Biosensors

Biosensors: 1QFY12 results above consensus expectations.
Net profit up 6-fold yoy to US$22.6m, while pre-exceptional net profit was up 2.4x to US$24.1m. This was driven by increased market penetration and the launch of the Nobori stent in Japan during May.
Total revenue grew 73% yoy to US$57m, in particular with licensing and royalties revenue jumping by 4x to US$15.6m, reflecting Terumo’s success in gaining mkt share (est 16% now) with the launch of the Nobori stent in Japan.
The strong results suggest that the group continues to gain traction with its Biomatrix products across the board.

Biosensors reaffirmed its positive outlook for the group’s revenue and maintained its guidance of 50-60% revenue growth. This assumes that it is able to consolidate the remaining 50% equity of JWMS from partner, Shandong Weigao by 2QFY12. In turn, Weigao may assume a 16% stake in Biosensors and will hold 21% after conversion of its convertible bonds. Also, Weigao indicated previously it would use HK$1b in proceeds to purchase more Biosensors shares. A 30% ownership would trigger a general offer.

With regards to BioFreedom’s CE mark approval status, the company indicates that it has filed for approval but is unable to predict when approval will be obtained. In terms of the ASP outlook in China, it expects some degree of price erosion to occur, given that high-end consumables such as stents are likely to be included in regional centralized procurement. Mgt indicated that a national tender in China is likely to happen by end-2011.

Nomura keeps Buy rating and PT $1.59, expects stock price to react favourably post results. Remains bullish on the group’s long term prospects, believes Biosensors could garner increased market share following the withdrawal of Johnson & Johnson from the DES market globally, with Japan to be the key driver in FY12.