Biosensors International Group’s (BIG) FY15 revenue was 5% lower at US$308.4m, forming 95% of our full-year forecast. The group had faced ASP erosion, FX translation effects, and lower licensing revenue from Terumo over the financial year. A net loss position of US$224.8m was mainly due to a US$256.1m one-off goodwill write-off of its China subsidiary JWMS. Stripping exceptional items out, estimated core net profit fell 23% to US$34.9m, constituting 107% of our estimates. Amid on-going headwinds for the year ahead, the group intends to focus on top-line growth through BioFreedom, as well as expansion of its distribution business in Japan. We do not see immediate major impacts on profitability, and thus trim our FY16F revenue and net profit by 5%/11% while we also introduce our FY17 estimates. Our FV estimate of S$0.60 stays unchanged based on 20x FY16F P/E. SELL at this juncture on rich valuations.
Weaker FY15 YoY results within expectations
Biosensors International Group’s (BIG) FY15 revenue was 5% lower at US$308.4m, forming 95% of our full-year forecast. The group had faced ASP erosion, FX translation effects, and lower licensing revenue from Terumo over the financial year. Underlying growth for the group’s revenue was deemed ‘encouraging’ and we did see continued cost reduction initiatives, with total operating expense as a percentage of revenue a tad lower at 51% (FY14: 54%). A net loss position of US$224.8m was mainly due to a US$256.1m one-off goodwill write-off its China subsidiary, JWMS. Stripping exceptional items out, estimated core net profit fell 23% to US$34.9m, constituting 107% of our estimates.
Looking to rely on BioFreedom and Japan presence
The one-time goodwill impairment in JWMS was to reflect the protracted slowdown in growth in China as compared to the group’s better sales performance back in 2011, when BIG acquired the remaining 50% equity in JWMS. Amid on-going headwinds such as declining ASP, the group will focus on top-line growth through BioFreedom and the Cardiac Diagnostic segment, as well as expansion of its distribution business in Japan and emerging markets. In addition, last week’s positive news on BioFreedom and its BioMatrix family would be supportive in reinforcing the benefits of BIG’s products. We look to see how the growth story pans out for BioFreedom, as primary endpoint data for its LEADERS Free trial is slated for release later in the year. But we keep in mind that obtaining approvals from US and Japan for BioFreedom could take a long time, and hence impacts on profitability are unlikely to be immediate.
Maintain SELL
As we expect a similar picture in the near-term, we trim our FY16F revenue and net profit by 5%/11% while we also introduce our FY17 estimates. Our FV estimate of S$0.60 stays unchanged based on 20x FY16F P/E. SELL at this juncture on rich valuations.
Biosensors International Group’s (BIG) FY15 revenue was 5% lower at US$308.4m, forming 95% of our full-year forecast. The group had faced ASP erosion, FX translation effects, and lower licensing revenue from Terumo over the financial year. Underlying growth for the group’s revenue was deemed ‘encouraging’ and we did see continued cost reduction initiatives, with total operating expense as a percentage of revenue a tad lower at 51% (FY14: 54%). A net loss position of US$224.8m was mainly due to a US$256.1m one-off goodwill write-off its China subsidiary, JWMS. Stripping exceptional items out, estimated core net profit fell 23% to US$34.9m, constituting 107% of our estimates.
Looking to rely on BioFreedom and Japan presence
The one-time goodwill impairment in JWMS was to reflect the protracted slowdown in growth in China as compared to the group’s better sales performance back in 2011, when BIG acquired the remaining 50% equity in JWMS. Amid on-going headwinds such as declining ASP, the group will focus on top-line growth through BioFreedom and the Cardiac Diagnostic segment, as well as expansion of its distribution business in Japan and emerging markets. In addition, last week’s positive news on BioFreedom and its BioMatrix family would be supportive in reinforcing the benefits of BIG’s products. We look to see how the growth story pans out for BioFreedom, as primary endpoint data for its LEADERS Free trial is slated for release later in the year. But we keep in mind that obtaining approvals from US and Japan for BioFreedom could take a long time, and hence impacts on profitability are unlikely to be immediate.
Maintain SELL
As we expect a similar picture in the near-term, we trim our FY16F revenue and net profit by 5%/11% while we also introduce our FY17 estimates. Our FV estimate of S$0.60 stays unchanged based on 20x FY16F P/E. SELL at this juncture on rich valuations.
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