Three pillars of growth

 Pillar #1: core DES franchise, global #5 player

Since the launch of BioMatrix in April 2008, BIG has emerged as the

number five player in the global drug-eluting stent (DES) market,

which is traditionally dominated by the Big Four. With growing market

acceptance, BioMatrix looks set to achieve further market share gains

in the EU, Asia and LatAm. We estimate a 23% CAGR for DES

revenue over FY10-13F.

 Pillar #2: well positioned JV in China

JWMS remains well positioned as the number two or three player in

China’s profitable DES market. Strict SFDA regulatory standards

should raise the entry barrier, and stent pricing pressure appears to

have abated for now given repeated delays in the central tender.

 Pillar #3: accelerating royalties from Terumo

Nomura Japan medtech analyst Mr Kohtani expects Nobori to receive

approval in Japan by end-FY11F (March 2011) and achieve 20%

market share in the world’s second-largest DES market worth

US$600mn. With the increased cashflow visibility, we have raised our

NPV estimate for Terumo royalties from US$85mn to US$132mn.

 Adjusting for euro exposure; attractive valuation

We revise down our FY11F earnings forecast by 4% to reflect the

weak euro, while FY12F earnings is buffered by a potential boost in

Terumo royalties. Reiterate BUY— BIG is trading at 17.2x FY11F

earnings, on an EPS CAGR of 40% over FY10-13F. The group also

appears to be well placed to grow, given its prudent net cash balance

sheet.

 Closing price on 16 Jul S$0.82

Price target S$1.20

(from S$1.17)

Upside/downside 47.2%

Difference from consensus 39.5%

FY12F net profit (US$mn) 62.0

Difference from consensus na

Source: Nomura

Nomura vs consensus

We believe consensus is irrelevant

given the lack of active analyst

coverage.