Maybank Kim Eng, July 4
WE flag further risks in licensing revenue from Terumo, which could cap share price recovery. It's not time for re-entry; maintain "hold", sum of the parts-based target price is trimmed to S$1.17.
We note in Terumo's "The New Mid-Term Plan (FY2013 - FY2016)" dated May 2013 that a new drug eluting stent (DES) was introduced in its product pipelines. We suspect that this is intended to eventually replace the Nobori DES once the licensing agreement with Biosensors expires in 2016.
Biosensors has a sound business strategy to transform into a multi-product platform and we recognise the long-term potential.
However, given the difficulties in quantifying the long-term potential and risks from M&As without more clarity, we have been holding back our optimism. We await value accretive M&As as potential catalysts for upgrade.
HOLD
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