Biosensor: Nomura maintain BUY, but reduces TP to $1.65 from $1.76. Note that Co. has shareholder approval on 28 Sep 2011 to acquire a 50% stake in JWMS from Shangdong Weigao, a win-win for both parties, as with full control, Biosensors will be able to pursue a more aggressive strategy in China, while Weigao will emerge as a major shareholder, benefitting from Biosensors’ intellectual property and global footprint.
With the restructuring of JWMS and rev contribution from Jap in FY12F, Biosensors is well positioned for the next stage of its growth. it may expand into adjacent products via acquisitions. Expect further gains in Japan, CE Mark for BioFreedom, although cut estimates for FY13/14 by 4-5% to factor in the weaker outlook in the EU and price pressures in China. Believe current P/E valuations of 15.3x and 11.1x for FY12F and FY13F, respectively, are undemanding given the company’s strong growth prospects and enhanced balance sheet.