Biosensors International Group’s (BIG) 4QFY14 core PATMI dipped 63.7% YoY to US$10.8m, falling short of our below-consensus expectations. Another disappointment came from its decision to not declare any dividends. Looking ahead, management did not provide any revenue guidance for FY15 given the weak visibility. Meanwhile, BIG also announced the appointment of a new CEO, and this will take effect from 1 Nov 2014. We pare our FY15 revenue and PATMI forecasts by 8.0% and 18.0%, respectively, and introduce our FY16 projections. We also switch our valuation methodology from FCFE to PER given the uncertainty over BIG’s future licensing agreements with Terumo. Applying a target peg of 20x (in-line with its peers’ forward average) to our revised FY15 forecasts, we derive a new fair value estimate of S$0.85 (previously S$0.77). However, we maintain our SELL rating on BIG given its rich valuations and unexciting near-term outlook.
4QFY14 core earnings below expectations
Biosensors International Group’s (BIG) operational performance took another hit in 4QFY14, with revenue and core PATMI dipping by 8.0% and 63.7% YoY to US$81.6m and US$10.8m, respectively. For FY14, revenue slipped 3.7% to US$323.8m, forming 97.9% of our forecast. Core PATMI fared worse, slumping 59.2% to US$45.5m, missing our forecast of US$48.2m, which was the second lowest on the street. Another disappointment came from BIG’s decision to not declare any dividends (FY13: maiden DPS of US$0.02) despite its strong balance sheet (net cash balance of US$222.2m as at 31 Mar 2014).
No revenue guidance provided
Contrary to BIG’s previous practice of providing topline guidance, management decided against doing so for its FY15 outlook. This was attributed to the weak earnings visibility as market conditions are expected to remain challenging in the near-term given price pressures and intensifying competition.
New CEO appointed
Meanwhile, BIG also announced that it has appointed Mr. Jose Calle Gordo as its new CEO, and this will take effect from 1 Nov 2014. Mr. Calle has over 25 years of broad business and management experience in the medical devices industry, having served in various vice president and managerial roles at Abbott, Eli Lilly, and Guidant. BIG’s current CEO Dr. Jack Wang has been re-designated as the new Chief Technology Officer.
Maintain SELL
We pare our FY15 revenue and PATMI forecasts by 8.0% and 18.0%, respectively, and introduce our FY16 projections. We also switch our valuation methodology from FCFE to PER given the uncertainty over BIG’s future licensing agreements with Terumo. Applying a target peg of 20x (in-line with its peers’ forward average) to our revised FY15 forecasts, we derive a new fair value estimate of S$0.85 (previously S$0.77). However, we maintain our SELL rating on BIG given its rich valuations and unexciting near-term outlook.
Biosensors International Group’s (BIG) operational performance took another hit in 4QFY14, with revenue and core PATMI dipping by 8.0% and 63.7% YoY to US$81.6m and US$10.8m, respectively. For FY14, revenue slipped 3.7% to US$323.8m, forming 97.9% of our forecast. Core PATMI fared worse, slumping 59.2% to US$45.5m, missing our forecast of US$48.2m, which was the second lowest on the street. Another disappointment came from BIG’s decision to not declare any dividends (FY13: maiden DPS of US$0.02) despite its strong balance sheet (net cash balance of US$222.2m as at 31 Mar 2014).
No revenue guidance provided
Contrary to BIG’s previous practice of providing topline guidance, management decided against doing so for its FY15 outlook. This was attributed to the weak earnings visibility as market conditions are expected to remain challenging in the near-term given price pressures and intensifying competition.
New CEO appointed
Meanwhile, BIG also announced that it has appointed Mr. Jose Calle Gordo as its new CEO, and this will take effect from 1 Nov 2014. Mr. Calle has over 25 years of broad business and management experience in the medical devices industry, having served in various vice president and managerial roles at Abbott, Eli Lilly, and Guidant. BIG’s current CEO Dr. Jack Wang has been re-designated as the new Chief Technology Officer.
Maintain SELL
We pare our FY15 revenue and PATMI forecasts by 8.0% and 18.0%, respectively, and introduce our FY16 projections. We also switch our valuation methodology from FCFE to PER given the uncertainty over BIG’s future licensing agreements with Terumo. Applying a target peg of 20x (in-line with its peers’ forward average) to our revised FY15 forecasts, we derive a new fair value estimate of S$0.85 (previously S$0.77). However, we maintain our SELL rating on BIG given its rich valuations and unexciting near-term outlook.
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