Both the market and the market value, Mindray Medical aimed at the privatization of A shares can be described as a double-edged sculpture.

Attracted by the high valuation of the A-share bull market, Mindray Medical International Co., Ltd. (hereinafter referred to as “Minui Medical”), which has been listed on the NYSE for 9 years, began its privatization on June 5th. The A-share market paves the way.

Mindray Medical is principally engaged in the development and manufacture of clinical medical devices . The company went public in the US in September 2006. After one year, the stock price rose to a historical peak of $44.99 per share, and has fallen 32% from its peak. At present, the company's price-earnings ratio is 18 times, and the average valuation of similar companies listed on the A-share market is 58 times.

“Mairui Medical is a registered place overseas, half of the market is also overseas, and most of the investors are overseas medical equipment companies. The privatization of A shares is not only a reason why the market value is underestimated, returning to occupy a larger medical equipment market. Perhaps it is a bigger game of Mindray Medical." A pharmaceutical industry analyst who did not want to be named told the China Business News reporter.

Large market value gap

On June 4, the three managements of Mindray Medical, which was listed on the NYSE, submitted a non-binding proposal to the board of directors on the same day. The three will acquire all the circulation of the company from other shareholders at a price of US$30 per share. Shares, the price is 9.2% higher than the company's closing price on June 3. On the same day, Mindray Medical's share price rose 10.92% to 30.47 US dollars / share, the largest increase since August 2012.

Currently, the three managements already own 28% of the company's circulating shares. According to Bloomberg, the equity acquisition plan will involve $2.6 billion in cash, while the Wall Street Journal is expected to cost $3 billion. More interesting is the rumors that the private equity companies that may acquire Mindray include CITIC Group.

The latest data shows that the current market value of Mindray Medical is 3.437 billion US dollars, a contract of 21.3 billion yuan, and in the A-share market, the market value of Yuyue Medical (002223), also listed as a medical device listed company, has reached a maximum of 43 billion yuan.

In fact, Mindray Medical's financial data shows that its net profit is several times that of Yuyue Medical. According to the 2014 annual report released by Mindray Medical on March 9, the company's net income in 2014 was 1.3 billion US dollars, 8.1 billion Yuan Renminbi, which was 9.0% higher than the previous year; net profit was 193 million US dollars, or 1.2 billion yuan, down 14% year-on-year. Among them, sales in China accounted for about half of the company's total revenue, which was $606.7 million, an increase of 10.1% year-on-year. Sales in overseas markets increased by 8.0% to $716.1 million.

In 2014, Yuyue Medical's operating income was 1.682 billion yuan and net profit was 297 million yuan. China Resources Wandong (600055) had revenue of 740 million yuan in 2014 and net profit of 0.26 billion yuan. The controlling shareholders of the two listed companies are all Jiangsu. Yuyue Technology Development Co., Ltd., merged together, the total income of the two companies in 2014 was 2.422 billion yuan, and the net profit was 323 million yuan. Mindray Medical's operating income is 3.3 times the sum of the business income of Yuyue Medical and China Resources Wandong, the net profit is 3.7 times, and the market value is only 1/3 of the two companies.

Another listed company that can be referenced is the Lepu Medical (300003), which supports the market value of 45 billion yuan by the heart stent business. In 2014, Lepu Medical's operating income was 1.669 billion yuan and net profit was 423 million yuan. Mindray Medical's operating income is 4.9 times that of Lepu Medical, and its net profit is 2.8 times that of Lepu Medical, but the market value is still only 1/2 of Lepu Medical.

Even if it is comparable to Shenzhen's competitor Libang Instrument (300206), Mindray Medical may have a lot of “jealousy”. In 2014, Libang Instruments realized operating income of 523 million yuan, but net profit was only 10.41 million yuan, but the market value. Recently, it has reached a maximum of 11 billion yuan. Mindray Medical's operating income is 15.5 times, its net profit is 115 times, and its market value is only twice that of Libang. The grievances between Mindray Medical and Libang Instruments may make Mindray Medical more concerned about the comparison of its market value. The two leading medical equipment companies in Shenzhen, which have a lot of connections, have been fighting for intellectual property rights since 2011. The lawsuit that lasted for three years in August last year has finally ended. Mindray has won all the cases and won the total amount of compensation. Up to more than 42 million yuan.

"As the origin of the old-fashioned medical device state-owned enterprise Shenzhen Anke High-tech Co., Ltd., Mindray Medical and Libang Instruments, although not in terms of business volume, have never been able to compete in the same city, but they have also staged great grievances, Mindray Medical In the past 10 years of overseas listing efforts, the market value is actually twice that of Libang Instruments. How can the management of Mindray Medical Center be dissatisfied with grievances?" Shi Lichen, head of Beijing Dingchen Medical Management Consulting Center, told reporters.

In fact, what makes Mindray Medical even more uncomfortable is the comparison with its other medical equipment company, Bao Laite (300246) in Guangdong. Bao Laite's products cover three major areas of life monitoring, ultrasound diagnosis, and medical imaging, and most of them coincide with Mindray's business.

In 2014, Baolaite achieved operating income of 289 million yuan, net profit of 3,381,500 yuan belonging to shareholders of listed companies, and its market value reached 10.6 billion yuan, and it is still rising. In contrast, Mindray Medical's operating income is 28 times, its net profit is 36 times, and its market value is only twice that of Bolly.

A pharmaceutical company's pharmaceutical industry analyst told reporters that the market value also represents the strength of the listed companies' financing ability in the future. The long-term underestimation will lead to the weakening of the company's financing capacity. At present, the medical device industry is in a period of turmoil, although Mindray Medical has been in the past. Has always been the top spot in the medical device industry, but the high valuation of other companies in the industry has brought greater M&A capabilities. In the future, Zhongyuan Cash is the king, Mindray Medical is eager to return to A shares. The wish can be seen.

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