Excerpts from latest analyst reports.....

Nomura Singapore sees catalyst for re-rating of BIOSENSORS

Analysts: Jit Soon Lim & Yuan Yiu Tsai

According to Bloomberg, Microport Scientific, the leader in the Chinese drug-eluting stent market,
is raising about US$150mn via a Hong Kong IPO this month (Bloomberg, 1 Sep 2010).

If Weigao's current valuation of 35x FY11 P/E is any guide for Microport's, we believe a successful IPO by Microport could be a re-rating catalyst for Biosensors, which owns 50% of JWMS - the last remaining private stent maker in China with a significant market share. Reiterate BUY -- we'll provide further industry analysis on Microport's prospectus pending its release.

 

Peer listing to drive rerating?

Market leader with first mover's advantage. Microport is the market leader in drug-eluting stents (DES) in China with a c30% market share (vs. 20~25% for Lepu and JWMS). Its DES Firebird was the first local DES to be launched in China (in May 2004). While we believe its technology is not groundbreaking (sirolimus-eluting stent similar to Johnson & Johnson's Cypher), Firebird has maintained its market-leading status over the years due to its first mover advantage, albeit with a declining market share.

It has recently launched a clinical trial for a next-generation DES FIREHAWK which has a biodegradable polymer. (for more details, see our initiation report Moving past the inflexion point, 16 Oct 2009)

Re-rating of Biosensors? One part of the investor feedback we have received on BIG is the lack of a trading comparable (ie, a single-product cardiovascular device company listed in Asia, excluding A-shares). Therefore we believe Microport's H-shares listing augers well for BIG as investors potentially become more knowledgeable on the industry.

If Weigao's current valuation of 35x FY11F P/E is any guide for Microport's listing, we believe a successful IPO by Microport could be a re-rating catalyst for Biosensors, which owns 50% of JWMS. Our PT of $1.20 values JWMS at 22x FY10F P/E.

We will provide further analysis pending the release of Microport's IPO prospectus.


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CIMB highlights TDR plays China Taisan, United Envirotech, Hu An Cable.

• In our AM trader today (Sept 7), we highlighted TDR as the most-favoured listing theme in recent weeks after the hype of “dual-listing” frenzy cooled. We recently witness the TDR theme achieving great trading outcomes for the traders.

• Yangzijiang and Super Group are two fine examples, with their share price rising 5.7% and 12% to S$1.68 and S$1.07 respectively after announcing TDR pricings that are at a premium to their last traded price.

YZJ fixed its TDR issue at NT$18.8 per TDR (Two TDRs will represent one share of the company), which translates into S$1.585/share. Super Group fixed its TDR issue at NT$14 per TDR (Two TDRs will represent one share of the company), which translates into S$1.18/share versus its last traded price of S$0.949 on 2 Sep.

L-R: Sharon Xue, Financial Controller, and Dai Zhixiang, CEO, Hu An Cable. Photo by Sim Kih

• Should China Taisan, Hu An Cable and United Envirotech be able to price its TDRs at a premium to its last traded price, we think that it will be positive for their stock value as they could potentially enjoy the rally seen in YZJ and Super.

• We have BUY calls for both China Taisan (TP: S$0.30) and Hu An Cable (TP: S$0.51).