Biosensors one of the fastest growing companies in the Singapore Market

Biosensors International Group Ltd (BIG) is a producer of innovative medical devices used in interventional cardiology and critical care procedures. The profits of the company are driven mainly by product revenue and licensing fees from its drug-eluting stents (DES) technology.

 Acquisition of JWMS increases Biosensor’s exposure to the fast growing DES market in China
 Regulatory approval for the use of its DES technology to drive earnings upside
 Nobori sales to provide licensing income stream
 A company to grow through acquisitions
 We do not have a rating on the stock

In this report, we provide a quick summary of the business for Biosensors, one of the fastest growing companies in the Singapore Market. However, we do not commit to an active coverage and do not have a rating on the stock.

Investment Merits
Following the acquisition JWMS, one of the top three DES players in China, we believe that Biosensors is well positioned to benefit from the growing DES market in the country. The successful launch of
BioMatrix in 2008 led to strong growth in the IVP segment over the past few years. Going forward, we expect earnings upside to come from growth in new markets, as the company achieves regulatory approval for the use of its products in other jurisdictions. The renewed licensing agreement with Terumo would continue to drive income streams from the sale of Nobori by Terumo. With a strong balance sheet, we also expect Biosensors to continue its growth trajectory by acquiring companies with complementary technology.

Investment Risks
The key downside risks for Biosensors would be
1) its high dependency on the success and adoption of its DES products,
2) downwards price pressures from the launch of similar DES products by major competitors,
3) poor performance of Nobori that would impact licensing revenue streams from Terumo and lastly,
4) overpaying for businesses in its acquisition drive.

Valuation
The stock of Biosensors trades at reasonable earnings multiples of 13.4X and 12.0X FY13/14E based on consensus forecasts. The current P/E multiple of the stock is marginally below that of a selected group of peers. We do not have a rating on Biosensors.