Biosensors

Biosensors: 4QFY14 well below, swinging to a net loss of US$247m, from US$6.1m a year earlier, mainly from a US$256.1m goodwill impairment and US$2.2m of professional fees. This brings full year net loss to US$224.8m, against a US$40.6m profit last year.

4QFY15 revenue fell 7% to US$75.9m, as licensing and royalties revenue nearly halved to US$5.4m. Product revenue was shaved 1% to US$70.5m as interventional cardiology revenue was partially offset by increases in critical care and cardiac diagnostic.

Gross margins fell 3.5ppt to 72.7%, from the distribution activities of Nobori stents in Japan, the cardiac diagnostic business, and price competition. Meanwhile operating margins held steady at 21.7% despite gross margin compression on lower operating expenses.

The goodwill impairment was relating to the JW Medical System acquisition, factoring into account dimmer China drug eluting stents growth prospects. When Biosensors bought the remaining 50% stake in JW Medical System in 2011, China revenue growth was in high double digits, but has been waning since.

On outlook, management cites headwinds like stiff competition, weakening licensing income from Terumo and FX pressure from potential translation losses.

Meanwhile, Biosensors guided that their clinical trials for BioFreedom and the next-generation Excel stent are progressing well.

Biosensors is trading at 22.8x consensus FY3/16e P/E, and 1x P/B.