Friday, February 21, 2014

Biosensors International -NEUTRAL rating for the short-term earnings weakness (CS)

Biosensors International Group Ltd. -
Price (12 Feb 14 , S$) 0.87
TP (prev. TP S$) 1.00 (1.00)
NEUTRAL rating for the short-term earnings weakness; but going private could be a viable option

● 3Q FY14 core earnings declined 44.7% YoY. China revenue was flat as the volume growth was offset by the ASP cut of 15-20%.

● R&D and SG&A expenses rose sharply due to consolidated expenses from SpectrumDynamics and ongoing clinical trials including those for Excel 2 in China, the global study of BioFreedom and the new protocol studies of SpectrumDynamics.


● We believe going private and IPO in Hong Kong or China domestic exchange is a viable option for Biosensors to unlock its value, given:

(1) it has ~US$500 mn cash (and equivalents) with a 37.5% share held by two of the largest PE firms in China and ~52% free float;

(2) it recently appointed the industry veteran Mr. JIANG Qiang (the ex-CFO of Shandong Weigao) as COO; and

(3) Citic PE's recent share acquisition price of $1.05 (purchased from Shandong Weigao).

● We cut our FY14E earnings and maintain NEUTRAL rating for the short-term earnings weakness, but we believe the stock is currently undervalued for its long-term growth potential.

Weakness in China and Japan continues
The recent ASP cut and weak market sentiment due to the anti- corruption campaign continue to put pressure on revenue in China, despite the double-digit volume growth. Licensing revenue from Japan has started to stabilise, but still saw the eighth consecutive quarter of sales growth decline. We believe the company's DES revenue will remain weak for the full year.

R&D expenses increased due to new product development
In 3Q14, Biosensors recorded a significant increase in R&D expense of 77.1% YoY. The R&D expense is mainly utilised to support clinical trials for two Excel programmes, two new protocols of Spectrum Dynamics and the ongoing Leaders programme that involves ~1,800 patients.

Privatisation and re-IPO in Hong Kong may happen
Biosensors appointed Mr. JIANG Qiang as the COO on 29 January 2014. Mr. Jiang is the former CFO of Shandong Weigao and has extensive experience in accounting and financial management. He will take full responsibilities of business development in his new position.

Given that Biosensors has US$689 mn cash with a 37.5% share held by two of the largest PE firms in China (Hony Capital and Citic PE), and recently appointed the industry veteran Mr. Jiang as COO, we believe going private and relisting in Hong Kong could be a viable option.

Our studies of Sihuan Pharma and China Animal Healthcare, both got de-listed from Singapore Exchange and re-listed in Hong Kong, show that re-listing in Hong Kong is likely to lead to higher valuation and better liquidity. We maintain a NEUTRAL rating for the short-term earnings weakness but remain positive on its long-term growth potential. Plus the repurchase programme started in November 2012 is going to provide downside protection.


Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 13/02/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock