Bloomage Biotechnology Corp (963 HK) – Quick Study

Bloomage BioTechnology Corporation Limited (the “Company”, together with its subsidiaries, the “Group”) was listed on the main board of the Stock Exchange in 2008. The Company is principally engaged in the development, manufacture and sales of raw materials and end products for a diversified range of hyaluronic acid (also known as hyaluronan, hyaluronic acid sodium, abbreviated as “HA”), and is a leading provider of medical beauty products and services in the PRC and one of the world’s largest producers of HA raw materials. The Group devotes to develop itself to be a provider of comprehensive series of products and solutions based on HA as the core.

Leveraging on the outstanding research and development capability of the Group, the Group successfully launched its injection cosmetic filler product – Hyaluronan Soft Tissue Filling Gel in 2012 and extended its business scope to HA end products. Currently, the self-developed end products of the Group comprise Hyaluronan Soft Tissue Filling Gel (including BioHyalux and Dermallure), HA+ medical skin care products (including professional pre-operation and post-operation repair products and daily maintenance and moisturizing products), Medical HA Gel for ophthalmologic use (trade name “Hymois”) and bone products for intra-articular injection (trade name “Hyprojoint”).

 

1) Trailing PEG

• P/E: 19.66 (from POEMS)
• Dividend Yield (%):0.22 (from POEMS)
• 5 years EPS compound growth rate: 23.33 (from ft.com)

The trailing PEG will be 19.66/(0.22+23.33) = 0.83. Which is good (below 1).

2) Intrinsic Value

If we calculate the intrinsic value using a growth rate of 20.997%. (90% from 5 years EPS compound growth rate)

F = P(1+R)^N

• F = the future EPS
• P = the starting (present) EPS (HKD 0.63)
• R = compound growth rate, 20.997 (90% of 5 yrs historical growth rate,23.33%)
• N = number of years in the future (5)

Estimated future EPS: HKD 1.63

I will be estimating the future PE of Bloomage Biotechnology Corp to be 21.8. (See below, data from Morningstar) Average of PEs from 2009 to 2016.

Future Stock Price

P=EPSxPE

• P = future stock price
• EPS = future EPS
• PE = future PE

Hence future stock price of Bloomage Biotechnology Corp is 1.63 x 21.8=HKD 35.534

Intrinsic Value

P=F/(1+R)N

• P = present (intrinsic) value
• F = future stock price (35.534)
• R = MARR (15% or 0.15)
• N = Number of years (5)

Hence intrinsic value of Bloomage Biotechnology Corp is HKD 17.7.

Given the current stock price of Bloomage BioTechnology Corp Ltd at HKD 12.26, there a margin of safety base on the estimated intrinsic value (approx. 44% lower).

Moreover, current Price to Book value is relatively low as compared to recent years.

Good to have this in my ‘shopping’ list.