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.
• Yesterday, China Taisan and United Envirotech become the latest companies to receive approval from the Taiwan Stock Exchange and Taiwan Central Bank for the listing of their TDRs on the exchange, joining Hu An Cable, which received its approval on 31 Aug.
• 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).
