Maybank Kim Eng Research, May 30
FY13 results were within our expectations with revenue of US$336 million (up 15 per cent y-o-y) and net profit of U$114 million (down 68 per cent y-o-y and up 14 per cent y-o-y excluding exceptionals).
Revenue and net profit make up 100 per cent and 101 per cent of our FY13 forecasts, respectively. Biosensors also declared maiden dividends of 2.0 US cents per share which translates to a forward yield of 2.1 per cent.
Product sales registered a 32 per cent y-o-y growth in FY13 due to consolidation of JWMS as well as increased sales of BioMatrix DES family products. Product gross margin improved to 81 per cent (FY12: 76 per cent) as a result of improved economy of scale and better product and geographical mix. However, the DES market is plagued by negative price pressures from government intervention, competition and natural price decline which could see erosion in margins going forward. In Japan, despite efforts to step up marketing of Nobori stents, Biosensors guided for flat licensing revenue growth, which implies that Terumo is unlikely to regain its initial market share.
New product lines such BioMatrix NeoFlex and contributions from recent acquisition of Spectrum Dynamics could sustain a decent growth rate but we think that a stronger catalyst is needed for positive re-rating, which hopefully could come from value accretive acquisitions. We cut FY14-15 forecast by 6-8 per cent on lower revenue and margin forecasts. Maintain "hold", SOTP-based (sum of the parts) TP reduced to S$1.25.
HOLD
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