Biosensors International Group (BIG) reported a sturdy set of 1QFY12 results which exceeded our expectations. Revenue rose 72.7% YoY and 28.2% QoQ to US$57.0m, forming 22.3% of our FY12 forecasts. Core earnings increased 143.6% YoY and 44.7% QoQ to US$24.1m constituting 28.9% of our full-year estimates. BIG’s sterling performance was fuelled by both higher product sales and licensing revenues from Terumo, which allowed the group to exceed the growth of the overall drug-eluting stent market substantially. A better product mix and increased economies of scale in manufacturing also helped to boost its margins. Management reaffirmed their total revenue guidance of 50-60% growth for FY12, subject to the completion of acquisition of JWMS (remaining 50% equity stake). Taking into account the better-than-expected set of results, we raise our FY12/13F core earnings by 13.4/6.8%. Our DCF-based fair value estimate thus increases from S$1.60 to S$1.68. BIG remains a BUY as fundaments remain strong.

1QFY12 results above expectations. Biosensors International Group (BIG) reported a sturdy set of 1QFY12 results which exceeded our expectations. Revenue rose 72.7% YoY and 28.2% QoQ to US$57.0m, forming 22.3% of our FY12 forecasts (consolidation of JWMS is expected to occur from 2HFY12). Net profit jumped 597.3% YoY and 23.8% QoQ to US$22.6m. Excluding exceptional items, net profit would have increased 143.6% YoY and 44.7% QoQ to US$24.1m constituting 28.9% of our full-year estimates. BIG’s sterling performance was fuelled by higher product sales and a 328.6% jump in licensing revenues as the Nobori stent was launched in Japan by its licensee Terumo during the quarter. The former was largely attributed to growing demand for BIG’s BioMatrix family of drug-eluting stents (DES) although the group did not obtain any new major geographical market approval. This exemplifies the increasing market share penetration in existing markets and greater acceptance from physicians as BIG strongly outperformed the overall DES market growth. A better product mix and increased economies of scale in manufacturing also helped to boost its margins. Gross profit and EBIT margins gained traction at 81.1% (+5.4 ppt from 1QFY11 and +1.8 ppt from 4QFY10) and 40.9% (+18.3 ppt from 1QFY11 and +8.4 ppt from 4QFY10) respectively.

DES’s large contribution highlights strong competitive positioning. Management maintained that they were happy with their current ASP levels relative to the market, although they are expecting some price erosion in China by year end. With regards to Johnson & Johnson’s (J& J) decision to exit the DES market, management highlighted that BIG’s DES sales had already been gaining traction over the years given the positive clinical data of BioMatrix against J& J’s Cypher stent. However, the group also believes that it can still benefit from physicians who would be looking for a second generation stent after J& J’s exit. Total revenue guidance of 50-60% growth for FY12 was reaffirmed, subject to the completion of acquisition of JWMS (remaining 50% equity stake).

Room for further growth reiterate BUY. While BIG’s share price has surged 28.4% since we resumed coverage with a BUY on 15 Oct 2010, we believe that further upside potential exists, given the recent spate of positive developments taking place at group and industry level. These include new earnings drivers from the licensing revenue coming from the Nobori stent in Japan and J& J’s decision to exit the DES market, which should underpin BIG’s growth momentum moving forward. Taking into account the better-than-expected set of results, we raise our FY12/13F core earnings by 13.4/6.8%. Our DCF-based fair value estimate thus increases from S$1.60 to S$1.68. Reiterate BUY.

Biosensors Reports Continued Strong Sales and Operating Results for the First Quarter of Fiscal Year 2012

Singapore, 27 July 2011 - Biosensors International Group, Ltd. (“Biosensors” or the

“Company”, Bloomberg: BIG SP) today announced its unaudited financial results for the first

quarter of fiscal year 2012 which ended on 30 June 2011 (“Q1 FY12”).

Highlights of quarterly performance:

· Continued robust revenue growth in Q1 FY12, with total revenue of US$57.0M,

representing a 73% increase year-on-year

· Approximate six-fold increase in net profit over Q1 FY11 to US$22.6M

· Agreement announced to acquire the remaining 50% interest in JW Medical Systems

Limited (“JWMS”) from Shandong Weigao Group Medical Polymer Company Limited

(“Weigao”) subject to regulatory and shareholders’ approval

· Plans for Global LEADERS, the largest ever “all comers” randomized clinical trial

between two drug-eluting stents, announced during the EuroPCR congress in Paris

· Terumo commenced sales of its Nobori drug-eluting stent in Japan during May

resulting in an increased licensing revenue for the quarter

“This is yet another quarter of improvement in our product sales, achieved without any

major new geographical market access,” commented Co-CEO Mr. Jeffrey B. Jump. “Our

results reflect an increased penetration in existing territories, due to greater levels of

acceptance of our products by physicians, as well as the launch of the Nobori stent in

Japan.”

For Q1 FY12, Biosensors reported total revenue, including licensing and royalties, of US$57.0

million, a 73% increase over the same quarter of fiscal year 2011 (“Q1 FY11”). Total product

revenue in Q1 FY12 was US$41.4 million, a 41% increase from Q1 FY11’s US$29.4 million.

Total Interventional Cardiology Products (“IVP”) revenue was US$37.7 million, a 43%

increase from Q1 FY11’s US$26.3 million. The increase was primarily driven by continued

growth in the sales of the Company’s BioMatrix™ family of drug-eluting stents (“DES”). Total

Critical Care Products (“CCP”) revenue for Q1 FY12 was US$3.7 million, a 23% increase from

Q1 FY11’s US$3.0 million.

Licensing and royalties revenue in Q1 FY12 grew to US$15.6 million. This is an approximate

four-fold increase over Q1 FY11’s revenue of US$3.6 million.

Gross margins on total product sales were 74% in Q1 FY12, an improvement of 1% from Q1

FY11. This was driven primarily by the shift in product mix towards the Company’s higher

margin DES products, combined with increased economies of scale in manufacturing.

Sales and marketing expenses were US$16.1 million in Q1 FY12 compared to US$9.4 million

in Q1 FY11. The increase was due to higher payroll and related expenses associated with

the build up of the sales and marketing function as well as higher expenses for

participation in medical congresses and travel.

General and administrative expenses were US$6.1 million in Q1 FY12 compared to US$4.5

million in Q1 FY11. The increase was mainly attributable to higher professional and patent

renewal fees, as well as increased payroll-related and travel expenses.

Research and development (“R& D”) expenses, which include costs for new product

development and testing, clinical trials and regulatory approvals, were US$4.4 million in Q1

FY12 compared to US$3.2 million in the prior year’s corresponding period. The increase was

mainly due to higher clinical trial expenses.

Included in the Q1 FY12 results is the equity method of accounting for the Company’s 50%

ownership interest in JWMS. This resulted in a net income of US$4.1 million, compared to

US$5.2 million for Q1 FY11.

For Q1 FY12, the Group reported a net profit of US$22.6 million or 1.68 US cents basic

earnings per share (“basic EPS”) and 1.64 US cents diluted earnings per share (“diluted EPS”),

compared to a net profit of US$3.2 million or basic EPS of 0.30 US cent and diluted EPS of

0.29 US cents for Q1 FY11.

Excluding the fair value adjustments for warrants, net profit would have been US$24.1

million, or basic EPS of 1.80 US cents and diluted EPS of 1.76 US cents. For Q1 FY11,

excluding the restructuring charges related to the closure of the U.S. operations and fair

value adjustments for warrants, net profit would have been US$9.9 million or basic EPS of

0.93 US cents and diluted EPS of 0.90 US cents.

The Company continues to expect its full year FY12 total revenue to be 50% - 60% higher

than its full year FY11 total revenue. In this assumption, the Company anticipates to

complete the acquisition of the remaining 50% equity of JWMS within the second quarter of

this fiscal year, subject to regulatory and shareholders’ approval.

" Looking ahead for this new fiscal year, we believe the market dynamics will continue to

improve for Biosensors,” concluded Co-CEO Dr. Jack Wang, “This last period represents our

fifteenth consecutive quarter of product sales growth. We will continue to invest in our

sales and marketing channels to maintain this sales momentum. During the past quarter,

we announced the intention to take over the remaining equity of JWMS from our JV

partner. Subject to various approvals, once this deal is concluded, it will present better

opportunities for Biosensors in China. Last but not least, we remain committed to investing

in R& D to develop superior cardiovascular solutions for the future."

Date of Announcement of Financial Results for the First Quarter of

Financial Year 2012 ended 30 June 2011

Biosensors International Group, Ltd (“Biosensors” or “Company”) will announce its results for

the first quarter of its financial year 2012 (“Q1 FY12”), ended 30 June 2011 on 27 July 2011,

after trading hours.

Co-CEOs Dr. Jack Wang and Mr. Jeffrey B. Jump, and CFO Mr. Ronald H. Ede will host an analyst

conference call on that day at 5.30 pm (Singapore Time) to discuss the financial results and provide an update on the Company’s progress.

A live webcast of the audio conference will be available through the corporate website at www.biosensors.com on the day of the event.

 

A live webcast of the audio conference will be available through the corporate website at www.biosensors.com on the day of the event.