Revolutionary products from SINJIA LAND, QT VASCULAR

Excerpts from analysts' reports

UOB Kay Hian unrated report highlights potential of Sinjia Land's new fuel cell business

Analyst: Loke Chunying

Sinjia Land currently has a market cap of S$27 million. Chart: Bloomberg.Sinjia Land (Sinjia), formerly HLN Technologies, has set up a 50:50 JV with Real Time Engineering Pte Ltd (RTE). The JV will be the exclusive licensee for the manufacturing of a proprietary fuel cell power plant that uses hydrogen to produce clean and green electric power.

The patent for the fuel power cell is currently held by Mr S Y Wong, the founder of RTE, and will be ultimately transferred to the JV.

Successful trial leads to new contracts. We understand RTE’s trial fuel cells set up at some HDB flats have been very successful. As a result, the JV signed a 10+10-year agreement with the Ministry of Manpower (MOM) and Jurong Town Corporation (JTC) to set up a 1MW power plant at the MOM building (Bendemeer) and at JTC’s CleanTech Park to supply electricity.

The contract will be based on pay per usage, and will be at a 5% discount to the current rates charged by Singapore Power. The plant is expected to start generating electricity from Aug-Sep 14.

Our view. We see potential in this revolutionary green fuel cells, especially in land-scarce Singapore, due to its compact size and 24/7 operational reliability (as compared to solar power panels which require huge land space and can only be used in the day). The Singapore government’s green initiatives such as the BCA green mark scheme also suggest possible support as evident in the awarding of the two new contracts by MOM and JTC.

While we see great potential in the green fuel cells (eg recurring income from sales of electricity and oil), educating consumers and gaining market acceptance are the key initial risks.

For full UOB KH report, click here.

DBS Vickers' unrated report says QT Vascular (53.5 cents) is trading at stretched valuations

Analyst: Alfie Yeo

Develops and markets products for vascular diseases. QT Vascular’s (QTVC) flagship product is the Chocolate PTA, a percutaneous transluminal angioplasty (PTA) Balloon approved for the treatment of Peripheral Artery Diseases (PAD).

Its products are distributed through Japan’s Century Medical, China’s Weihai Weigao and Johnson & Johnson. Market penetration and adoption of its balloon catheters will drive growth going forward.

Stock catalyst in product approvals. QTVC is awaiting approvals for some of its products in Japan and China. If approved for sale, these products could positively impact its future earnings and stock price.

QTVascular_choc6.14 QT Vascular's Chocolate PTCA Balloon Catheter: The balloon has rings positioned along its tract to prevent it from expanding into a uniform shape. This prevents the balloon from inflating in the shape of a bone, with the edges being larger than the center of the balloon. Additionally, the valleys that are formed allow large bits of particularly hard calcification to snuggle within them rather than being pushed into the blood vessel wall where they can cause damage.

Risks. Factors that may cause the company’s earnings to underperform include competition from stents and other balloons, failure to attain product approvals, poor take-up rates from commercialisation of products, adverse clinical trial data on QTVC’s products, and loss of distributorship.

QTVC’s product concentration is high and it is important for it to diversify away from balloon catheters. Persistently higher-than-expected cash burn rate to fund clinical research and development could also weigh down on its balance sheet and share price.

Trading at 15x P/S, above peers. It is not meaningful to value QTVC on earnings and EV/EBITDA multiples since the company is loss making. This leaves P/S multiple as the most relevant valuation matrix, albeit its short listing history.

QTVC’s P/S multiple is way above its peers’ average of 4-5x. We attribute the lofty P/S to its low revenue base and believe current valuations appear stretched. However, upside risks to the stock includes a potential buyout for QTVC, product approvals and better than expected sales.

Revolutionary products from SINJIA LAND, QT VASCULAR

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