Biosensors

Biosensors: 1QFY15 results missed, as net profit fell 18% to US$9.9m, while revenue rose 5% to US$80.2m, as product revenue rose 5% to US$70.5m, driven by growth in critical care, interventional cardiology and cardiac diagnostic. This was partially offset by a 16% reduction in licensing and royalties at US$9.7m. Product gross margins slipped 4ppt to 71% s attributable mainly to lower gross profit margins from the distribution activities of Nobori stents in Japan and the cardiac diagnostic business, as well as the price reductions in various geographic regions. Management is eyeing new product opportunities in non-DES field s and efficiency improvement, but meanwhile, Deutsche reckons the road to recovery would be slow. Meanwhile, near term risks include weakness in volume growth in China, continuous market share loss in Japan, and temporary gap between the ramp up of BioFreedom and the maturing life cycle for BioMatrix. Biosensors trades at 28.7x annualized 1QFY15 P/E. Latest broker ratings: Deutsche maintains Sell with TP of $0.64