Biosensors reported its 1Q10 (quarter-ended June) results after market close on 27 July œ the first profitable quarter in its history. Revenue was in line with the company‘s guidance.

Profit from its China JV (JWMS) remained strong with 100% growth YoY, 12% growth QoQ œ the JV contributed 74% of Biosensors‘s 1Q10 EPS. The company expects to receive Chinese SFDA approval for its BioMatrix in next 9-15 months.

With US$50 mn cash as of June and its positive free cash flow, the company believes it can pay the US$48 mn convertible bond, which is due in November 2009. We, however, believe near-term fund raising may be inevitable.

With encouraging 1Q10 results, we raise our FY10E EPS by 48%, but reduce FY11E EPS by 28% œ we expect competition to intensify due to the planned 2010 launch of NEVO and Boston Scientific‘s drug-eluting stent (DES) with biodegradable polymer but Biosensors‘ likelihood of being acquired has increased. Maintain OUTPERFORM with but reduce our target price from S$0.90 to S$0.80.