Biosensors

Biosensors: Majority shareholder Shandong Weigao has agreed to dispose its entire 21.7% stake in Biosensors to CB Medical Holdings for US$312.3m, valuing Biosensors at $1.05 per share, a 12% premium to its last closing price. SGX filings have identified CB Medical to be a subsidiary of Citic Private Equity, a well known PE fund manager in China, managing ~US$2.6b of committed capital. We note that the street appears divided on their opinion in the latest development, with the positives claiming that the latest acquisition by CB Medical, would enable Biosensors to tap and utilize the resources / network of Citic PE, in regards to business expansion and product development. Others however opine that the sale by Shangdong Weigao, depicts a lack of confidence in the prospects of Biosensors going forward, and the presence of two PE funds (Hony Capital holds 15.8% shares outstanding, CB Medical holds 21.7% shares outstanding) could lead to differing views and a less cohesive organization. Yet, some market watchers are not ruling out a future take-over bid by CB Medical, especially if should Hony Capital divest its stake holdings to them, and trigger a general take-over offer. At the current price, Biosensors trades at 18.2x forward P/E versus HK listed peers Shangdong Weigao’s 33.7x and Microport Scientific’s 22.5x. Overall, the street has 1 Buy, 6 Holds and 2 Sell call ratings with a mean TP of $0.95.