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Background: Biosensors develops, manufactures and markets medical devices for interventional cardiology and critical care procedures. BioMatrixTM, its flagship product, is the world’s first commercially available drug eluting stent (DES) with a biodegradable polymer.
Recent development: Biosensors recently proposed to acquire the remaining 50% stake in JW Medical Systems (JWMS), to turn it into a wholly-owned subsidiary. JWMS is one of the top three DES players in China and has its own Excel brand stent. This strategic acquisition would allow Biosensors to market its BioMatrixTM product through JWMS’s distribution network in China.
Key ratios…
Price-to-earnings: 26.4x
Price-to-NTA: 3.9x
Dividend per share / yield: $0.0 / 0%
Net cash/(debt) per share: S$0.205
Net cash as % of market cap: 16%
Share price S$1.28
Issued shares (m) 1,344.941
Market cap (S$m) 1,721.53
Free float (%) 66%
Recent fundraising activities Mar 11: Placement of 216m new shares to Atlantis and Ever Union @ $0.9283
Financial YE 31 Mar
Major shareholders Autumn Eagle (20%), Atlantis (8%), Ever Union (8%)
YTD change +13.27%
52-wk price range S$0.790-1.410
Our view:
Long road to acquire JWMS. The plan to acquire JWMS fully was hatched in 2007 after the initial 50% acquisition. However, regulatory approval could not be obtained from China authorities. The eventual approval came after Biosensors’ founder and chairman sold his entire 18% stake at 88.88 cents to Hony Capital, a Chinese private equity firm, followed by the entry of another two strategic investors with strong exposure in China, namely, Atlantis Investment and Ever Union Capital.
Tapping Japan and China markets. Biosensors has a licensing agreement with Terumo Corp of Japan, which allows the latter to market BioMatrixTM stents under the Nobori brand exclusively in Japan. After the JWMS acquisition, Biosensors would be ready to tap into another huge US$500m DES market in China. Approval for its BioMatrixTM stent is expected to come this year or next.
Developing a next-generation product. Even as it is marketing its BioMatrixTM product, Biosensors is already developing a next-generation DES product, BioFreedomTM, which is polymer-free, thereby reducing the risk of clotting.
Race to penetrate markets. In the absence of another commercially available competing product currently, Biosensors needs to race to penetrate markets. If this pans out well, it could see double-digit profit growth, which would then make it a worthy stock for investment. The stock currently trades at FY11 PER of 26.4x.
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