10 November 2010Results MITA No. 010/06/2009

Current Price: S$1.22

Fair Value: S$1.35

SINGAPORE Company Report Results MITA No. 013/06/2010

Reuters Code BIOS.SI

ISIN Code B20

Bloomberg Code BIG SP

Issued Capital (m) 1,086

Mkt Cap (S$m / US$m) 1,325 / 1,025

Major Shareholders

Autumn Eagle Ltd 29.5%

Free Float (%) 45.2%

Daily Vol 3-mth (‘000) 17,312

52 Wk Range 0.675 - 1.260

Turnaround story continues as expected

2Q11 results largely within expectations.

International Group (BIG) reported its 2Q11 results with revenue

increasing 33.9% YoY and 10.4% QoQ to US$36.5m. Net

profit increased 31.6% YoY and 161.7% QoQ to US$8.5m.

Both revenue and core earnings were largely within our

expectations. Gross profit margin and EBIT margin also

showed good improvement at 78.7% (vs. 70.1% in 2Q10 and

75.7% in 1Q11) and 25.8% (vs. 15.2% in 2Q10 and 22.6% in

1Q11) respectively. For 1H11, revenue increased 30.4% to

US$69.5m, meeting 43.8% of our FY11 revenue forecast

(44.0% of consensus); and net profit rose 10.2% to US$11.7m,

meeting 27.8% of our full-year earnings figure (30.1% of

consensus). While this seems to be on the low side, it was

due to exceptional items including charges related to the

revaluation of warrants as well as the restructuring of BIG's

US operations. Excluding these one-off items, 1H11 net profits

would have increased 95.3% to US$21.1m. BIG has also

guided that profitability for 2H11 is expected to be higher than

in 1H11.Biosensors

Growth driven by BioMatrix.

stent (DES) saw a 63.4% YoY surge in sales to

US$20.9m in 2Q11, which helped to offset a decline in sales

of other interventional cardiology products. There was an

increase in penetration rates in existing markets and continued

expansion in new geographical areas such as Taiwan. This

change in revenue mix (64.5% of product revenue in 2Q11 vs.

51.1% in 2Q10) has helped to drive up gross margins as

BioMatrix DES fetches a higher selling price.BIG's flagship BioMatrix drugeluting

Organisational changes to drive China strategic focus

BIG announced changes to its organisation structure in line

with the recent change in major shareholder. Mr. John Zhao

(CEO of Hony Capital) and Mr. Yuan Bing (MD of Hony Capital)

were appointed as Non-Executive and Non-Independent

Directors of BIG. Mr. Jeffrey Jump and Dr. Jack Wang have

also been appointed as Co-CEO. Mr. Jump would continue to

lead the company's strategy outside of China while Dr. Wang

will focus on BIG's operations and its China strategy. Coupled

with the expertise of Hony Capital, this shows BIG's intent to

drive its China strategic focus. We view this as a positive

move given the potential of the Chinese DES market..

Maintain BUY

in BIG's gross margins moving forward and fine-tuned our

assumptions. We continue to be sanguine about BIG's growth

prospects and believe there is further upside ahead. As such,

we reiterate our

estimate from S$1.30 to S$1.35.. We have taken into account the improvementsBUY rating and revise our DCF-based fair value

Correction.....In my opinion, this is  far from the Climax yet. It is only the foreplay before even the actual act play. Run and you will miss all the fun and the final ecstatic climax...... Don`t forget the new owner is by the name of `Hony ``who is  famous for making deal and zeal. 

In view of the market sentiment, the price is not 'down'...

    It looks more like a shakeout...

Even considering the 'macro' fundamentals, this is a good play...

   Medical play is now big league story... 

iPunter      ( Date: 09-Nov-2010 14:55) Posted: That's a  good trading move!...  susan66      ( Date: 08-Nov-2010 23:22) Posted: Yeh, I noticed, lucky just entered last week expecting this ascending triangle to breakup and it finally did! More to come, nice uptrend!!