Invest in China's
Healthcare Industry with Shares of Mindray
(MR)
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By: Paul Goodwin
Editor
Cabot China & Emerging
Markets Report
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Published:
August 10, 2007
China has the longest string of
double-digit growth years on the
planet, and that's a powerful
engine. Russia, India, and Brazil
are also growing strongly, but China
will probably be the "Big Dog" for
the foreseeable future. Even with
the unpredictability of its
government and the volatility caused
by so much hot money (foreign and
domestic) chasing stocks around, the
opportunities in China are still
huge.
There's one China stock in
particular that I've had my eye on.
It's a medical equipment company
that came public just last
September. It is liquid, pays a
small dividend, and reported
after-tax profits of nearly 30% last
quarter. Plus, it has one of the
best company names I’ve ever heard.
The company is Mindray Medical
(NYSE: MR, $33.88), a Chinese
maker of medical devices that
designs and manufactures 40
products, including patient
monitoring devices, diagnostic
laboratory instruments, and
ultrasound imaging systems. The
stock came public just last
September and has already more than
doubled. But there's a deeper story
here.
According to the Chinese
government's Ministry of Health, in
2005 there were about 18,700
hospitals and 41,700 healthcare
clinics in China. In 2002, the
latest year for which figures are
available, these hospitals bought
85% to 90% of their medical
equipment from manufacturers outside
China. And finally, the increasing
urbanization of China and the
outbreak of SARS in 2003 have
brought it home that healthcare in
China needs an immediate focus on
quality and quantity of care.
These statistics help to paint a
picture of a country with enormous
potential as a market for medical
equipment. And Mindray is in the
right place with the right products.
A look at Mindray’s chart shows a
stock that came public at 14 and
moved smartly up the chart to 27 in
less than three months. But at that
point, MR stalled out. Partly this
was due to a need to digest post-IPO
gains. And partly it was because
Mindray's business has a seasonal
swing to it. With the profitable
fourth quarter (traditionally its
strongest) on the books, and the
weaker first quarter in view;
investors were a little shy about
putting their money down.
But it's the early investor that
gets the worm, and MR's
small-but-growing roster of
institutional sponsors shows that
some big investors are ready to take
the chance. This one will bear
watching, and when it gets organized
for another advance, it could be a
very profitable stock to have
around.
Paul Goodwin
Editor
Cabot China & Emerging Markets Report
About Paul Goodwin
[includes/bios/goodwin.htm]
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