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This one looks good
Peter_Pan ( Date: 26-Nov-2013 17:46) Posted:
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yea baby..!
Markie ( Date: 26-Nov-2013 16:07) Posted:
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quipment & Svs│ Singapore
November 25, 2013
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
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BIG belief leads to BIG value
A change in major shareholder from a strategic one to a value-driven
one augurs well for BIG. Paying a premium over BIG?s last closing
price, CITIC?s move to replace Weigao signals its greater ambition, in
our view.
We keep our EPS and SOP-based
target price. Our unchanged
contrarian Outperform rating hinges
on the instant success of BIG?s
Spectrum Dynamics, product
launches, regulatory approvals and
M& A accretion. More importantly,
new shareholder, CITIC, could seek
to enhance its investment value
through more active participation.
What Happened
Last Friday, BIG's shareholder
Shandong Weigao announced that it
was selling off its entire stake (21.7%)
in BIG to CB Medical at a price of
S$1.05/share, representing an 11.7%
premium to BIG?s last closing price
of S$0.94 on Thursday. CB Medical
is an investment vehicle of the CITIC
Group in China.
What We Think
We think: 1) CITIC will play a more
active role not just in managing
BIG?s operations but also strategic
direction, from M& As to corporate
finance 2) while BIG?s earnings had
been dragged down by weaker
contributions from Japan?s licensing
income (which we think has been
priced in), BIG?s objective is to
obtain SFDA approval for
BioFreedom in China as well as add
other accretive acquisitions. As these
could be the forte of private-equity
funds, we believe CITIC?s
involvement will work in BIG?s
favour 3) CITIC?s choice of owning
BIG could be an endorsement of the
latter?s leadership in stent-making
and intent to be a serious
medical-platform contender,
potentially setting BIG apart from
the rest of its Asian peers, including
Terumo and 4) a privatisation of
BIG could even be possible if its
current two private-equity
shareholders want to rejig BIG.
What You Should Do
We think BIG?s valuation has only
priced in its near-term challenges,
not a potential earnings uplift from
the commercialisation of new
products in FY15. BIG is working on
multiple product launches for
generating new revenue. Other
products are gaining ground with
various regulatory authorities and a
soft launch of BioFreedom remains a
source of excitement.
CIMB Analyst(s)
????????????????????????????????????????
Gary NG
T (65) 6210 8699
E gary.ng@cimb.com
Share price info
Share price perf. (%) 1M 3M 12M
Relative -1.8 13.3 -15.5
Absolute -3 16 -9.3
Major shareholders % held
CITIC 21.7
Hony Capital 15.7
Biosensors Int'l FLASH NOTE
BIG SP / BIOS.SI
Current S$0.98
Market Cap Avg Daily Turnover Free Float Target S$1.19
US$1,333m US$2.81m 42.0% Prev. Target S$1.19
S$1,669m S$3.54m 1,723 m shares Up/Downside 21.4%
Conviction| |
Sources: CIMB. COMPANY REPORTS
64
79
94
109
124
0.7
0.9
1.1
1.3
1.5
Price Close Relative to FSSTI (RHS)
Source: Bloomberg
10
20
30
40
Nov-12 Feb-13 May-13 Aug-13
Vol m
Financial Summary
Mar-12A Mar-13A Mar-14F Mar-15F Mar-16F
Revenue (US$m) 292.1 336.2 327.5 383.8 429.0
Operating EBITDA (US$m) 103.2 114.6 77.3 119.7 141.7
Net Profit (US$m) 364.3 115.4 49.5 89.0 102.7
Core EPS (US$) 0.058 0.064 0.028 0.051 0.059
Core EPS Growth 22.0% 10.6% (55.6%) 79.6% 15.3%
FD Core P/E (x) 11.11 12.28 27.65 15.39 13.35
DPS (US$) - 0.020 0.020 0.020 0.020
Dividend Yield 0.00% 2.55% 2.55% 2.55% 2.55%
EV/EBITDA (x) 10.62 9.02 14.77 9.73 8.39
P/FCFE (x) NA 6.26 NA NA NA
Net Gearing (24.7%) (27.0%) (20.9%) (18.5%) (16.3%)
P/BV (x) 1.23 1.10 1.26 1.23 1.22
ROE 13.5% 9.4% 4.2% 8.1% 9.2%
% Change In Core EPS Estimates 0% 0% 0%
CIMB/consensus EPS (x) 0.62 0.91 0.92
0.98
1.19
0.83 1.40
Target
52-week share price range
Current
SOURCE: CIMB, COMPANY REPORTS Biosensors Int'l
November 25, 2013
2
CITIC to play a more active role than Weigao
While Shandong Weigao is a medical-equipment maker/distributor in China,
we believe CITIC?s involvement can possibly bring in a lot more. We think
CITIC will play a more active role not just in managing BIG?s operations but
also its strategic direction, ranging from M& As to corporate finance. With
CITIC feeding BIG with various opportunities, BIG may just be able to emerge
as a medical-platform company, finally.
CITIC?s choice of owning BIG is an endorsement of the latter?s leadership in
stent-making, in our view, and intent to be a serious medical-platform
contender. This could set BIG apart from the rest of its Asian peers, including
Terumo.
Forget about Japan think of what China can offer?
Although contributions from Terumo have been dwindling in the past year
(Terumo is in the midst of developing its own DES), all will not be lost for BIG.
When their agreement ends at end-2014, BIG will have the opportunity to
pursue the Japanese market without a leash. Moreover, it is the Chinese market
that BIG really wants.
? which is product approvals
BIG has been sharing with investors recently about potential SFDA approval in
China for BioFreedom in the near term. Our guess is that it will be in the
summer of 2014.
The main reason for our contrarian call on the stock (Outperform) is that the
market seems to be too focused on the weaker numbers related to Japanese
licensing and not the dynamics of its medical-equipment business around the
world.
BIG?s recent acquisition of Spectrum Dynamics was an instant success, that
should boost its earnings further if approved by China?s Food and Drug
Administration (SFDA). BIG is working on multiple product launches to
generate new revenue. Other products are gaining ground with various
regulatory authorities and a soft launch of BioFreedom remains a source of
excitement.
Two private-equity (PE) funds: a lesson in healthcare history
With the completion of the latest transaction, both CB Medical (CITIC) and
Hony Capital (another big PE fund in China) will be substantial shareholders of
BIG. CITIC will own 21.7% and Hony Capital, 16%. This is reminiscent of
Parkway Holdings? (present-day IHH) shareholding developments in 2010.
We think that having two Chinese PE funds could add to BIG?s corporate
dynamics, especially given that Shandong Weigao?s involvement in BIG?s
corporate activities outside China had been fairly muted.
Background of Shandong Weigao?s substantial stake in BIG
There were a few transactions leading up to BIG's purchase of a 50% stake in
JWMS from Weigao (WG) back in Jun 11.
1) BIG paid WG S$160m
2) BIG issued 260m shares to WG at S$1.2215/share
3) BIG issued a 4% convertible note worth S$120m to WG. Exercise price was
US$1.0913/share (exchange rate then was 1.2313), implying a conversion price
of S$1.344/share. WG converted its notes in Nov 11 for 110m shares in BIG.
Weigao, as such, owned 370m shares of BIG from Nov 11, with BIG owning
100% of JWMS.
Biosensors Int'l
November 25, 2013
3
Background of CITIC
CITIC is a state-owned investment company of the People's Republic of China.
It owns 44 subsidiaries, including China CITIC Bank, CITIC Holdings, CITIC
Trust Co. and CITIC Merchant Co., Ltd (mainly banks) in China, Hong Kong,
the US, Canada, Australia and New Zealand.
Who heads CITIC?s PE fund? Liu Lefei, who is the Executive Chairman of
CITIC?s PE fund. Born in 1973, he was ranked No. 22 of the 25 Most Powerful
Businesspeople in Asia by Forbes on 20 Apr 11. He also serves as committee
member of the FTSE Xinhua Index and Reuters China Pension Index. Before
joining CITIC, Liu had served as CIO of China Life (since Jul 06), where he led
investments in China Southern Power Grid and China Union Pay. He also
served as the General Manager of the Investment Management Department of
China Life Insurance. Before that, Liu served as a General Manager of China
Galaxy Securities Investment Management LLC (2003-04) and Executive
Director of Capital Securities (1998-2003). Liu is the son of Liu Yunshan.
Liu Yunshan is one of the seven members of China?s central politburo, at the
very top of China?s political structure. He currently holds the positions of First
Secretary of the Central Secretariat of the Communist Party of China, Chairman
of the CPC Central Guidance Commission for Building Spiritual Civilization and
President of the CPC Central Party School.
Figure 1: BIG?s numbers show a recovery despite licensing hiccups
3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 YoY QoQ
Revenue (US$ m)
Interventional cardiology 58.7 61.9 65.7 61.9 64.0 73.3 60.9 66.4 7.3% 9.0%
Critical care 4.0 3.5 3.3 3.6 3.6 3.1 3.4 3.4 -3.6% -0.2%
Cardiac diagnostic 0.7 2.4 - 241.4%
Total Product 62.7 65.3 69.0 65.4 67.6 76.4 65.0 72.2 10.4% 11.0%
Licensing & Royalties 22.0 22.8 17.3 14.3 13.7 12.4 11.6 10.8 -24.6% -7.1%
Total Revenue 84.8 88.2 86.3 79.8 81.3 88.8 76.7 83.0 4.1% 8.3%
Gross Profit (US$ m)
Interventional cardiology 42.1 48.1 54.6 51.1 53.7 61.1 47.7 50.9 -0.2% 6.8%
Critical care 1.6 1.4 1.4 1.4 1.5 1.0 1.1 1.1 -21.5% -1.2%
Cardiac diagnostic 0.2 1.0 - 362.2%
Total Product 43.7 49.5 55.9 52.4 55.2 62.1 49.0 53.0 1.1% 8.2%
Licensing & Royalties 22.0 22.8 17.3 14.3 13.7 12.4 11.6 10.8 -24.6% -7.1%
Total Gross Profit 65.8 72.3 73.2 66.8 68.9 74.5 60.6 63.8 -4.4% 5.2%
Gross Margin (%)
Interventional cardiology 71.7% 77.7% 83.0% 82.5% 83.9% 83.4% 78.3% 76.7%
Critical care 40.5% 39.9% 41.6% 38.8% 40.6% 32.0% 31.9% 31.6%
Cardiac diagnostic 30.7% 41.6%
Total Product 69.8% 75.7% 81.0% 80.1% 81.6% 81.3% 75.4% 73.4%
Licensing & Royalties 100% 100% 100% 100% 100% 100% 100% 100%
Total Gross Margin 77.6% 82.0% 84.8% 83.7% 84.7% 83.9% 79.1% 76.9%
SOURCES: CIMB, COMPANY REPORTS
Figure 2: Sum-of-the-parts valuation
(US$ m) Comments
BIG Intervention & critical core 279 PV of FCF
Licensing to Terumo 68 PV assumes no renewal after FY15
JWMS 1,120 Pegged at 10x CY14 P/E
Addition of U.S. market 3 PV of FCF potential
Net cash 228
Total value (US$ m) 1,698
Total value (S$ m) 2,089
FD shares outstanding 1,750
SOP-derived target price (S$) 1.19
SOURCES: CIMB, COMPANY REPORTS
Biosensors Int'l
November 25, 2013
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Figure 3: Peer comparison
Bloomberg Price
Target
Price
Market
Cap Core P/E (x) 3-year EPS P/BV (x)
Recurring
ROE (%)
Dividend
Yield (%)
Company Ticker Recom. (lcl curr) (lcl curr) (US$ m) CY2013 CY2014 CAGR (%) CY2013 CY2013 CY2013
Biosensors Int'l BIG SP Outperform 0.98 1.19 1,333 21.1 17.3 -3.2% 1.21 5.5% 2.6%
Asian Peers
Terumo Corp 4543 JP NR 5,330 NA 10,011 21.5 22.1 20.4% 2.18 10.1% 1.0%
Shandong Weigao Group Medical 1066 HK NR 10.18 NA 5,878 33.7 27.1 -27.8% 3.67 11.2% 0.8%
Mindray Medical International MR US NR 40.07 NA 4,706 19.6 18.1 15.0% 3.15 16.4% 1.0%
Lepu Medical Technology Beijin 300003 CH NR 13.69 NA 1,825 27.1 20.2 5.1% 3.83 15.2% 1.2%
Microport Scientific Corp 853 HK NR 5.24 NA 952 22.4 17.8 1.8% 2.35 9.8% 1.6%
Global Peers
Johnson & Johnson JNJ US NR 95.20 NA 268,601 17.4 16.3 18.3% 3.69 21.5% 2.7%
Abbott Laboratories ABT US NR 38.07 NA 58,863 18.9 17.0 -9.6% 2.63 13.1% 1.5%
Medtronic Inc MDT US NR 57.10 NA 56,955 16.8 14.2 7.4% 2.87 19.6% 1.9%
Covidien PLC COV US NR 66.68 NA 30,166 18.3 16.3 2.3% 2.92 17.2% 1.7%
Boston Scientific Corp BSX US NR 11.93 NA 15,929 26.6 22.8 21.7% 2.38 8.9% 0.0%
Hospitals
Bangkok Chain Hospital BCH TB Outperform 6.30 7.20 493 22.3 19.9 0.5% 3.59 16.1% 2.4%
Bangkok Dusit Med Service BGH TB Outperform 129.0 154.0 6,276 30.6 26.1 13.6% 4.96 17.1% 2.0%
Bumrungrad Hospital BH TB Underperform 90.75 94.00 2,077 26.7 23.7 15.5% 6.88 27.9% 1.9%
IHH Healthcare IHH SP Neutral 1.59 1.72 10,336 59.5 35.7 17.7% 1.88 3.3% 0.7%
Raffles Medical Group RFMD SP Outperform 3.15 3.81 1,394 26.0 20.7 16.8% 3.96 16.1% 1.4%
Simple Average 25.5 21.0 7.2% 3.26 14.3% 1.5%
SOURCES: CIMB, COMPANY REPORTS, BLOOMBERG
starlene ( Date: 26-Nov-2013 17:41) Posted:
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https://brokingrfs.cimb.com/7A5Wjzy4XqAJgWsNlGr0XZelG_VEDZ6gXaBxleXVYcefimEffUWhUvzFBdIscjhv5jUhY7dLMwE1.pdf
On track for a positive close. Above $1, bullish
Peter_Pan ( Date: 26-Nov-2013 13:56) Posted:
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biosensors rocking the baby
Those who look at charts call it sell in the short term but I personally BIG will hit its loe 82cts anymore baring unforseen world chaos and after hitting 90cts from the disposal news and owned by a new state own PRC co BIG should gradually head upwards..no more $1.50-1.60 but $1.15 to $1.25 ..I love what the CEO saud below
Dr. Jack Wang, Chief Executive Officer of Biosensors, said about the future of his company. He mentioned, ?Based on our recent approvals, we are working on multiple product launch plans to generate new revenues for the company. With the changing market conditions, management is implementing measures to enhance efficiency and improve profitability by restructuring its cost and operational compositions. We believe that the reorganization is necessary for us to better position ourselves to deliver our long-term goals.?
The company is trading at 11.2 times its historical earnings and has a dividend yield of 2.7%.
Yiming2000 I will hold my last 100 lots bought quite high to accompany u..at least still has dividends starting from this year
Same..brought some at 94 cents too...
Markie ( Date: 26-Nov-2013 12:57) Posted:
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Bought some at 94 cents. Hope won't regret lll
| Date | Open Price | Target Price | Upside/Downside | Price Call | Source | |
|---|---|---|---|---|---|---|
| 25/11/2013 | 0.975 | 0.80 | -0.175 (17.95%) | SELL | OCBC |  |
| 13/11/2013 | 0.885 | 0.80 | -0.085 (9.60%) | SELL | OCBC | |
| 13/11/2013 | 0.885 | 0.94 | +0.055 (6.21%) | HOLD | DBS Vickers | |
| 13/11/2013 | 0.885 | 1.19 | +0.305 (34.46%) | BUY | CIMB |
Agree with yiming. bio has alot of potential.
yiming2000 ( Date: 26-Nov-2013 02:00) Posted:
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Biosensors Int'l - BIG belief leads to BIG value [ OP/◄ ► - S$0.98/TP:1.19 - Coy Flash -25/11 ]
A change in major shareholder from a strategic one to a value-driven one augurs well for BIG. Paying a premium over BIG?s last closing price, CITIC?s move to replace Weigao signals its greater ambition, in our view. We keep our EPS and SOP-based target price. Our unchanged contrarian Outperform rating hinges on the instant success of BIG?s Spectrum Dynamics, product launches, regulatory approvals and M& A accretion. More importantly, new shareholder, CITIC, could seek to enhance its investment value through more active participation
CIMB rated BUY at $1.19
CITIC is China's equivalent of TEMASEK. This means that Biosensors, through CB Medical, has the support of China's sovereign wealth fund. CITIC was set up to foster the development of Chinese high tech companies into world-class brands in the next phase of China's economic growth from a low-cost manufacturer. Biosensors' potential will not be left to the mercy of irrational whims of the free-market the way Nokia and Blackberry (both basically good companies) have suffered. Favorable treatment in the China market alone will assure Biosensors - a major player in the stent business - survival.
As such I rate Biosensors a BUY with a target price of 1.25 for now.
you shorted?
nice profits from biosensors
CITIC Group Corporation holds not less than 20% of the voting rights of CITIC Securities Company Limited. By virtue of this, through CITIC Securities Company Limited, CITIC Securities International Company Limited, CITIC Securities International Asset Management Limited, CITIC PE (Hong Kong) Limited, CITIC PE Funds Management Limited, CB Medical Investment Limited and CB Medical Holdings Limited, CITIC Group has a deemed interest in 370,000,000 Shares, representing approximately 21.7% of the issued share capital of Biosensors. The CITIC Group is a state-owned investment company of the People's Republic of China...
I think should read about the CEO of Citic PE fund, Liu Le Fei.
http://www.worldofceos.com/dossiers/lefei-liu
LeFei has acquired a reputation in the China investment community as a dealmaker.
Hold limited downside..buy when 85cts or less and take profit if go beyond that..the 100@$1.00 of Biose will hold till next year
Markie ( Date: 25-Nov-2013 11:40) Posted:
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Valid points made here. Yes you can surmise that the Chinese givt is now a major shareholder who can directly influence value of biosensors. Health care including medical devices for critical care is key priority for china. Anticipate positive developments that will boost shareholder value with privitisation a distinct possibility.
tbt001 ( Date: 25-Nov-2013 12:39) Posted:
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