By Carey Wong
Thu, 12 Feb 2009, 08:58:04 SGT

Market Pulse: Biosensors, Karin, SSH Corp, Man Wah and WesTech (12 Feb 2009)

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Biosensors International Group: Pulsating growth

Summary: Biosensors International Group (Biosensors) reported another “home run” quarter with its 3Q09 revenue rising 135% YoY to US$20.6m while gross profit soared 233% YoY to US$13.6m. On a 9M basis, gross profit grew 3.5x to US$74.3m. The impressive performance was primarily due to accelerated sales of its Drug Eluting Stents along with better cost controls. The company indicated that with its cash balance of US$63.7m, it will be able to internally service its US$45m Convertible Notes (plus interest) due in Nov 2009. Management also updated on plans to launch its BioMatrix stent in China, with regulatory approval expected within 12 months. We think that Biosensors is now in a position to grow to the next phase when it can compete with global players. We tweak our financials and introduce our FY11F estimates with new management guidance on FY10F performance, better clarity on projections in China, cost estimates and product sales acceleration. We are maintaining our medtech discounted model with a raised fair value of S$0.71 (prev: S$0.66). Maintain BUY. (Kelly Chia)


Karin Technology: Credible 1HFY09 results

Summary: Despite the deteriorating global economy, Karin Technology (Karin) yesterday released a set of healthy 1HFY09 results. Revenue was essentially flat YoY at HK$902.8m (-8.4% HoH), while net income fell 35.8% YoY (-6.5% HoH) to HK$23.3m amid a less favorable sales mix and higher operating expenses. Its main revenue generator, IT infrastructure segment, continued to grow (+5.1% YoY) due to still decent demand for various computer products, and partially offset weakness in its components distribution and IC application design segments (-7.1% YoY and -3.9% YoY respectively). Over the period, Karin had also reduced its bank borrowings substantially from HK$160.9m in June 2008 to just HK$1.5m, while keeping its cash position steady at HK$55.5m (HK$52.6m in June 2008). The half-year sales formed about 47.4% of our FY09 revenue forecast, whereas the net profit met 57.6% of our bottomline projection, but we note that first-half is typically stronger. We will provide more updates after attending the analyst briefing this afternoon. For now, we put our BUY rating and S$0.18 fair value under review. (Kevin Tan)


SSH Corporation: Net profit within expectations but lowering estimates

Summary: SSH Corporation (SSH) reported a 2% YoY fall in revenue to S$55.1m and a 27% YoY rise in net profit to S$5.5m for 2Q09. Revenue was lower than expected but net profit was within expectations, partly due to higher other operating income. On the whole, it was a good set of results given the difficult operating environment. Going forward, gross margins may be affected by lower steel prices and the group has also made provisions for an inventory write-downs. Despite the fact that results are historically better in the second half of the financial year, we are lowering our FY09 revenue estimates by 8% in view of the challenging outlook ahead, but maintain our valuation parameter of 2x blended FY09/10 earnings. Our fair value estimate eases to S$0.11 (prev. S$0.12) but we maintain our HOLD rating for SSH. (Low Pei Han)


Man Wah Holdings Ltd: Sales growth came from Europe

Summary: Man Wah Holdings Ltd’s (MWH) 3Q09 results exceeded our expectations with a 14.7% YoY growth in earnings to HK$56.2m accompanied by a 29.9% increase in net profit to HK$522.3m. EPS grew to 8.43 HK cents from 7.35 HK cents a year ago. Europe posted the highest sales growth of 65.4%, while North America and China turned in credible improvements of around 32%. Declining consumer spending has pushed the group to reduce its average selling prices (ASP), and this could potentially hurt its revenue going forward, if volume growth does not catch up with price declines. With the present drag on economic growth prospects and the expected slowdown in consumer demand, we see no major share price drivers ahead and thus we are suspending coverage on the stock. (Lee Wen Ching)


WesTech Electronics Limited: Profit warning for FY08

Summary: WesTech Electronics (WTE) yesterday announced that it expects to suffer significant losses for FY08, primarily due to the provision for doubtful debts from default of payments by major customers. These losses have been further impacted by decline in sales, write-down of inventory, as well as exchange losses due to fluctuation of the USD against the SGD. WTE is currently still in the process of liaising with the insurer in relation to the claim on the default of the accounts receivables by a major customer as announced on 30 Sep 2008. It adds that it had entered into a standstill agreement with certain financial institutions and creditors on 19 Dec 2008 and the agreement will be in force for a period of up to six months or till termination of the agreement in accordance with the stipulated provisions. WTE has been put under review since October 2008 due to uncertainties over its financial status. (Kevin Tan)


For more information on the above, visit www.ocbcresearch.com for the detailed report.


NEWS HEADLINES

- ASL Marine registered a 10.6% YoY rise in net profit to S$16.3m for 2Q09 while revenue rose 7.7% to S$107.7m.

- Hit by a hefty investment impairment charge, the Hour Glass posted a 3Q09 net loss of S$7.08m, its first quarterly loss in 10 years, versus a net profit of S$8.21m in 3Q08.

- Food Junction reported a 2% YoY fall in net profit to S$1.09m for 1Q09 despite a 10.9% rise in revenue to S$12.95m.

- Tiong Woon Corporation posted a 119% YoY rise in 1H09 net profit to S$23.07m while revenue rose 45% to S$95.51m.

- ST Electronics has won additional contracts worth about S$6.8m to provide an integrated security system and other projects for Resorts World at Sentosa.

- RSH Ltd reported a 45% YoY drop in net profit to S$8.3m in 3Q09.

- Yellow Pages reported a 38.6% YoY rise in net profit to S$19.1m for 9M09 while revenue was flat at S$56.4m.

- As government-backed loans provided to SMEs jumped 38% to S$990m last year, Spring Singapore will continue to step up efforts to support viable SMEs throughout the downturn.