Friday, March 4, 2016


Biosensors: (S$0.82) Weak 3QFY16; share price held up by ongoing deal
Biosensors' 3QFY16 swung into net loss of US$1.1m (3QFY15: US$7.4m profit), taking 9MFY16 to US$12.3m (-45%), barely a third of street's FY16 earnings estimate of US$42.1m.

The drag came from pricing pressure for its products and weak licensing revenue due to a reduction in the licensee's DES sales in Japan, which resulted in a 18% drop in revenue to US$63.6m.

Subsequently, bottom line was dragged by a slip in gross margin to 70% (-2ppt), and the persistently high operating expenses of US$37.1m (-7%) despite lower sales.

Still, share price of Biosensors at $0.82/share has been held up by the ongoing proposed amalgamation with CB Medical Holdings, which allows shareholders to make an exit at $0.84/share.

The SGM to obtain shareholders' approval will be held on 5 Apr, just before the deal deadline on 10 Apr.

Biosensors is currently valued at 23.6x forward P/E, above its 5-year historical average of 17.4x.

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