationale Weak regional consumption outlook  Real wage growth in Singapore has declined while discretionary spending in Malaysia is expected to be weak on lower fuel subsidies and upcoming GST implementation. Hong Kong registered its lowest retail sales growth since 2009 in 2014 and with China's ongoing anti corruption campaign, consumption for discretionary high end goods and services is expected to be softer.   Higher cost outlook  With TWG opening more stores regionally, start up costs would dampen margins going forward. Furthermore, legal costs in Hong Kong and Singapore are expected to be expensed in 2015, which will add to higher costs. Potential IPO opportunities in the long term  Osim is a brand owner of Osim, GNC and TWG. We see opportunities in the future where management can potentially float any of these brands as independent listed companies to further unlock shareholder value.Osim has a strong balance sheet with a net cash position.The massage chair market has low penetration in Asia. The potential for growth is therefore huge.  

Valuation Our target price of S$1.94 is based on 14x FY15F earnings. OSIM is a growth company, which is expanding very quickly in key markets of Singapore, Malaysia, Hong Kong, China and Taiwan. As such, we see earnings growth as an integral part of OSIM’s fair valuation. Our 14x PE valuation pegs the stock at +0.5 SD of its historical mean.

Source: DBS Bank

Page 2

Risks Regional consumer sentiment  OSIM retails consumer products regionally. The business is therefore sensitive to changes in regional consumer sentiment.   Potential share overhang  Convertible bond holders are in the process of converting their bond holdings into shares. Additional shares out in the market could potentially cause an overhang in the trading of OSIM’s shares.  

Company Focus OSIM International

1Q15 results disappoints Below expectations. OSIM turned in a set of weaker than expected results. Earnings of S$13.5m (-53% y-o-y) significantly underperformed our and consensus estimates. The drag came from a disappointing topline and higher opex. Revenue declined 13% y-o-y to S$150m with weakness seen across all markets. Our view of weak regional discretionary spending had been spot on. Decline in topline sales across all markets. OSIM’s massage products which contribute to a majority of sales, was a key reason for the slowdown. There were no new key product launches in 1Q15. GNC sales were stable, while TWG relied on new stores to support its performance. Higher opex. Gross margins remained stable. However, opex was higher with increases in staff costs and other operating expenses. Staff costs were higher by 3.6% y-o-y, with revision in basic salaries even as sales were sluggish. Other operating expenses as a percentage of sales increased to 37% (31% in 1Q14, 33% in 4Q14). The higher cost was also led by startup/pre-opening expenses for TWG, increases in rental expenses, and legal costs. Declining revenue growth trend Revenue growth has been masked by TWG consolidation. We were previously concerned that that growth was coming off. The revenue growth trend without TWG’s consolidation has in fact been declining. On the back of weak consumer sentiment, the revenue decline in 1Q15 was worse than expected. Revenue growth (ex-TWG consolidation) has been declining yoy (%) 20

TWG consolidation

15 10 5

Chairs have been pulling down revenue growth… Management does not disclose revenue by individual markets and by brands (OSIM, TWG, GNC). But we do know that OSIM’s chairs account for a majority of sales, followed by GNC and TWG. We believe the decline in chair sales is significant enough to cause a drag in revenue. Chair sales in Singapore and Malaysia have been weak. GNC sales are stable while TWG is growing. But, TWG’s contribution is still too small to make up for poor chair sales. …despite new product launches, TWG consolidation. The sales decline has in fact played out in the midst of 1) TWG’s consolidation; and 2) new product launches (ie uAngel, uInfinity, uShape etc.). The weak results suggest poor end demand for massage chairs. With the introduction of lower priced chairs (uAngel in the S$2,000 bracket), OSIM needs to generate higher unit sales to make up for any sales slowdown of every top end (S$7,000 bracket) chair. No significant drivers to turn soft consumer sentiment around. OSIM launched uMagic in 2Q14, a new chair in the S$5,000 price bracket, with two more smaller massage products due to be launched this year. Despite positives in new product launches, we believe that weak consumer sentiment will continue to suppress performance going forward. Legal costs for court cases in Singapore and Hong Kong could weigh down on earnings as well. Cut FY15F/FY16F earnings by 10%/14% FY15F to trail FY14 earnings led by poor 1Q15 results. We factor in 1Q15’s earnings disappointment and slower than expected performance into our forecasts. We cut our store count assumptions as management’s store expansion plans are now less aggressive. We impute higher staff costs and other operating expenses to account for more investment into growing TWG. We now expect FY15F earnings to lag FY14, dragged by the poor 1Q15 earnings. We do however anticipate turnaround and recovery in FY16F on the back of a lower FY15F earnings base.

0 1Q13

2Q13

3Q13

4Q13

(5) (10) (15)

Source: Company, DBS Bank

Page 3

1Q14

2Q14

3Q14

4Q14

1Q15

Valuation Maintain HOLD, TP S$1.82. While we have highlighted weaker FY15F outlook for OSIM, we also expect management to drive longer term recovery in FY16F with accelerating store expansion, new products and better contribution from TWG. Valuations at 14-15x forward earnings are now close to its three year average levels. Upside is capped on weak outlook, but we do not see major downside at average valuations. In line with our earnings cut, we derive a lower TP of S$1.82 based on 14x blended FY15F/FY16F EPS. Maintain HOLD.

Company Focus OSIM International

Results Summary and Comparison FY Dec (S$m)

1Q14

4Q14

1Q15

YoY Chg

Sales

172.6

177.7

149.8

-13%

-16%

Cost of Goods Sold

(50.6)

(54.1)

(44.0)

-13%

-19%

Gross Profit

122.0

123.5

105.8

-13%

-14%

3.7

3.5

4.0

7%

13%

Distribution Costs Administration Expenses R & D and other expenses

(30.4)

(28.8)

(31.6)

4%

10%

(5.4)

(5.4)

(5.5)

2%

2%

(53.4)

(58.7)

(55.1)

3%

-6%

Other Operating Expenses

(89.3)

(92.9)

(92.2)

3%

-1%

36.4

34.2

17.6

-52%

-49%

Other Operating Income

EBIT

QoQ Chg

Non-Operating Income

0.0

0.0

0.0

n/m

n/m

Interest Income

1.3

1.8

1.2

-9%

-33%

Interest Expense

-1%

(1.4)

(1.2)

(1.2)

-12%

Share of Associates' or JV Income

0.5

(0.1)

0.4

-9%

nm

Exceptional Gains/(Losses)

0.0

(0.7)

0.0

n/m

n/m

Pretax Profit

36.8

34.0

18.0

-51%

-47%

Tax

(7.8)

(6.3)

(4.9)

-37%

-22%

Minority Interests

(0.1)

(0.3)

0.5

nm

nm

Net Profit

28.8

27.4

13.5

-53%

-51%

Margins (%) Gross Margin

70.7

69.5

70.6

SGA % Sales

51.7

52.3

61.5

EBITDA Margin

24.2

22.3

15.4

EBIT Margin

21.1

19.2

11.7

Pre-tax Margin

21.3

19.1

12.0

Net Margin

16.7

15.4

9.0

Source: Company, DBS Bank

Page 4

Company Focus OSIM International

Key Assumptions FY Dec

2012A

2013A

2014A

2015F

2016F

844.0 0.7

871.0 0.7

841.0 0.8

852.0 0.8

882.0 0.9

2012A

2013A

2014A

2015F

2016F

Revenues (S$ m) North Asia South Asia America / Africa / Europe /

335 230 37

353 250 45

366 279 46

362 303 42

393 316 43

Total

602

648

691

707

753

2012A

2013A

2014A

2015F

2016F

602 (181) 421 (306) 115 0 2 (3) 0 115 (28) 0 0 87 87 129

648 (193) 455 (332) 123 0 3 0 3 129 (28) 0 0 102 98 140

691 (205) 486 (351) 135 0 1 2 (6) 132 (30) 0 0 102 108 158

707 (212) 495 (372) 122 0 2 2 0 126 (29) 0 0 97 97 149

753 (226) 527 (396) 131 0 2 2 0 135 (31) 0 0 104 104 158

8.7 7.5 6.5 25.9

7.6 8.6 6.9 16.9

6.7 13.0 9.8 0.6

2.3 (5.7) (9.6) (5.2)

6.5 5.7 6.9 7.3

70.0 19.2 14.4 48.1 19.3 26.7 52.0 42.6

70.3 19.0 15.7 43.5 17.7 21.9 44.5 278.4

70.4 19.6 14.8 28.8 13.3 16.7 45.7 NM

70.0 17.3 13.7 20.9 11.0 12.8 47.9 NM

70.0 17.4 13.8 20.1 11.1 12.7 44.6 NM

Store count Blended sales per store Segmental Breakdown FY Dec

Income Statement (S$ m) FY Dec Revenue Cost of Goods Sold Gross Profit Other Opng (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Net Profit before Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x)

Source: Company, DBS Bank

Page 5

Reduce store count assumption

Margins Trend 21.0% 20.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 2012A

2013A

Operating Margin %

2014A

2015F

2016F

Net Income Margin %

Includes S$5m assumption of undisclosed legal fees

Company Focus OSIM International

5.8 2.6 4.2 2.4

(13.4) (24.1) (29.0) (44.5)

12.3 20.1 26.9 67.1

(15.7) (40.5) (48.6) (50.7)

70.7 21.1 16.7

70.4 20.8 16.2

70.9 17.0 10.4

69.5 19.2 15.4

70.6 11.7 9.0

2012A

2013A

2014A

2015F

2016F

Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets

21 47 59 222 54 38 30 471

25 18 219 291 73 42 12 680

36 18 211 456 72 44 15 852

46 20 201 505 73 45 15 905

55 22 192 559 78 47 15 969

ST Debt Creditor Other Current Liab LT Debt Other LT Liabilities Shareholder’s Equity Minority Interests Total Cap. & Liab.

25 90 32 117 7 196 4 471

155 107 35 0 39 271 73 680

17 96 43 168 36 438 54 852

17 99 43 168 36 489 54 905

17 105 43 168 36 546 54 969

1 80 24.0 119.6 114.3 1.3 2.3 1.8 CASH CASH 8.5 6.1

(15) 136 22.6 201.2 128.9 1.1 1.4 1.1 CASH CASH 7.4 4.6

(9) 271 22.6 203.0 143.7 0.9 3.7 3.2 CASH CASH 12.7 4.8

(8) 319 22.7 190.5 141.4 0.8 4.0 3.5 CASH CASH 13.5 4.8

(7) 374 22.3 185.3 137.6 0.8 4.2 3.7 CASH CASH 13.5 4.9

Balance Sheet (S$ m) FY Dec

Non-Cash Wkg. Capital Net Cash/(Debt) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%) Z-Score (X)

Source: Company, DBS Bank

Page 6

10% 140 5%

120 100

0%

80

-5%

60 -10% 40 20

-15%

0

-20%

Revenue

1Q2015

(3.3) 20.5 16.8 4.5

Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%)

15%

160

4Q2014

150 (44) 106 (88) 18 0 0 0 0 18 (5) 0 14 14 24

3Q2014

178 (54) 124 (89) 34 0 0 1 (1) 34 (6) 0 27 28 40

2Q2014

158 (46) 112 (85) 27 0 0 0 (5) 23 (7) 0 16 21 33

1Q2014

183 (54) 129 (91) 38 0 0 1 0 39 (9) 0 30 30 43

20%

180

4Q2013

173 (51) 122 (86) 36 0 0 0 0 37 (8) 0 29 29 42

200

3Q2013

1Q2015

2Q2013

4Q2014

1Q2013

Revenue Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit Net profit bef Except. EBITDA

Revenue Trend 3Q2014

4Q2012

Quarterly / Interim Income Statement (S$ m) FY Dec 1Q2014 2Q2014

Revenue Growth % (QoQ)

Includes S$5m assumption of undisclosed legal fees

Asset Breakdown (2014) Debtors 7.3%

Net Fixed Assets 6.1% Assocs'/JVs 3.1%

Inventory 12.0% Bank, Cash and Liquid Assets 71.6%

Company Focus OSIM International

Cash Flow Statement (S$ m) FY Dec

Capital Expenditure 2012A

2013A

2014A

2015F

2016F

115 18 (25) (2) 1 3 110 (12) (5) (1) 0 (18) (36) (36) 0 (14) (3) (54) (5) 15 14.9 13.3

129 22 (29) (3) 4 (9) 113 (11) (4) (7) 1 16 (4) (36) 5 (7) (2) (41) 6 74 15.1 14.1

132 30 (26) (1) (16) (2) 117 (24) (4) 0 0 4 (23) (45) 134 0 (15) 73 1 168 17.4 12.3

126 33 (29) (2) 0 0 128 (25) 0 0 0 0 (25) (46) 0 0 0 (46) 0 56 16.6 13.3

135 33 (31) (2) (1) 0 134 (25) 0 0 0 0 (25) (46) 0 0 0 (46) 0 63 17.5 14.1

30

Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Currency Adjustments Chg in Cash Opg CFPS (S cts) Free CFPS (S cts)

25 20 15 10 5 0 2012A

2013A

Source: Company, DBS Bank

Target Price & Ratings History

3.00

S$

2 S.No .

2.80

1: 2:

1 2.60 2.40 2.20

4 2.00

5 3

1.80 1.60 May-14

Sep-14

Jan-15

May-15

Not e : Share price and Target price are adjusted for corporate actions.

Source: DBS Bank

Page 7

2014A

2015F

Capital Expenditure (-)

Cl o s i n g Ta rg e t Pri c e Pri c e 07 May 14 2.82 3.26 01 Aug 14 2.85 3.26 Da te

R a ti n g Buy Buy

3:

29 Oct 14

1.94

2.59

Buy

4:

18 Dec 14

2.01

2.59

Buy

5:

04 Feb 15

2.02

1.94

Hold

2016F

Company Focus OSIM International

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.

ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date of the report is published, the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 Mar 2015. 2.

DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class of common equity securities of the company mentioned as of 31 Mar 2015.

3.

Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from the company mentioned.

Page 8

Company Focus OSIM International

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United Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients.

Dubai

This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) rd having its office at PO Box 506538, 3 Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States

Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank Ltd. 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel. 65-6878 8888 Company Regn. No. 196800306E

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