$15.02
-0.30 (-1.96%)
China Medical Technologies, Inc. (ADR) (CMED)
CAPS Rating:
A China-based medical device company that develops, manufactures & markets advanced in-vitro diagnostics products using Enhanced Chemiluminescence technology & Fluorescent in situ Hybridization technology, to detect & monitor various diseases & disorders.
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I've had real money on this once since it was $20.
Excellent price, excellent growth prospects, very efficient in terms of gross/net margins... They have cut a new distribution deal in japan which presents a very good long term cash flow possibility. They are currently seeking FCC approval in the US with HIFU technology (which if you check on pub med actually has some decent research behind it. HIFU may be the treatment method of choice for solid prostate and breast tumors in years to come- it is non-invasive, several studies show it is equally effective as surgery and has fewer side effects. If they do not get FCC approval, they will likely continue growing at their current impressive rate, but if they DO get it... watch out. this could be a 10-100-bagger. Their immunoassay/in-vitro tech represents new cutting edge non-invasive dignostic technology for a variety of conditions, including prenatal screening.
As a physician- I am very excited about this new technology, and I think this company has the best chance of being a worldwide leading distributor of it. American companies just cant compete with chinese production pricing.
Thanks Dr. Quack,
I recently came across this stock when doing a screen for high growth stocks with a PEG of under 1. This one is the prettiest of em all. I will check pubmed since I do not know much about HIFU but it does seem interesting. So do their immunofluorescent technologies.
Normally Chinese stocks make me nervous. However, this one seems to have significant support from the government and potential for income outside of China. And it is in a secular, rather than cyclical industry. So when the Chinese economy goes kabloo-ee at some point this Co. may still be left standing, and in the long run, when China rules the world, it will be enormous :).
I will definitely be watching it closely and will recommend it on here as soon as the price pulls back a bit.
Your recommendation is very helpful, especially since your science/medical background allows you to see the potential applications of this technology firsthand...
Hey, Dr. Quack... it's FDA, not FCC. Maybe you really ARE a quack. How can a physician not know the regulating body for medical devices? Like the Jimmy Buffet song line about being at a physicians' convention " ... but I don't think I'd let 'em cut on me."
I've looked more closely at this company over the last few days (as the stock price has skyrocketed).
I see several poignant pluses and minuses for those long on CMED.
Negatives:
1. The company has only a few products: HIFU, Chemiluminescence, FISH. A hit to espe HIFU would hurt profits a lot
2. The COO of the company left a while back to start his own company. He is using or plans to use similar technology as CMED uses. In the US this would be a breach of intellectual property but it seems in China this restriction is not in existence. This could put competitive pressure on CMED while it is still in its early growth phase.
3. GE, which used to have as much as a 15% stake in the company, has eliminated all or most of its holdings. I've been trying to find out why they did this but have not been able to find anything.
4. Chines companies are inherently risky even if this may be less risky than some others.
Positives
1. The Chinese healhcare industry is expected to grow at 14% aq year for the upcoming years.
2. Over 2/3 of the equipment in Chinese hospitals, esp. in rural areas, was made before the 1990s.
3. The major foreign equipment suppliers in China (like GE) do not have much of a rural presence. The acquisition of FISH may help CMED penetrate these markets since FISH is lower end, cheaper, but still needed where there is very little in the way of tests/diagnostics, etc.
4. The Chinese government seems adamant to spend whatever it takes to bring the Chinese hospitals and healthcare overall up to par.
5. Cmed's products, esp. HIFU, may find huge markets outside of China if approved.
Valuation:
My DCF valuations put this company's worth by year's end at at least $70 a share; up to $110. Grahaminvestor.com has an intrinsic value in this range also.
However, risky companies often price way under the "intrinsic value" because there is more uncertainty in regards to the veracity of this figure.
M*, which tends to be very conservative, prices it in the 20s.
I haven't looked at historical P/E ratios for the company or at other indices yet.
Given the risk and reward I''m going to let this thing run and just watch it go unless it comes back under $30. I can see why people would still get in after the run-up but man... I hate to lose money so I'm willing to see what happens first before getting in.
My thoughts... anyone have theirs?
thanks bud, looks like you're right- its FDA approval. FCC is the federal communications commission. I guess my 80 hour weeks were getting the better of me when i wrote that. :PThat said, I stick by my prior reasoning. They are moving on the FDA approval, and starting clinical trials at U of Washington Medical Center: http://www.genengnews.com/news/bnitem.aspx?name=20360612
You make some good points UCLA, and you've done your research. As for me, any company that earns good cash, has a good plan, knows where to spend their resources and has the promise of good growth may end up on my list (CMED fits the bill). It helps if they've cornered an industry- and CMED very well may have this too. I think they are still cheap in the 30's... they would be a safe buy at 40-50 atm (as of 7/16). thus, I have them on buy. Watching a good stock thats underpriced wins you no points. :)
It turns out that GE is teamed with an Israeli imaging firm, Elbit to form Insightec in 1999, and that this may be a distribution channel GE uses for HIFU. Worth looking up if your not familiar with this.
I did do a pubmed search for HIFU technology and it does seem to be very exciting. I hope for the sake of humanity that it can one day cure pancreatic cancer, though the trials to be performed at U of W will be designed to be more palliative in nature.
I majored in biochemistry as an undergraduate at UCLA and was a medical student at UCSD before an accident set me back quite a bit. I am finishing my MPH and figuring out what my next step is. I just started investing in individual stocks last year though I have certainly found interest in it. CMED would be my first venture into Chinese stocks so I am playing it conservatively... So far I have found that large run-ups such as the recent one usually find some dip in which to buy. We'll see.
By the way.. how are those 80 hour weeks treating you?
All the best...
J-
They were horrible... I have no idea how people survived before the 80 hour cap per week. 120 hour weeks doing this kind of work seems near impossible. All the stress and death everywhere...
That said, now I'm a resident and I'm working close to a normal 40 doing a specialty I love... which means less stress more fun and more time to study stocks :)
buy buy buy
is an evergreen stock
will beat the market
If you see the intaday graph...
you will see that founds are accumulating this stock...
yes yes yes