The Three Numbers That Osim Find Soothing

osimlogoOsim International (SGX: O23) has one of the highest Return on Equity in the Singapore market. At a mouth-watering 45%, it is some four times higher than the average for midcap stocks. It is also five times higher than the average for the 30 companies that comprise the Straits Times Index (SGX: ^STI).

Interestingly, Osim International’s Net Income Margin at 14%, whilst respectable, is not especially high. But what it lacks in profitability, Osim makes up for in efficiency. The massage chair maker is nearly seven times more efficient at generating revenues from its available assets than other companies in the market.

An Asset Turnover of 1.3 would indicate that Osim is generating $1.30 for every $1 of asset used in the business. This may in part be due to the higher ticket price of the goods that Osim sells. For instance, a top-of-the-range uInfinity massage chair could set you back almost S$7,000.

To help boost the returns that shareholders enjoy, Osim also makes use of debt. Its Leverage Ratio of 2.4, although not especially high, is still higher the wider market.

By kneading together the three key numbers, it is easy to see how Osim keeps shareholders relaxed. Its exceptional Return on Equity is the product of a decent Net Income Margin of 14%; an efficient Asset Turnover of 1.3 and a generous helping of Leverage of 2.4.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.