InvestIdeas

Not vested. From Dr. Check, The Standard HK:-

Meditech picture of good health

In recent years some of the better companies to list on Hong Kong's Growth Enterprise Market have migrated to the main board after failing to lure enough investor attention.

One such firm is Golden Meditech (0801), which stands to benefit from China's growing health-care sector.

Meditech makes autologous blood recovery machines and disposable blood processing chambers.

It also operates the mainland's first cord blood bank.

For the year ended March 31, Meditech had a turnover HK$498 million, up 18 percent year on year.

Gross profit margin stood at a relatively high 71 percent.

Following the acquisition of Daopei Hospitals Group, the firm became a one-stop health-care provider.

Beijing's one-child policy and an increased public awareness of the benefits of stem cells will continue to help the cord blood bank division.

China has earmarked 850 billion yuan (HK$965 billion) to revamp the national health-care system over the next three years.

The stock peaked at HK$4.80 in 2007. At yesterday's closing price - HK$1.38 - it looks reasonable.

http://www.thestandard.com.hk/news_deta ... 91020&fc=2

Not vested. From UOBKH:-

Golden Meditech Holdings
Forerunner of blood solutions

We initiate coverage on Golden Meditech with a BUY recommendation and target price of HK$2.76 based on sum-of-the-parts valuation, which implies 20x FY11F PE and 16x FY12F PE, a 20% discount to its peers.

Stock Impact

Golden Meditech Holdings (GMH) develops, produces and sells autologous blood recovery system (ABRS) machines and disposable chambers. Through its subsidiary Golden Meditech Hospital Management, GMH
manages China’s largest private haematology hospitals in Beijing and Shanghai. GMH also holds a 44% stake in China Cord Blood Corporation (CCBC), which provides storage and accessory services for blood stem cells
extracted from the umbilical cords of newborn babies.

Dominant position in ABRS market. GMH’s first-mover advantage enables the company to dominate the industry with a market share of about 80%. There is a limited number of such suppliers in the market. The technology is easy to replicate, but intellectual property protection and the long and stringent approval process create hurdles for potential entrants.

Favourable policies to fuel ABRS growth. Although GMH has sold over 10,000 ABRS machines to 2,000 hospitals, autotransfusion volume is estimated at merely 5% of total blood transfused during surgeries. The
Ministry of Health requires the use of autotransfusion to reach at least 20% in Level 3 hospitals and 10% in Level 2 hospitals. We believe this will boost consumable sales to over 30% CAGR for the next three years.

In addition, the Ministry is likely to make it mandatory for each surgery room in above county level hospitals to be equipped with ABRS machines. Should this policy be carried out officially, machine sales could grow at high double digits in the following years instead of our single-digit projection, given only over 2,000 hospitals out of a total of 12,961 hospitals are currently equipped.

Cord blood bank a major near-term growth driver. CCBC holds two of the six exclusive licenses for operating cord blood banks in Beijing and Guangdong. It has a 19.92% stake in Shandong Cord Blood Bank.
Guangdong and Shandong have huge populations and are among the most affluent provinces in China, but penetration rates in both areas are very low – below 2% and 0.5% respectively – compared to 14% in Beijing which is a more developed market.

In addition, China’s one-child policy, which eliminates the chance of transplanting bone marrow between siblings, will support the adoption of stem cell storage. Industry growth for the next 3-5 years is expected to clock a CAGR of over 30%, and Guangdong and Shandong operations are likely to grow at a faster rate given their very early stage of development and low penetration rates.

Hospital management could be a rising star. Public hospital reform will call for solid hospital management expertise to help public hospitals improve their services and profitability. GMH is tapping this market as one of the firstmovers with officially granted licenses and strong management expertise, especially in the area of haematology.

We project about 40% top-line growth for this segment for next three years but do not expect a significant revenue contribution in the near term due to relatively low base. We, however, believe the segment could achieve sustained high growth and become another growth driver over a longer time horizon as the reform deepens and more and more public hospitals bring in external management teams to help them improve profitability.

Valuation/Recommendation

We arrive at our target price of HK$2.76 based on sum-of-the-parts valuation. Our target price implies 20x FY11F PE and 16x FY12F PE, which are at a 20% discount to other Hong Kong- and US-listed Chinese medical device manufacturers.

http://research.uobkayhian.com/research ... 210129.pdf

Not vested

Mainland health-care firm doubles profit
Friday, July 23, 2010

Golden Meditech (0801), a health-care service provider in China, said net profit for the year to March 31 soared 104 percent year-on-year to HK$116.42 million.

The profit hike was driven by the group's hospital management service, which generated more than HK$51.763 million in revenue, making up 18 percent of the total.

Total revenue increased 3percent to HK$285.467 million. But gross profit fell 8 percent to HK$172.644 million due to a price cut for medical devices.

Meditech chairman Kam Yuen said the firm reduced prices of devices in a bid to expand its hospital business beyond the top-tier segment. "We have voluntarily adjusted the average selling price of our medical devices by 25 percent to encourage greater uptake from the lower tier hospitals," Kam said.

The group also declared that no dividend will be distributed. "In view of the medical reform in China, we feel that investment opportunities will open up over the next couple of years. Capital will be needed for further acquisition of other business operations," Kam explained. LARRY WONG


http://www.thestandard.com.hk/news_deta ... 00723&fc=8

Not vested

Golden Meditech in picture of health
Tuesday, November 30, 2010

Health-care firm Golden Meditech Holdings (0801) saw net profit surge nearly 2 times to HK$165.57 million for the six months ended September 30, thanks to China's medical reforms and a favorable market.

The 243.95 percent rise in net profit includes a fair-value gain of HK$35.7 million from financial liabilities, which reversed a year-on- year net loss of HK$38.25 million.

Taking into account the impact from fair-value changes, profit after tax was HK$131 million during the fiscal first half, up 30 percent year- on-year, chairman Kam Yuen said.

Earnings per share were 9.83 HK cents. Revenue rose 24 percent to HK$162.8 million, with the medical devices segment contributing HK$124.8 million.

Gross profit margin for the medical devices sector stayed at 65 percent.

The stock surged almost 20 percent yesterday to HK$1.69. SOPHIE HE

http://www.thestandard.com.hk/news_deta ... 01130&fc=2

Not vested

DJ MARKET TALK: Golden Meditech +19.9%; 1H Beats View
Nov 29, 2010

1608 [Dow Jones] Golden Meditech (0801.HK) ends +19.9% at HK$1.69, vs midday close of HK$1.42, supported by stronger-than-expected fiscal 1H11 (April-September) results with net profit up more than 3.4X on-year at HK$165.57 million, vs HK$48.14 million in 1H10; bottom-line represents 80.2% of FY11 net profit forecast based on Thomson Reuters.

Strong earnings growth supported by medical and healthcare services. As healthcare/medical business viewed as immune from potential China tightening concerns, business outlook likely positive ahead.

Stock remains distant vs year-to-date high of HK$2.25.

Source: Dow Jones Newswire

MARKET TALK: Golden Meditech May Not React Much To TDR Application
Oct 7, 2010

Source: Dow Jones Newswire

Not vested

*DJ Golden Meditech Cut To Hold From Buy By UOB KayHian

Source: Dow Jones Newswire

Not vested

DJ MARKET TALK:Golden Meditech Off 4.1% Pre-Mkt; Take Profit -UOB

0944 [Dow Jones] Golden Meditech (0801.HK) down 4.1% at HK$1.62 at pre-market, with stock expected to fall on profit-taking after yesterday's 19.9% rise in knee-jerk response to solid 1H.

1H11 net profit up over 3.4X on year at HK$165.57 million, vs HK$48.14 million year ago; bottom-line represents 80.2% of FY11 net profit forecast based on Thomson Reuters.

UOB KayHian says company's 1H beat expectation on non-recurring items, but suggests investors take profit after share price rally.

Notes, "the surprise came mainly from a fair value gain of convertible bonds which amounted to HK$35 million as well as higher-than-expected investment income of HK$52 million.

Performance of the core operating segments (devices sales and hospital management) on the other hand, remained unexciting."

Cuts stock to Hold vs Buy, cuts target to HK$1.90 (previous target not shown) based on SOTP valuation. Raises FY11 earnings forecast by 20% to reflect strong 1H.


Source: Dow Jones Newswire

Not vested

DJ MARKET TALK: Golden Meditech Off 7.1%; HK$1.80 Target - Broker

1533 [Dow Jones] Golden Meditech (0801.HK) down 7.1% at HK$1.57 on profit-taking after 19.9% rise yesterday in response to solid 1H results (announced yesterday midday); 1H11 net profit up more than three-fold on-year at HK$165.57 million vs HK$48.14 million year ago; bottom-line represents 80.2% of FY11 net profit forecast based on Thomson Reuters.

Prudential's Alvin Cheung expects medical and healthcare sector to remain strong medium-term as demand grows amid rising population of elderly people in China.

Suggests investors look for re-entry level near 50-day moving average of HK$1.49; sets medium-term target at yesterday's peak of HK$1.80.

"It would be good to take profit now after yesterday's rise."

Source: Dow Jones Newswire