Biosensors International Group (BIG) reported a disappointing set of 3QFY13 results which missed our below-consensus estimates. Revenue fell 4.0% YoY to US$81.3m, dragged down by weak licensing and royalties revenue (-37.8% YoY), and was 11.2% below our forecast. Core PATMI declined 9.2% YoY to US$24.3m, falling short of our forecast by 20.3%. BIG also lowered its revenue growth guidance for FY13 from 20-30% to 15-20% due to weaker-than-expected licensing and royalty revenue from Japan. However, product revenue growth is expected to remain robust. We pare our FCFE-based fair value estimate from S$1.69 to S$1.63 as we incorporate lower core PATMI projections and BIG’s recent fixed notes issuance in our model. We believe that proceeds for the latter would be used for earnings accretive acquisitions.
Maintain BUY.
3QFY13 results missed our below-consensus estimates
Biosensors International Group (BIG) reported a disappointing set of 3QFY13 results which were below ours and the street’s expectations. Revenue fell 4.0% YoY to US$81.3m, its first YoY topline decline since 1QFY10, given weak licensing and royalties revenue (-37.8% YoY) from Terumo Corp. This was 11.2% below our forecast. Headline PATMI showed a 91.4% YoY plunge to US$24.9m, but investors should note that there was a one-off non-operating and non-cash fair value accounting gain of US$273.2m in 3QFY12 as a result of BIG’s acquisition of JWMS. Excluding this and other exceptional items, we estimate that core PATMI declined 9.2% YoY to US$24.3m, falling short of our forecast by 20.3%. For 9MFY13, revenue and core PATMI grew 21.3% and 13.0% to US$247.4m and US$81.9m, respectively.
Lowers revenue guidance, but still some positives
BIG lowered its revenue growth guidance for FY13 from 20-30% to 15-20%. This was mainly due to weaker-than-expected licensing and royalties revenue from Japan. However, Terumo mentioned recently that its Nobori® stent sales are gradually recovering after bottoming out. BIG maintained its initial expectations on robust product revenue growth. It continued to deliver double-digit YoY drug-eluting stent (DES) sales growth in EMEA and APAC.
Maintain BUY
We pare our core PATMI projections for FY13 and FY14 by 9.5% and 13.8%, respectively. However, the latter is partly due to the input of higher interest expenses from its recent S$300m, 4.875% four-year fixed rate notes issuance, of which proceeds are highly likely to be used for acquisition opportunities which we expect to be accretive to its earnings. Management highlighted that it is in various stages of discussions with several potential M&A targets, with some of these discussions nearing completion. We have not incorporated any contribution from possible new acquisitions in our assumptions. As a result of our revised earnings forecast and debt issuance by BIG, our FCFE-based fair value estimate is lowered from S$1.69 to S$1.63. Maintain BUY.
Biosensors International Group (BIG) reported a disappointing set of 3QFY13 results which were below ours and the street’s expectations. Revenue fell 4.0% YoY to US$81.3m, its first YoY topline decline since 1QFY10, given weak licensing and royalties revenue (-37.8% YoY) from Terumo Corp. This was 11.2% below our forecast. Headline PATMI showed a 91.4% YoY plunge to US$24.9m, but investors should note that there was a one-off non-operating and non-cash fair value accounting gain of US$273.2m in 3QFY12 as a result of BIG’s acquisition of JWMS. Excluding this and other exceptional items, we estimate that core PATMI declined 9.2% YoY to US$24.3m, falling short of our forecast by 20.3%. For 9MFY13, revenue and core PATMI grew 21.3% and 13.0% to US$247.4m and US$81.9m, respectively.
Lowers revenue guidance, but still some positives
BIG lowered its revenue growth guidance for FY13 from 20-30% to 15-20%. This was mainly due to weaker-than-expected licensing and royalties revenue from Japan. However, Terumo mentioned recently that its Nobori® stent sales are gradually recovering after bottoming out. BIG maintained its initial expectations on robust product revenue growth. It continued to deliver double-digit YoY drug-eluting stent (DES) sales growth in EMEA and APAC.
Maintain BUY
We pare our core PATMI projections for FY13 and FY14 by 9.5% and 13.8%, respectively. However, the latter is partly due to the input of higher interest expenses from its recent S$300m, 4.875% four-year fixed rate notes issuance, of which proceeds are highly likely to be used for acquisition opportunities which we expect to be accretive to its earnings. Management highlighted that it is in various stages of discussions with several potential M&A targets, with some of these discussions nearing completion. We have not incorporated any contribution from possible new acquisitions in our assumptions. As a result of our revised earnings forecast and debt issuance by BIG, our FCFE-based fair value estimate is lowered from S$1.69 to S$1.63. Maintain BUY.
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