We project Biosensors International Group (BIG) to report revenue and core EPS CAGR of 17.6% and 10.9% from FY12-14F, respectively. In our opinion, growth would be underpinned by its superior drug-eluting stent (DES) technology, which would enable BIG to continue its market share gains from competitors to mitigate the challenges in the industry. BIG’s healthy financial position would also enhance its ability to weather the vagaries of the global economy, finance its R& D and clinical trials, and provide it with ample ammunition for share buybacks and M& A activities. BIG currently trades at 12.1x blended FY13/14F core EPS, which is approximately one standard deviation below its 3-year average forward core PER. Maintain BUY with an unchanged DCF-derived fair value estimate of S$1.69, which implies a potential upside return of 48.2%. We are recommending BIG as our top healthcare pick for 2013.
Poised for further growth
We project Biosensors International Group (BIG) to report revenue and core EPS CAGR of 17.6% and 10.9% from FY12-14F, respectively. Growth would be underpinned by deeper market penetration, supported by robust clinical evidence which highlights the safety and efficacy of its drug-eluting stent (DES) products, in our view. BIG has continued to deliver healthy sales growth in the EMEA and APAC regions, especially in Europe and China, which is in contrast to some of its peers. However, Latin America and India has seen some weakness but we understand that BIG is undergoing some restructuring of its operations in Latin America such as diversifying its distributor base in a bid to increase its penetration and concentration in the region.
Challenges apparent, but BIG still standing strong
While challenges are apparent in the DES market (price and competitive pressures), we see positives from BIG’s superior stent technology, which has enabled the group to maintain its robust growth by capturing market share away from its competitors. Strong volume growth has also led to economies of scale and this has been reflected in BIG’s gross margins (1HFY13: 84.3% +3.4ppt YoY). BIG also generated healthy free cashflows of US$52.3m for 1HFY13, thus allowing it to end the Sep quarter with a net cash position of US$331.7m. BIG’s healthy balance sheet would enhance its ability to withstand the vagaries of the global economy, finance its R& D and clinical trials which is critical for future growth, and provide it with ample ammunition for share buybacks and M& A activities.
Maintain BUY on attractive valuations
BIG is currently trading at 12.1x blended FY13/14F core EPS, which is approximately one standard deviation below its 3-year average forward core PER. Stripping out its net cash balance, BIG trades at a compelling blended FY13/14F ex-cash core PER of just 9.1x. Maintain BUY with an unchanged DCF-derived fair value estimate of S$1.69, which implies a potential upside return of 48.2%. We are recommending BIG as our top healthcare pick for 2013.
We project Biosensors International Group (BIG) to report revenue and core EPS CAGR of 17.6% and 10.9% from FY12-14F, respectively. Growth would be underpinned by deeper market penetration, supported by robust clinical evidence which highlights the safety and efficacy of its drug-eluting stent (DES) products, in our view. BIG has continued to deliver healthy sales growth in the EMEA and APAC regions, especially in Europe and China, which is in contrast to some of its peers. However, Latin America and India has seen some weakness but we understand that BIG is undergoing some restructuring of its operations in Latin America such as diversifying its distributor base in a bid to increase its penetration and concentration in the region.
Challenges apparent, but BIG still standing strong
While challenges are apparent in the DES market (price and competitive pressures), we see positives from BIG’s superior stent technology, which has enabled the group to maintain its robust growth by capturing market share away from its competitors. Strong volume growth has also led to economies of scale and this has been reflected in BIG’s gross margins (1HFY13: 84.3% +3.4ppt YoY). BIG also generated healthy free cashflows of US$52.3m for 1HFY13, thus allowing it to end the Sep quarter with a net cash position of US$331.7m. BIG’s healthy balance sheet would enhance its ability to withstand the vagaries of the global economy, finance its R& D and clinical trials which is critical for future growth, and provide it with ample ammunition for share buybacks and M& A activities.
Maintain BUY on attractive valuations
BIG is currently trading at 12.1x blended FY13/14F core EPS, which is approximately one standard deviation below its 3-year average forward core PER. Stripping out its net cash balance, BIG trades at a compelling blended FY13/14F ex-cash core PER of just 9.1x. Maintain BUY with an unchanged DCF-derived fair value estimate of S$1.69, which implies a potential upside return of 48.2%. We are recommending BIG as our top healthcare pick for 2013.
