India Infoline (IIFL) Securities starts Osim (O23.SG) at Buy with $1.80 target price, implying 21.3X FY11 P/E, 17.0x FY12 P/E.

Says massage-chair maker well placed to deliver 45% profit CAGR over FY09-12, driven by focus on more profitable markets and products, addition of 75 new Osim stores and 85 new Richlife outlets annually in China from FY10-12, improved margins on cost efficiencies and lower taxes.

“The growing network of Osim stores spread over a larger number of cities (in China) would help the group take advantage of the rising income base across the country.”

Expects Richlife brand, which sells health and nutrition supplements, to benefit from trend of greater lifestyle awareness; “although the concept is quite prominent in the US, the idea is still catching up in emerging economies like India and China.”

Shares +0.7% at $1.45.