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