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Why Has OSIM International Ltd. Fallen By 11% in a Week?

OSIM International Ltd. (SGX: O23) has been tumbling lately. Just yesterday, it had declined by 3.7% to S$2.33. Since last Wednesday’s close at S$2.63, OSIM has fallen by some 11.4%. What is happening?

OSIM’s drop yesterday had caught the attention of Singapore’s stock market regulator Singapore Exchange, which issued a query to the Board of the company, asking for any possible explanations for the share price move. OSIM’s Board has since replied and they basically have no clue as to why the company’s shares had fallen the way it did.

If we actually dig through OSIM’s corporate announcements over the last seven days, the only noteworthy bit of new information released was that the company is due to announce its third quarter earnings on 28 October 2014.

Going back to September, the company had just issued S$170 million worth of convertible bonds. The bonds carry an effective annual interest rate of only 2%, although there is a small amount of dilution risk for OSIM’s existing shareholders.

If we go even further back to OSIM’s second quarter earnings release in July, we see a company that managed to grow its quarterly net profit by 13% year-on-year. Revenue from all of OSIM’s geographical markets had also grown and in its earnings release, management seemed optimistic about the future, commenting that they “expect our businesses to remain strong in 2014.”

So, there doesn’t seem to be anything which is bad for OSIM – and yet the company’s share price has tumbled by 11.4% in a week.

Foolish Takeaway

No one really knows why OSIM is falling. Is this an opportunity for investors to buy into the company on a temporary dip in price or is the market prescient in pricing in a slew of future bad news to come? It really is anyone’s guess until the company provides more information for investors when it releases its latest set of financials later this month.

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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 contributor Stanley Lim doesn’t own shares in any companies mentioned.