Biosensors: Post discussion with mgt, Deutsche tips possibility of Shandong Weigao (1099 HK) acquiring Biosensors’ 50% stake in the JW Medical (JWMS) JV; adds Weigao may further acquire a controlling stake in Biosensors. Says Weigao is the other 50% JWMS JV partner, and deal makes sense bcs Weigao's corporate gross margin is 55% vs JWMS’ GM of 85-88%; also Weigai does not yet have its own stent technology…
It would be positive if this scenario were to occur, as this would be an opportunity for Biosensors to unlock value. DBSV estimates Biosensors’ JWMS stake to be worth ~US$500m (22x FY12E P/E), which translates to ~$0.38/sh.
Recent Street ratings are a unanimous Buy, with targets ranging btwn $1.32-1.50.
Stock trades at 26.9x consensus fwd P/E, vs Weigao’s 36.6x and Microport’s 21.4x…
Stock closed up 3.4% on Friday at $1.22, may be a possible breakout candidate if multi-year high of $1.26 is taken out.
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