Biosensors

Biosensors: disappointing core 4QFYMar13 results; below expectations. Revenue at US$88.8m, flat yoy. Net profit at US$29.6m, +9% yoy, mainly boosted by a tax write back of US$5.9m. Pretax profit was US$23.8m, -20% yoy, largely due to higher operating costs, eg. selling & Marketing and R&D expenses. The group saw revenue growth and gross margin expansion for its core DES business, despite pricing pressures. The China market saw organic revenue growth in FY13 but is experiencing headwinds. Licensing revenue was the main drag, as it continued to decline qoq and yoy, due to lower pricing, loss of mkt share in Japan, and weaker contributions from a depreciating yen. Mgt has guided for a 15% yoy overall revenue growth in FYMar14. Expect more M&A activities as Biosensors seeks to expand its product lines for more growth drivers. The group declared maiden div of US 2cts which translates to a yield of 2.1%. Maybank KE maintains at Hold with TP $1.25 (from $1.28), notes challenges in existing pdt lines, and believes the group needs a stronger (M&A) catalyst for positive re-rating. Deutsche keeps at Hold, with TP $1.30. Nomura maintains Buy with TP $1.80, but still expects negative stock reaction on the lower-than-expected results.