Biosensors

Biosensors: has agreed to purchase substantially all the assets of Spectrum Dynamics – a privately-held medical imaging and clinical applications company engaged in advanced functional assessment technologies, including those used to evaluate patients for cardiac interventions. The purchase consideration is US$51.1m to be paid in cash, but may rise to US$72.5m including assumption of trade accounts payable and earn out payments (for meeting certain performance benchmarks from date of acquisition to FYMar16). Spectrum has a net book value of US$7.3m. Biosensors will fund the acquisition with internal resources; expects minimal impact for FY14, but notes its potential to be moderately accretive to earnings in FY15. While small in size (< 6% of Biosensors’ net assets), the acquisition fits Biosensors’ strategic intent to expand its product line offerings and develop new revenue streams. We hypothesize that there may be synergies as Biosensors could potentially offer more attractive evaluation and medical product packages to healthcare providers. At $1.235 at last close, Biosensors trades at 15.2x P/E, similar to HK-listed peer Microport (853 HK) at 16.6x. OCBC maintains its Buy rating with TP $1.60.