We reiterate our Neutral rating on
Mindray Medical International Limited
). Its second-quarter 2012 adjusted (excluding one-time expenses
other than stock-based compensation expense) earnings per share of
45 cents beat the Zacks Consensus Estimate of 44 cents. Reported
net income moved up 16.1% year over year to $52 million (or 44
cents) in the quarter.
Revenues were up sharply 23.3% year over year to $267.8 million, in
the second quarter, beating the Zacks Consensus Estimate of $258
During the reported quarter, Mindray recorded outside-China sales
of $152.5 million, up 20.5% year over year. Revenues in China
increased 27.1% to $115.3 million. The company performed well in
other emerging markets with growth of 21.1%.
Patient Monitoring & Life Support Products (42.8% of total
sales) sales grew 23.3% year over year in the reported quarter to
$114.6 million. In-Vitro Diagnostic Products (27.6% of total
revenue) revenues were $73.9 million, up 31.1%. Recurring revenues
from reagents contributed 34.4% of In-Vitro Diagnostic segment
sales during the quarter.?? Medical Imaging Systems (24% of total
sales) sales rose to $64.1 million, a growth of 15.1%. Other
revenues (5.6% of total revenue) were up 24.4% to $15.1 million.
Mindray is a bellwether in the Chinese MedTech industry with a
solid international presence. A key distinction with domestic
competitors is that the majority of Mindray???s products have CE
Mark and/or Food and Drug Administration (FDA) clearance.
Mindray maintains a decent product pipeline and brings out several
new products each year. New products contribute in a major way to
Mindray???s revenues. In fiscal 2011, the company launched 13 new
The company has entered the premium segment globally, where its
competitive advantage is still unclear. Also, on the negative side,
health care reform in China and the U.S. may reduce demand for
Mindray???s products. Competition is fierce and leads to price
erosion over time.
Mindray???s competitors, in different niche segments, include GE
Healthcare, a part of
). Our Neutral recommendation is supported by a short-term Zacks #3
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