Biosensors International Group’s (BIG) 3QFY12 core PATMI of US$26.8m (+79.8% YoY, +24.4% QoQ) was slightly below our US$28.2m estimate, while revenue of US$84.8m (+99.0% YoY, +36.3% QoQ) came in 3.8% above our forecasts. Its healthy revenue growth trend was underpinned by market share gains and strong licensing revenues. Moving forward, we believe that new catalysts for BIG’s financial and share price performance would come from obtaining regulatory approval from China’s SFDA for its BioMatrix™ DES and CE Mark approval for its next-generation BioFreedom™ DES. We tweak our earnings projections marginally but our DCF-derived fair value estimate remains unchanged at S$1.95. Reiterate BUY.
Consolidation of JWMS boosts headline figures.
Biosensors International Group (BIG) reported 3QFY12 core earnings which were slightly below our expectations. Revenue jumped 99.0% YoY and 36.3% QoQ to US$84.8m, or 3.8% above our estimates. Net profit surged from US$13.3m in 3QFY11 and US$22.9m in 2QFY12 to US$291.5m, due mainly to a one-off non-operating and non-cash gain of ~US$273.2m from BIG’s acquisition of JW Medical Systems (JWMS). This is the first quarter in which BIG has fully consolidated JWMS, which partly explains the significant jump in headline figures. Adjusting for exceptional items, we estimate that core PATMI would have increased 79.8% YoY and 24.4% QoQ to US$26.8m, slightly lower than our forecast of US$28.2m. For 9MFY12, revenue rose 82.0% to US$204.0m, while core PATMI grew 101.4% to US$72.4m.
Healthy revenue growth trends.
Despite ongoing economic weakness in Europe, management highlighted that it still managed to achieve over 20% sales growth from the EMEA region. Another bright spot came from Asia-Pacific, which also delivered ~20% sales growth. A noteworthy mention was the strong contribution from its Licensing revenues, which exceeded our expectations yet again. Nevertheless, given larger-than-expected increase in sales and marketing expenses due to BIG’s aggressive participation in key healthcare symposiums and seminars, core earnings for 3QFY12 slightly missed our projections.
New catalysts from product approvals.
We believe that new catalysts for BIG’s financial and share price performance would come from obtaining regulatory approval from China’s SFDA for its BioMatrix™ DES and CE Mark approval for its next-generation BioFreedom™ DES. In addition, we are also expecting robust organic growth in its existing addressable markets to continue, backed by positive clinical evidence. We adjust our core earnings estimate for FY12 and FY13 by -1.8% and -1.2% respectively, but our DCF-derived fair value estimate remains unchanged at S$1.95. Despite the recent share price surge in BIG’s stock, we believe that the market still has not fully priced in the growth potential of BIG. Reiterate BUY.
Biosensors International Group (BIG) reported 3QFY12 core earnings which were slightly below our expectations. Revenue jumped 99.0% YoY and 36.3% QoQ to US$84.8m, or 3.8% above our estimates. Net profit surged from US$13.3m in 3QFY11 and US$22.9m in 2QFY12 to US$291.5m, due mainly to a one-off non-operating and non-cash gain of ~US$273.2m from BIG’s acquisition of JW Medical Systems (JWMS). This is the first quarter in which BIG has fully consolidated JWMS, which partly explains the significant jump in headline figures. Adjusting for exceptional items, we estimate that core PATMI would have increased 79.8% YoY and 24.4% QoQ to US$26.8m, slightly lower than our forecast of US$28.2m. For 9MFY12, revenue rose 82.0% to US$204.0m, while core PATMI grew 101.4% to US$72.4m.
Healthy revenue growth trends.
Despite ongoing economic weakness in Europe, management highlighted that it still managed to achieve over 20% sales growth from the EMEA region. Another bright spot came from Asia-Pacific, which also delivered ~20% sales growth. A noteworthy mention was the strong contribution from its Licensing revenues, which exceeded our expectations yet again. Nevertheless, given larger-than-expected increase in sales and marketing expenses due to BIG’s aggressive participation in key healthcare symposiums and seminars, core earnings for 3QFY12 slightly missed our projections.
New catalysts from product approvals.
We believe that new catalysts for BIG’s financial and share price performance would come from obtaining regulatory approval from China’s SFDA for its BioMatrix™ DES and CE Mark approval for its next-generation BioFreedom™ DES. In addition, we are also expecting robust organic growth in its existing addressable markets to continue, backed by positive clinical evidence. We adjust our core earnings estimate for FY12 and FY13 by -1.8% and -1.2% respectively, but our DCF-derived fair value estimate remains unchanged at S$1.95. Despite the recent share price surge in BIG’s stock, we believe that the market still has not fully priced in the growth potential of BIG. Reiterate BUY.
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