Following  a  conversation  with  Apex  Healthcare  Bhd  (AHB)'s  management  on  its  new  venture  into  orthopaedic  devices manufacturing,  we gather that AHB had acquired a 40% stake in the new JV company, ABio Orthopaedics Sdn Bhd (AOSB), for about RM5.0m. AOSB, which is set  to  secure  its  first  contract,  will  build  a  plant  in  Penang  and  expect  full  operation  by  1HFY13.  We  are  revising  up  our  FY13  earnings forecast by 1.4% and lifting our FV to RM4.10, pegged to a higher PE of 10x. Despite relatively insignificant contribution seen now, we expect the  new  venture  to  contribute  meaningfully  to the group's bottomline over  the  mid-  to  long-term,  attributable  to  a  growing  elderly population and a steady rise in the diagnosis of musculoskeletal disorders. 

JV  formed.  Apex  Healthcare  Bhd  (AHB)'s wholly-owned  subsidiary,  ABio  Marketing  Sdn  Bhd,  had  subscribed  for  a  40%  stake  in  ABio Orthopaedics  Sdn Bhd (AOSB) for RM5.0m in January this year.  November Union Sdn Bhd (NUSB), its JV partner, will  hold the remaining 60% stake.  AOSB is in the contract manufacturing business for surgical-grade orthopaedics devices, components and surgical instruments.

Source: OSK