In China's medical gear market, acquisitions are a legitimate
pathway to growth.Mindray Medical International (
) appears to believe wholeheartedly in such a strategy.
In July, the firm completed the buy of a controlling stake in
Wuhan Dragonbio Surgical Implant Co., which specializes in
trauma, spine, joint and other surgical-care products. The
seven-year-old company posted $7.7 million in 2011 sales.
That's not even 1% of the $881 million in Mindray's full-year
sales the same year. Mindray officials, however, appear eager to
capitalize on the growth opportunities. It notes that a report by
consulting firm Frost & Sullivan estimates the Chinese
orthopedics market at $1.1 billion in 2010 and growing at a
compounded annual rate of more than 18% from 2010 to 2015.
"The orthopedic consumable market has high barriers to entry,
but this deal will give us instant access to this promising and
sizable market," Minghe Cheng, Mindray's chief strategic officer,
said in a June 6 news release.
The global orthopedic market, Mindray estimates, was $30
billion in 2011 and growing 8% annually.
Incorporated in 1991, Mindray is already a major player in
patient-monitoring, in-vitro diagnostic and medical imaging gear.
In the second quarter, 57% of its $267.8 million in total revenue
Mindray shares are still more than 22% below an all-time peak
of 45.19 set in October 2007. But lately, the stock has shown
On Aug. 7, Mindray cleared a four-month consolidation past a
34.17 buy point and rose 6% before moving sideways over the past
seven weeks. That's long enough to qualify as a flat base with a
potential 36.46 buy point.
The stock holds an 1.8% annualized dividend yield. On April
10, Mindray paid 40 cents a share.
Its three-year Earnings Stability Factor is outstanding at 2
on a scale of zero (most stable) to 99 (most volatile). Mindray
also scores high with a 94 Composite Rating.
It boasts eight years in a row of annual EPS growth (from 12
cents in 2003 to $1.57 in 2011). Return on equity was solid at
17.7% in 2011, but down from 21.3% in 2010. Analysts see earnings
rising 6% to $1.67 a share this year and up 17% in 2013.