Biosensors shares fall after CB Medical pares stake
Move by major shareholder deals blow to talk of takeover
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Move by major shareholder deals blow to talk of takeover
By Nisha Ramchandani
16 July 2014
Shares in medical devices maker Biosensors International Group lost seven cents to close at 86.5 cents yesterday after substantial shareholder CB Medical Holdings sold off nearly 40 million shares.
The counter slipped to a low of 83 cents in trading yesterday before finally closing at 86.5 cents, with 35.84 million shares changing hands.
Owned by China-based fund Citic Private Equity, CB Medical divested some 39.5 million shares at an average price of US$0.84 per share. This cuts its stake in Biosensors from 21.78 per cent to 19.46 per cent.
In a note to clients, CIMB said that the fund could be pulling out of Biosensors, putting to rest earlier speculation of a takeover offer. CIMB has a “hold” call on the stock, with a target price of $1.01.
In February, Bloomberg had reported that Citic was considering buying out the medical devices maker. The China-based fund had acquired the stake in Biosensors last year from Shandong Weigao Group Medical Polymer Co.
“We do not like the management changes and restructuring within Biosensors,” CIMB said in the note. “Also, management has hinted that they are going back into the balloon catheter market. If we go along the line with what the medical world is thinking, (a) new wave of balloon catheters could spell the end to stents. That is the reason medical giants from Abbott Lab, Metronic, Boston Scientific and Johnson & Johnson are focusing their efforts in the balloon catheters market.”
It noted that while the company’s fundamentals haven’t turned bad overnight, its corporate governance has taken a “big hit”.
For FY14, Biosensors reported a revenue of US$323.8 million, down 4 per cent year-on-year as product revenue growth was offset by lower licensing and royalty revenue.
Net profit for the financial year ended March 31, 2014, worked out to US$40.6 million (including exceptional items), down from US$115.5 million previously.