Biosensors

Biosensors: CS reassumes coverage on Biosensors with Outperform and TP$2.00 up from $0.80 (in May 2010). House is of view adoption of proprietary BioMatrix drug-eluting stents (DES) places Biosensors on a rapid growth curve in emerging mkts, with significant upside supported by
(1) strong licensing revenue growth from the Japan market after the May launch (fig below),
(2) faster market share expansion in emerging markets such as China, and
(3) new product launches

Value is under-recognised as it is not only a leading cardiac DES player with value in its proprietary technology including polymer, coating, drug, stent, catheter to delivery system, which are core fundamental technology transferable to penetrate intl medtech mkts (other non-DES types in fig below). Also with Weigao as its largest shareholder diversification into other medtech products shld accelerate.

China-listed peers trade at 16.7x 2012E EPS and PEG of 0.9, approx 20% growth CAGR but Biosensors is trading below 10.5x FY12E EPS. With PEG of 0.3 implying 32% growth. House values co at 15.5x FY12E EPS and PEG of 0.5x