Valuation Case Study on BIOSENSORS INTERNATIONAL · 2013. 8. 11. · Company P/E Biosensors 13.57...
Transcript of Valuation Case Study on BIOSENSORS INTERNATIONAL · 2013. 8. 11. · Company P/E Biosensors 13.57...
Valuation Case Study on
BIOSENSORS
INTERNATIONAL
Disclaimer and Declaration
The objective of the presentation is for educational
purposes. The full content of the presentation is for
illustration purposes only and should not be used as
investment recommendations. AB Maximus and its
presenters are not responsible for all investment activities
conducted by the participants and cannot be held liable
for any investment loss.
The company and presenters may have personal interest
in the particular shares presented.
Agenda
Company Background 1
Industry Overview 2
Valuation 3
Risk 4
Company Background
Biosensor International belongs to the
HEALTH CARE sector and its core business
is in developing, manufacturing and marketing
innovative MEDICAL DEVICE used in
interventional cardiology and critical care
procedures
Company Background
Interventional
Cardiology
• Drug Eluting Stents
BioMatrix Flex
Axxess
• Bare-metal stents, S-Stent
Gazelle
•Balloon Dilation Catheter
Powerline
Source: www.biosensors.com
Company Background
Critical Care
• Products include:
ACCUTRANS Disposable Blood
Pressure Transducer
BIOTRANS
Thermodilution and Pulmonary Artery
Catheters
Multi-Lumen Central Venous Catheter
Bipolar Pacing Catheter
BIOTRAY
Embolectomy Catheter
Source: www.biosensors.com
Company Background
Source: www.biosensors.com
Company Background
Revenue Highlight (FY 2012)
Source: Company’s Annual Report 2012
33.04 36.47
42.59 44.49
57.04 62.19
84.75 88.16
0
10
20
30
40
50
60
70
80
90
100
Q1 Q2 Q3 Q4
FY 11
FY 12
70%
increase
100%
increase
Company Background
Revenue Growth in FY 13 Q1
Source: Company’s Annual Report 2012
33.04 36.47
42.59 44.49
57.04 62.19
84.75 88.16 86.31
0
10
20
30
40
50
60
70
80
90
100
Q1 Q2 Q3 Q4
FY 11
FY 12
FY 13
Biosensors announce
revenue growth of 51%
as compared to FY 12 Q1
Company Background
Revenue by Segment
Source: Company’s Annual Report 2012
196.74
0 0
80.78
14.62 FY 2012
Interventional Cardiology
Drug-Eluting Stents
Other Interventional Cardiology Products
Licensing Revenue
Critical Care
27.7%
5%
67.3%
Revenue contribution for Biosensors comes
mainly from the Interventional Cardiology Segment
Interventional Cardiology grew 56% from FY 11
Interventional cardiology revenue grew 56% from
FY11, driven largely by the consolidation of JW
MedicalSystems Ltd continued growth in sales of the
BioMatrixTM family of DES.
Industry Overview
Source:RCML Research
Stent Industry Outlook
Biosensors International Group had a market share of 8% globally
Industry Overview
Significant Growth Opportunity in China
Source: Religare Care Research Institute
Fully Owned
Subsidiary of
BioSensors
Industry Overview
Source:RCML Research
Stent Industry Outlook
Global Stent market is estimated at US$6bn and growing at
3% annually, Biosensors market share growth is higher
due to its high exposure to Asia Pacific especially China
In China for heart attack cases, only 3% of patients receives
stents as compared to 30% In developed countries. China’s
inadequate medical infrastructure could be a factor however,
The government had a favourable policy on this issue.
Industry Overview
Source:www.sgx.com
Licensing Revenue
Biosensors extended its agreement with Terumo to sell
BioMatrix technology in Japan till 2014
Licensing contributed 27% of revenue in FY2012
Valuation
Methodology
FCFF
P/E Comparison
Valuation
Risk Free Rate 2.5%
Market Required Return 10.0%
Beta 1.15
Cost of Equity (CAPM) 11.1%
Cost of Debt 4%
WACC 11%
Terminal Growth 2.5%
Valuation
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Revenue growth 21% 13% 11% 8%
Growth - DES 28% 16% 14% 9%
Growth - Critical Care 4% 2% 3% 4%
Growth - Licensing 6% 5% 4% 4%
Revenue - DES 126 197 252 292 333 363
Revenue - Critical
Care 13 15 15 16 16 17
Revenue -
Licensing 17 81 86 90 94 97
Total Revenue 157 292 357 402 448 483
Gross Profit Margin 0.78 0.80 0.81 0.81 0.8 0.8
Revenue Projection
Valuation FY2013 FY2014 FY2015 FY2016
Free Cash Flows to Firm 103 150 169 190
Discount Factor (WACC) 11% 0.948731 0.853943 0.768626 0.691832
Present Value of Cash Flows 92.17 123.68 125.60 127.85
Sum of Present Values in Forecast
Period 463.46
Terminal Value 511.66
Enterprise Value 1975.12
Add: Net Cash 313.531
Less: Borrowings -37.08
Equity 2,251.57
Number of Shares
Outstanding 1719.629
Price Per Share (US$)
Price Per Share (S$) 1.31
Valuation (P/E Comparison)
Source: Bloomberg P/E slightly less than industry peers
Company P/E
Biosensors 13.57
Terumo Corp 24.3
Shandong Weigao Group Medical 26.2
Mindray Medical International 16.9
Lepu Medical Technology 17.1
Microport Scientific Corp 11.9
Johnson & Johnson 13.2
Abbott Laboratories 12.7
Medtronic Inc 10.9
Covidien PLC 11.8
Boston Scientific Corp 11.3
Raffles Medical Group 21.3
Industry Average (excluding Biosensors) 16.1
Estimated Forward EPS 0.077
Fair Value $1.24
Trading Data
52 Weeks Trading Range $1.09 - $1.70
Avg Volume (3 mths) 6.7 mil
Market Cap $2.12 bil
Source: Yahoo Finance
Main Risks
The medical device market is highly competitive
and fast changing, company need to
continuously innovate to avoid being obsolete.
Clinical Trial is lengthy and expensive, any delay
due to regulatorys may impact on Biosensors
operations and share price
Main Risks
Operating results and financial position is
vulnerable to economic, political, social and
legal developments and domestic demand in
China.
Default Risk - Low
Current ratio = 3.72x
Interest coverage = 60.8 x
D/E ratio = 3.318
Loans maturing this year = $37.08 mil
Cash = $313.5 mil